The Arbitrum Foundation has submitted a new proposal to return the 700 million ARB tokens it had allocated to itself to the layer2 network’s DAO treasury.

Concerns about Arbitrum’s governance emerged after the Foundation exchanged $10 million worth of ARB tokens for stablecoins. At the time, the Foundation said the funds were necessary to keep its operation running.

However, the community criticized the arbitrary allocation, adding that the actions were not in the spirit of decentralization.

To rectify this issue, the Arbitrum Foundation submitted a new proposal, AIP-1.05, to refund the tokens. The proposal stated that the first “AIP-1 was a clear overreach of the DAO’s power of treasury resources.” 

Thus, the return of the funds initially allocated would be a “symbolic gesture to demonstrate that the governance holders ultimately control the DAO, not the Arbitrum service provider nor the Foundation.”

Additionally, the proposal would see the Foundation “buyback the ARB via Wintermute with whatever fiat is left from the $10M OTC sale.”

The new proposal is already facing its share of controversies, as the community is currently divided in its views. According to the snapshot, 55.38% of the votes supported the proposal, while 42.1% were against it. The remaining 2.52% have chosen to abstain.

Some voting against the proposal is doing so because of the “Buyback clause”. In their view, such buybacks could have financial and legal consequences and should be separately decided on instead of combining it with the proposal to return the remaining tokens.

The founder of Project LendX PG said, “the pandemonium around Arbitrum and funding themselves is ludicrous.” He added:

“Nobody had a problem when the foundation airdropped hundreds of millions worth of tokens and injected BILLIONS of TVL into the chain… You CANNOT expect a foundation to run healthily if you don’t pay them. Crypto is not a charity, if you want Arbitrum to succeed longterm, DO NOT starve the foundation.”

ARB is down by 3.26% in the last 24 hours and trades at $1.15, according to BeInCrypto data. The token has shed over 10% of its value during the past week amid the proposal’s drama.

However, the layer2 scaling solution has continued to witness a spike in its transaction volume, crossing the 1 million mark several times during the period, according to Arbiscan data.

Blockchain analytical firm Messari corroborated the above, adding that the network is closing the gap between it and Solana post-airdrop.

The post Arbitrum Down 3% Despite Foundation’s Proposal to Return 700M ARB Tokens appeared first on BeInCrypto.

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