Community wants Arbitrum Foundation to return 700M ARB to DAO Treasury

A new proposal asks the Arbitrum Foundation to return 700 million ARB tokens after community backlash. Voting ends on April 14.

The Arbitrum community has initiated a new proposal requesting the Arbitrum Foundation to return 700 million ARB tokens to its DAO Treasury. The move comes after the Arbitrum Foundation transferred the funds without receiving the community's approval in March. 

According to the proposal, the foundation should proceed with its budget plan only after returning the tokens. “This is a symbolic gesture to demonstrate that the governance holders ultimately control the DAO, not the Arbitrum service provider nor the Foundation,” said a community member.

Voting will end on April 14. At the time of writing, 55% of voters supported the proposal, 42% opposed it, and 2% abstained.

The dispute between Arbitrum’s foundation and its community started at the end of March, following the foundation’s first governance proposal (AIP-1), which called for funding its operations with 750 million ARB tokens — worth nearly $1 billion.

Following backlash from community members, the foundation said in a forum post on April 2 that AIP-1 was a ratification, not a proposal. It added that some of the tokens were already sold for stablecoins. At that time, the foundation noted that its symbolic first governance attempt failed due to communication problems and decisions that were “clearly not articulated correctly.”

A few days later, the Arbitrum Foundation released a set of new improvement proposals aimed at restoring community dialogue. The new proposals include AIP-1.1, which covers a smart contract lockup schedule, spending, budget and transparency. The other, AIP-1.2, tackles amendments to current founding documents and lowers the proposal threshold from 5 million ARB tokens to 1 million ARB “to make governance more accessible.”

The efforts, however, did not resolve the issues with ARB holders. “The foundation has unilaterally been allocated $750M tokens from the DAO that was not approved by the governance tokenholders. Any funds must be returned until it has been properly allocated by the DAO and the DAO only,” the proposal says.

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