Arbitrum Foundation Reconsiders Controversial Governance Proposal Amid Community Backlash

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The Arbitrum Foundation has recently withdrawn a contentious proposal and ratification vote, which would have granted it control over a substantial portion of tokens. As an Ethereum layer-2 solution provider, Arbitrum faced significant backlash from the community, ultimately prompting the organization to reassess its governance voting system.

Arbitrum Foundation Responds to Community Concerns

On April 2nd, the Arbitrum Foundation acknowledged the community’s apprehensions, announcing via Twitter that its initial governance proposal, AIP-1, “likely will not pass.” The foundation committed to addressing the community’s feedback and refining its governance approach.

As a result of the community’s response, the Arbitrum Foundation will now divide the contentious governance package into smaller segments. The foundation’s team explained: 

AIP-1 is too large and covers too many topics. Therefore, we will follow the DAO’s advice and split the AIP into parts. This will allow the community to discuss and vote on the different subsections.”

Community Backlash Over Centralization Concerns

The foundation’s decision to reassess its governance proposal came after a weekend of community backlash over the organization’s “ratification” vote for decisions it had already made. 

Critics such as decentralization advocate Chris Blec called the original proposal “decentralization theatre.” 

The initial proposal would have given the centralized foundation control over 750 million Arbitrum (ARB) tokens, amounting to approximately $1 billion.

In response to the criticism, the Arbitrum Foundation stated that the 750 million tokens would be subject to a separate AIP. The foundation is exploring options to enhance accountability, such as a vesting period of four years for the tokens. Additionally, tokens held by the foundation cannot be used to vote.

Making Key Changes

The Arbitrum Foundation plans to introduce a budgeting proposal including transparency reports. These reports aim to inform the community about how funds are allocated and spent over time.

The Special Grants program, criticized for its vagueness and lack of DAO involvement, will be rebranded as the “Ecosystem Development Fund.” 

The foundation will provide context on how these funds will be utilized to support the growth and development of the Arbitrum ecosystem.

The Arbitrum Foundation intends to release new Arbitrum Improvement Proposals early this week, showcasing its commitment to addressing community concerns and fostering a more transparent and inclusive governance process.


The Arbitrum Foundation’s decision to backtrack on its initial governance proposal highlights the importance of community involvement in shaping the future of decentralized platforms.

 The foundation demonstrates its commitment to promoting a more transparent and decentralized ecosystem by addressing the concerns raised and refining its approach.

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