On March 23, 2023, the long-awaited Arbitrum airdrop was released to eligible participants who were in their hundreds of thousands. Since then, there has been a lot of news and updates about the decentralized project. One such development which caught the attention of users is the recent sale of 10m ARB tokens by the Arbitrum Foundation.
In response to the feedback given by the Arbitrum community, Arbitrum said that the sale of 10m ARB tokens by the Foundation is to raise money to run operations for the foundation. “The 10m ARB tokens were sold to Fiat to fund pre-existing contracts and to pay for near-term operating costs,” it said.
It further added that $3.5 million was used to cover the setup cost described in AIP-1. AIPs are Arbitrum Improvement Proposals created for the advancement of the project. Like EIPs (Ethereum Improvement Proposals), AIPs help to drive the development of the Arbitrum project.
In addition, Arbitrum said that the Arbitrum Foundation, which is a separate body from Offchain Labs, the company building Arbitrum, was set up without any financial backing and was not designed to sell Arbitrum tokens except for recent reasons.
Disagreement in the Arbitrum ecosystem
Aside from the Arbitrum tokens sold, the AIP-1, the first of its kind, was not greeted with acceptance in the Arbitrum ecosystem. According to the AIP-1, the Arbitrum Foundation will have the right to control 750 million ARB tokens worth about a billion dollars. Community members disagreed with the proposals and called for an immediate review.
On this complaint, Arbitrum said that the community will cast a vote to determine what will stand. It also highlighted that while more accountability will be brought into the system such as initiating a vesting period for the tokens assigned to the foundation, the foundation will not be allowed to use those tokens for voting.
Other issues brought up by the community against the AIP-1 are the lack of boundaries in terms of what it should cover, lack of transparency on how the funds (750 million ARB tokens) will be spent, and no clarity in the Special Grants program mentioned in the AIP-1.
In response, Arbitrum explained that they will split the AIP into parts for coherency, make a proposal to release transparency reports on expenditures so that the community can be aware of the updates, and the Special Grants program will be renamed to “Ecosystem Development Fund”. There will also be clearly stated “context on how the funds will be used to benefit the Arbitrum Ecosystem”.
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