Blockworks Research voted against the Arbitrum Improvement Proposal Framework AIP-1, citing concerns about transparency and governance. The proposal outlines the transfer of 750 million ARB (worth over $1 billion at current prices) to a governance budget wallet controlled by the Arbitrum Foundation.
Questions raised about the controls and safety of the 750M $ARB token in #arbitrationproposed budget wallet @blockworksres https://t.co/drTllhkhH4
— Kyptos (@azcoinnews) April 2, 2023
The money will be used for special grants, to reimburse service providers for setup costs, and to cover administrative and ongoing operating costs.
While the proposal states that wallets must be approved by ArbitrumDAO, Blockworks Research believes this still represents significant centralized control over a large number of tokens. Furthermore, the proposal is not clear enough about how the funds will be distributed and what monitoring mechanisms will be implemented.
Blockworks Research also noted that the 750 million ARBs were initially considered part of the DAO treasury, managed directly on the ArbitrumDAO chain. The move to separate wallets controlled by the Arbitrum Foundation has raised concerns about access to funds and their intended use.
According to the Arbitrum Foundation document, the amount of ARBs proposed to be allocated to the Arbitrum DAO treasury is 4.278 billion. However, as stated in AIP-1, the DAO treasury only received 3,527,046,079 ARB tokens.
Source: Blockworks Research
The researchers noted that three former directors of the Arbitrum Foundation, Campbell Law, Edward Noyons and Ani Banerjee, controlled the funds. Without more transparency and oversight, funds may be used in ways that are not in the best interest of the community.
In addition, Blockworks Research raised concerns about the security risks of wallets currently controlled by multi-sig (multiple signature) mechanisms. They argue that even with multisig, there is a significant risk of malicious actors obtaining funds.
The researchers also showed that the proposed transfer of 750 million ARBs is much larger than other similar proposals. For example, Uniswap’s proposal to establish the Uniswap Foundation totals $74 million, 10 times less than the $750 million ARB requested in the AIP-1 proposal.
Blockworks Research believes there needs to be a clearer picture of required spending and a reassessment of the budget after a year. They voiced their concerns on the forum and called on other holders and representatives to voice their concerns.
The researchers claim they represent more than 2,000 Arbitrum token holders and are tasked with asking these questions on behalf of delegators. They are open to feedback from the Arbitrum community and are ready to change positions as new information becomes available.
According to recent developments, 69.23% of the votes, or 48 million ARBs, were against the proposal, while 30.39% of the votes, or 21 million ARBs, were in favor. The remaining 0.38% of the ballots, or 261,000 ARBs, cast blank ballots. It’s great to see the community openly expressing their views on this issue.
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board pass
according to Kyptos
