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A controversial Arbitrum Improvement Proposal (AIP-1.05) that seeks to return 700 million ARB tokens to the DAO Treasury was met with overwhelming opposition on April 15. This proposal seemed to overturn the unpopular determination of Arbitrum’s Foundation to switch $1 billion value of governance tokens to itself regardless of not receiving the DAO’s approval.

Arbitrum, the most important Layer 2 community by TVL, is now ruled by a decentralized autonomous group (DAO), which voted largely towards AIP-1.05. According to sure experiences, some governance token holders noticed the proposal as too unrealistic and ‘myopic’.

Origin Of The AIP-1.05 Proposal

The origin of the AIP-1.05 proposal might be traced again to the primary weekend of April when the Arbitrum Foundation backtracked on a vital proposal – Arbitrum Improvement Proposal-1 (AIP-1). The AIP-1 proposal included a plan to switch 750 million ARB tokens to the Arbitrum Foundation, which might be invested in initiatives constructed utilizing Arbitrum’s expertise.

Although the governing DAO voted vehemently towards the AIP-1 proposal, it appeared like it might cross anyway – with out the token holders’ approval. However, after the decentralization of Arbitrum’s governance was questioned, the Foundation referred to as AIP-1 a ‘ratification’, and a distinct set of proposals (together with AIP-1.05) had been created to tackle the preliminary proposal.

The summary of the AIP-1.05 proposal claims that “what happened with AIP-1 was a clear overreach of the DAO’s power of the treasury resources”. It additionally states that the proposal “is a symbolic gesture to demonstrate that the governance holders ultimately control the DAO, not the Arbitrum service provider nor the Foundation”.

Reasons Behind The AIP-1.05 Failure

However, the Arbitrum Improvement Proposal-1.05 was not favored by an amazing majority of the ARB voters. According to the experiences, the transfer didn’t obtain help from most ARB token holders. 118 million ARB tokens kicked towards the proposal, representing 84% of the entire votes obtained.

Meanwhile, 20 million tokens voted in help of the proposal – roughly 14.57% of the entire votes. Around 2 million ARB tokens selected to sit on the fence. As stated earlier, many citizens didn’t favor the AIP-1.05 proposal as a result of they believed the muse’s means to distribute tokens, in the long term, was extra essential than a short-term worth enhance.

Another crucial reason the proposal is believed to have been opposed is that it didn’t acknowledge that the funding challenge had already been addressed in AIP-1.1. The basis had already deliberate to switch the tokens to a sensible contract with vesting, which the DAO can modify. It is believed that implementing AIP-1.05 solely overcomplicates this example. 

According to information from CoinGecko, the ARB token presently trades at $1.64, with a formidable 40.9% worth rally up to now week. 

ARB buying and selling at $1.6311 | Source: ARBUSD chart from TradingView