AIP-1: Arbitrum Improvement Proposal Framework

I have a few questions.

What made the team change their mind regarding the 750 Million allocation? If it were already planned, then it’d not have been counted under the DAO funds on the foundation docs website.

What happens to the spent funds out of the 750 Million ARB if the votes pass as is (52.9% against)?

The clear path forward seems like separating the setup / admin costs and grants funds. Also segregation of the proposals so that important decisions can reach consensus with less friction.

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LOL Do you still think so? :rofl:

Love the discussion so far and here’s my take on the AIP.

AIP-1 is obviously a complete utter joke and a strategic ploy meant to elicit a polarizing response from the community, thereby prompting a heightened level of engagement and emotive discourse. Objective is so that genuine stakeholders in the arbitrum ecosystem will exercise their voting rights.

At the end of this DAO social experiment, all non-voting coins will get an undisclosed % of their allocation burnt. This novelty of AIP-1 is a 1000 IQ play and presents a fascinating case study on the intricacies of decentralized governance and the power dynamics at play within DAOs.

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Hi all,

I echo some of the concerns brought forward by @BlockworksResearch & @olimpio and will be voting AGAINST AIP-1.

I generally support the goals the Arbitrum Foundation seeks to pursue, namely to minimize governance overhead in certain matters and create a legal entity that can interface with the “real world” and pay out past and future service providers.

However, I believe that there is no need to provide the Foundation with 750m $ARB tokens at once. Rather, the Foundation should come up with a tentative budget for its first year of operations and request new funds from the DAO every year thereafter. This ensures the Foundation is truly bound to the DAO and not the other way around.

I’m sure there was good reason to set-up the Arbitrum Foundation Administrative Budget Wallet pro-actively and transfer first batches of funds out, but it would be good if those reasons could be clarified. It’s important to set the right precedents here.

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please be different then %98 of the projects which are mainly scam, we as community trusted arbitrums tech but if their core team is asking for 750M Arb Tokens, then all of our trust is hurt unless this is a joke proposal…

I will vote Against!

And we need a proper explanation about this mistake after ‘Against’ win

Hi all,

We have put together a longer answer in a new thread:

It should hopefully provide context on how AIP-1 came about and the thinking behind it.

In a personal capacity, I am really proud to see the DAO actively participate and it highlights why I wanted to join Arbitrum :slight_smile:

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can we know how much of it is turned in to stable coins? will you go on selling on community at CEX’s? when this proposal ends with ‘agains’ are you going to send those funds to DAO treasury back?

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There is no need to request for 750m tokens in one go. Instead, the Arbitrum Foundation should consider disbursing these tokens in tranches instead.
Will be voting against this proposal.

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if you think the arb team are not be trusted that’s fine and reasonable, however their latest post clarifies the position imo - it’s clear they will use these funds for the benefit and growth of the ecosystem - after this messy first AIP I would also expect things to only get better on the governance front, once its the chickens laying the eggs, and there is better communication and engagement with the community

Thank you for adding detail to some of the questions that have been raised. Unfortunately this now becomes quite a messy situation with the clarification that AIP:1 is meant to act as a ratification of the proposal instead of an actual proposal to be reviewed and voted on. Which begs the question, will the result of the vote for AIP-1 even matter?

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Echoing the abovementioned arguments against the AIP-1 in its current hybrid basically all-in-one all-encompassing redaction, I find it important to underline the following:

  1. The function of $ARB token is to be a decentralised governance token, it will have value as long as an actual decentralized governance can be carried out by its holders. In other words, the token is for the effective decentralised governance and development of Arbitrum and not the other way around, namely the governance should not be about acquisition of tokens and centralisation. Otherwise it would defeat the purpose of issuing the token in the first place and render it useless.

  2. It’s only a start, in other words it’s just a baby of sorts. Hence the necessity of a gentle approach and “baby steps” if you will. Rough decisions, lack of transparency, antagonization of any kind should be avoided at any cost.

Unfortunately, the AIP-1 in its current redaction is formulated roughly, lacks transparency with respect to the decision making process concerning grants, tries to encompass everything and transform a baby into a full-fledged grown-up overnight. It doesn’t and shouldn’t work this way.

Thus, I vote against the proposal in its current redaction. AIP-1 is a foundational proposal and thus should contain only most basic and crucial. Any not so important subtleties should be gently presented in other proposals, one at a time.

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Thinking on it a little more, this response really misses the mark against the concerns that have been raised in the discussions so far.

The foundation and the wider team must understand that it is highly undesirable for the first Arbitrum Improvement Proposal to be retroactively declared by the team as a ratification statement for an already executed plan.

One would think a more appropriate response would be to go back to the drawing board, discuss the legitimate concerns that were tabled by trusted delegates such as @BlockworksResearch and @ChainLinkGod as well as others, and perhaps engage in direct discussions with such parties to start this process afresh, and turn this into a positive statement of the foundation’s commitment to decentralisation and community ownership. Doubling down on API:1 as it stands could be a significant misstep that tarnishes the reputation of the protocol for good.

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Thanks for your response.

But this is still not desirable. If this is a “ratification” as you mention and not an asking for permission why to put it to vote then? what would be the difference if the result is “Against” and you still started the use of the funds?.

If this was indeed a ratification the proposal must have been different and must have been done concerning to the part of the funds that have not been utilized. Also clarify the initial utilization of the funds.

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The problem with AIP-1 being a “retroactive ratification” is that the DAO now looks powerless. How do we know that the Foundation will appropriately use that 750m ARB? How do we know that they’ll follow directions from DAO governance?

Of course they should be given some leeway in day-to-day operations because DAO governance can be cumbersome, but beginning operations before the DAO even has a chance to vote on the founding documents is a breach of trust, trust which must now be re-built.

To rebuild that trust, some version of the following needs to happen:

  • AIP-1 should be voted down and broken into sub-proposals for individual votes
  • The Foundation needs to return most of the 750m ARB to the DAO, or at least as much as possible
  • The Foundation should submit an approximate budget request so that the DAO can review it for the coming year and grant funds as needed

The DAO needs to know that it actually holds the power in this relationship, not a small multisig run out of the Cayman Islands.

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Wow… this is wild… It’s weird to make a ratification proposal… If this is sybolic, why are we wasting our time? Why would we Ratify this and not ratify the airdrop distribution, or anything else about the launch?

I have to vote no, as it is sooooo much money with so little oversight, but it seems like this was already part of the initial airdrop distribution so I don’t even get why we are voting.

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As a DAO member. The transfer of 750M tokens from the DAO without prior approval should be considered theft in the name of law. As the foundation has not been setup at all, as AIP-1 sets the foundation up. I feel all tokens should be moved back to the DAO Treasury

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In all of these, can we as soon as possible proffer solution(s). From what I have read, Foundation have sold tokens and expended some of the fund already. It is obvious foundation erred and acted wrongly, but we shouldn’t ruminate too much on this. Also I think the foundation needs to give official response to the community as soon as possible and in the response they should provide way(s) to remedying all of these! Arbitrum is too big for it’s DAO to be handled unprofessionally.

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looks really bad… i’m against

As the third largest delegate on the entire chain with over 13,5M votes, we feel the obligation to share our thoughts on this highly controversial proposal. We have been internally going over the proposal over the past couple of days and have found ourselves disappointed in the distinct lack of transparency regarding the Foundation’s 750M ARB tokens, apparently earmarked and moved beforehand without a vote. We completely understand the need for funding, but the Arbitrum DAO deserves a more detailed breakdown of where the money is going and what it’s being spent on.

In its current state, Plutus is voting no on AIP-1.

If AIP-1 fails, we would like to see the following from an improved proposal:

  • Clear breakdown of how the 750M ARB are going to be spent and reasoning behind that number - current reasoning feels very arbitrary
  • A vesting schedule for the 750M ARB tokens - we see no need to have them all available in one go
  • If no vesting schedule is instituted, we believe the number of tokens should be significantly smaller

More importantly, the Arbitrum Foundation has now backtracked on the legitimacy of the vote, claiming that it is a ratification of decisions and actions that have already taken place. This is an extremely worrying stance that reflects incredibly poorly on Arbitrum’s governance process in general. We encourage the Foundation to reconsider, listen to the community and return to good governance practice.

Arbitrum’s governance is now under a magnifying glass - we believe that honoring the DAOs voting process is foundationally important and however this situation is handled will set an important precedent for the future.

Links:
AIP-1: Snapshot
Clarity around the ratification: Clarity around the ratification of AIP-1

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> “The Constitution of the Arbitrum DAO”
*> *
> Phase 3: DAO votes on AIP, on Arbitrum One (14-16 days): During this Phase 3, the ArbitrumDAO will be able to vote directly on-chain on a submitted AIP.
*> *
> If the AIP fails to pass, the process ends after this Phase 3.

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