Blockchain at Michigan is committed to improving protocol transparency and ensuring the long-term sustainability of the Arbitrum protocol and the Arbitrum DAO. After reviewing the proposal in its current form and discussing it with our fellow delegates, we stand with the opinions of @BlockworksResearch and many others that AIP-1 does not promote this transparency that is deserved by the community.
We appreciate members of the Arbitrum team’s communication throughout this process, but the lack of clarity surrounding the 750 million $ARB token transfer to the Foundation when describing the initial token distribution is a failure on the Arbitrum Foundation’s part and has led to considerable complications with the initiation of this DAO. It is our current understanding that this transfer of 750 million $ARB has already occurred and that AIP-1 serves as a retroactive ratification of preordained decisions carried out without the DAO’s input.
The remainder of AIP-1 provides a proper framework for the establishment of the Arbitrum DAO. While 7.5% of the total supply is fairly common for protocol teams/foundations, Arbitrum is a highly valued protocol, with this transfer currently valued at around one billion USD. This issue opens the door to discussion on the % allocation a foundation is to receive versus the objective dollar amount they should be allotted. In other words, rather than stating that a 7.5% token allocation to the foundation is on par with industry peers, we should look at objective dollar amounts. Even more, we should critically analyze the true costs of funding a foundation along with the amount of money that is required for grants. Perhaps a better setup is to lock a fixed amount of tokens in a wallet for the foundation, only to be distributed by the DAO when and if they are needed, such as on a quarterly basis, for instance. This would require the foundation to become more lean and transparent. Nevertheless, amounts this large must be disclosed during the initial launch of the tokenomics. We understand, however, that prior to the establishment of a DAO, decisions need to be made for the aspects discussed in this “proposal” such as the establishment of the security council and constitution (Arbitrum spoke on this “chicken-egg problem” extensively in their response.
With all of this in mind, on behalf of our delegates, we have decided we will be voting AGAINST on AIP-1: Arbitrum Improvement Proposal Framework in its current form. This experience has shown the Arbitrum Foundation that there is a need for complete transparency throughout the governance process as well as the expectations we and our fellow delegates have for the Foundation to remove any ambiguity from future decisions on Special Grants and other usages of this token distribution. We look forward to continuing to work with our fellow delegates, the Arbitrum team, and the community as a whole to improve DAO and set up Arbitrum for long-term sustainability.