Castle Capital have debated this proposal extensively with the key goal of supporting Arbitrum on its path to continued success and ecosystem growth. Ultimately, this requires the Foundation to be fully empowered to act in the service of the DAO.
Some of our views on AIP-1.05:
Return 700M ARB → Although we agree with this in its initial concept, it is, as AIP-1.05 quotes, ‘a symbolic gesture’ and as such, a bit of a show - plus when you get down to the bare bones of it, you cannot ask for 700M ARB back without asking for every action to be reversed.
Buyback $ARB via Wintermute with whatever fiat is left from the $10M OTC sale → We disagree with this, what’s done is done and the foundation should not undergo additional slippage/market moving bids etc.
Disclose terms of the market making deal with Wintermute → We disagree, such an action would discourage future private entities from doing business with Arbitrum. Whether this sort of activity should be the status quo is a debate to have elsewhere. Arbitrum and its governance are not to be used as a tool in this conversation.
We acknowledge the mistakes Arbitrum has made around the setting up of the DAO and the withdrawal of Treasury funds to the Foundation. Although this was ultimately not performed with the approval of the DAO, it is a vital action that needs to be taken. In our opinion, this allocation should have been separate from the DAO Treasury from the start, but alas, this is not the case we find ourselves in.
As a result of these actions, external actors have every right to question the authority of the DAO and whether it has been undermined from the start. That is what these forums are for. However, as Arbitrum-natives and long-term supporters of the ecosystem, Arbitrum, and Offchain Labs, we believe its acceleration takes precedence over an impeccable governance process.
Therefore, Castle Capital will be voting against AIP-1.05.
Conduct a buyback with proceeds from the unauthorized token sale.
Disclose terms to a nonpublic agreement with Wintermute.
Pause AIP-1.1 and AIP-1.2.
Recommendation: Vote Abstain.
GFX strongly supports the first goal. 700m+ is a needlessly large budget for the newly created Foundation. We fully favor the 700m being returned to the DAO, which still leaves the Foundation with significant funds to utilize, given the Foundation can always request additional funds at a future date.
We’re voting to abstain because we generally agree with the proposal’s intention. However, a buyback at this stage is unnecessary. Additionally, the market-making agreement between Wintermute and the Foundation isn’t significant to the proposal’s objective.
I have voted “Against” on AIP 1.05. Reasoning below:
Return 700M ARB I see the merit to the idea, however it largely feels pointlessly symbolic to do it at this stage. I think there will be more harm then good to do something like this. While the events up to this point are unfortunate, it feels better to just acknowledge the mistake and move forward… versus trying to spin wheels over the span of a few months. I will add that I think if AIP 1.1 fails this is something worth looking into at that point, and would suggest Returning the 700M ARB to be AIP 1.3 in that scenario.
Buyback $ARB via Wintermute with whatever fiat is left from the $10M OTC sale I disagree with doing this. I’m not even sure if this is possible at this point, but even if it were… this type of transaction carries too much market risk and could sour the business relationship.
Disclose terms of the market making deal with Wintermute This is beyond the scope of the DAO as it currently stands in my opinion.
Pause AIP 1.1 and AIP 1.2 Answered somewhat in item 1 - I believe the best course of action is to see how AIP 1.1 and AIP 1.2 playout before addressing the 700M ARB situation.
We consider AIP-1.05 as a suggestion made in response to misunderstandings caused by communication issues in AIP-1.
We are aware that the Arbitrum Foundation is actively working on the development of Arbitrum. Naturally, we are aware that these operations will have a cost, which must be paid with ARB tokens.
We find it wrong to extract money from the Arbitrum DAO’s treasury before the AIP-1 voting ends. However, for this reason, we do not find it appropriate to prevent the transmission of the funds detailed in AIP-1.1 and AIP-1.2.
Although the mistakes made in AIP-1 are against decentralization, we believe that the process to be carried out from now on will be provided in a more decentralized and transparent manner with the transparency reports specified in AIP-1.1.
For all these reasons, we vote “Against” to AIP-1.05.
Of course the Foundation needs funding. However, it should happen in a systematic, transparent and sensible manner. Crypto projects have suffered enough because of the questionable actions of their founders.
This seems 100% unnecessary, and slightly entitled. They made a mistake, but let’s fix it and settle it all together with a real prop. We can get a real proposal out here to move forward.
L2BEAT votes AGAINST AIP-1.05 in the Snapshot temperature check.
We have carefully examined the implications of the proposal and engaged in discussions with the community during the Governance Community Call. Below are our remarks:
Pros:
The proposal represents a bold move to resolve existing issues, return funds to the Treasury, and proceed only from this point forward
Cons:
The proposal appears to be a symbolic gesture (as acknowledged by the proposer) that serves primarily as a power play
It does not outline subsequent steps, potentially jeopardizing the Foundation’s future if the DAO faces challenges in approving additional funding for any reason (such as lack of coordination or consensus)
The proposal’s conclusion includes a requirement to purchase ARB from the market using any remaining fiat from the 10M ARB OTC sale, without explanation or justification, which seems illogical
Additionally, there is a requirement to disclose the terms of the (already signed) market-making agreement with Wintermute, which lacks explanation or justification and appears risky and irrational. Nevertheless, proposing a requirement for full disclosure of market-making deals (potentially with a delay) could be considered for future agreements.
Given those arguments, we are voting against this proposal, as we believe it is not in the best interest of Arbitrum and ArbitrumDAO.
We appreciate the efforts put forth by @thiccythot in coming up with this proposal but after we carefully examined the implications of the proposal and considering some of the issues raised by other delegates, Curia remains dedicated to our primary goal for the Arbitrum DAO: fostering sustainable growth, decentralization, security, and transparency. With this commitment in mind, we will be voting against AIP-1.05 for the following reasons:
Avoiding unnecessary complexities: The proposal seeks to empower governance token holders but introduces extra steps and complications that could hinder progress. The return of 700M ARB tokens and subsequent buyback adds operational overheads and potential legal implications. Our focus should be on cultivating collaboration between the DAO, the Foundation, and other stakeholders for efficient resource allocation and growth of the Arbitrum ecosystem.
Preventing trust erosion: The proposal’s intention to reverse decisions made by the Foundation or service providers might lead to trust erosion in the governance process. A balance of power and cooperation between different parties is crucial for the long-term success of the ecosystem.
Learning from past mistakes: Recognizing past errors and working towards a better future is essential. The Foundation has demonstrated commitment to improving communication and decision-making processes, as evidenced by AIP-1.1 and AIP-1.2. Supporting these efforts and concentrating on future growth is more productive than dwelling on past mistakes.
Respecting private agreements: Revealing the terms of the market-making deal with Wintermute could establish a negative precedent for future business relationships. Respecting the confidentiality of existing agreements and ensuring that the DAO can effectively work with private entities is crucial.
In conclusion, we believe that voting against AIP-1.05 serves the best interests of the Arbitrum ecosystem. It is vital to prioritize growth, collaboration, and trust-building among all parties, consistent with our dedication to the Arbitrum DAO and its community, rather than participating in power plays that could ultimately hinder the ecosystem’s progress.
It’s amazing to see all those thoughtful arguments from the different communities. After making a punitive vote for the first mistake, they clearly bet on moving forward and doing their best for the community. This is a huge lesson, and after this past weeks, this DAO will emerge stronger.
To learn about the voting procedure of SEEDLatam and L2 en Español, you can read it here.
Rationale
We believe this proposal is unnecessary and seems more like a power play that could cause legal and reputational harm to the Arbitrum Foundation and, consequently, the DAO. It is worth clarifying that we voted against AIP-1 for the reasons we clarified in this forum. We consider it is time to move forward and not fall into situations that hinder growth since AI-1.1 and 1.2 address the main issues of AIP-1.
Details
Our main reasons to vote agains this proposal are the following:
The Foundation has unilaterally been allocated $750M tokens from the DAO that was not approved by the governance token holders.
Return 700M $ARB from the Foundation to the DAO as a symbolic gesture that the governance token holders hold ultimate power and authority over the resources that were granted to the DAO
As we mentioned earlier, this is an unnecessary step and delays the launch of the Arbitrum Foundation. We believe that funding the Foundation is necessary for the growth of the Arbitrum ecosystem.
Buyback $ARB via Wintermute with whatever fiat is left from the $10M OTC sale
This action entails unnecessary expenses, and we do not know the legal and regulatory scope of such actions. We must be cautious as the ecosystem is under the scrutiny of regulators.
Disclose terms of the market making deal with Wintermute
We understand that there is a signed legal agreement; this could create unnecessary conflict between the parties. In addition, it would undermine the seriousness and reputation of the Arbitrum Foundation, which could affect future agreements with other entities/institutions or individuals.
Conclusion
Our community previously expressed its anger by voting against AIP-1. Now they consider that the Foundation has set things right with AIP-1.1, AIP-1.2, and the Transparency report: Initial foundation setup. This proposal does not contribute to the growth of the Arbitrum ecosystem, which is one of our pillars expressed in the Delegate Statement, but rather delays it.
