Wow wow wow - Arbitrum went from the darling of the Ethereum ecosystem for having bootstrapped one of the most active networks without a token to the Web3 villain overnight. Things were poorly handled, true, but hopefully, we don’t need to raise pitchforks.
Having personally bootstrapped networks and knowing the pain behind them, here are my two cents. It was a rookie mistake, not so much as builders (they are fantastic), but in how to properly coordinate a community token launch and the level of thoughtfulness needed in handling comms. You’d think doing it after OP would have given them more time to observe and understand the lay of the land (aka token holder mentality). Money worsens everything - the community, the team, the Foundation, etc. Everyone gets defensive and entitled. But it is a necessary evil and one has to learn how to live with it while growing the empire.
As the Foundation clarified in this post by @stonecoldpat, the overall allocation % was not that different from other ecosystems. The main mistakes they made were primarily:
- Not disclosing the allocation from day 1, when the airdrop was announced. No one would have batted an eye since the allocation was on par with other ecosystems.
- Not providing clarity on the unlock schedule for the Foundation and liquidity needed for a proper setup to ensure ecosystem success for the next 2-3 years ($500M+ right away? Probably not).
There is quite a bit to unpack on the second point. Regulatory limitations exist on what can be done after the split of entities, which means teams try to plan for the long run (5-10 years) - not legal or financial advice here. Many teams saw the struggle even the Ethereum Foundation faced with liquidity shortage over the years. There aren’t many Vitalik willing to fund via their personal holding. Now it is even harder to do so even if someone wanted to. If we want to give the team the benefit of the doubt, they were likely trying to ensure continuity for an extended period.
Now, I assume this is the Foundation wallet with initial 750M $ARB, it seems they transferred out 50M so far. Relying on personal experience, $50M-$60M in treasury is enough to ensure the Foundation is well capitalized for at least 2-3 years unless they want to go full bazooka like Solana did last few years (remember the $5M hackathon?).
I don’t think buyback or sending the token back to the DAO treasury for another vote is necessarily needed. To truly grow an ecosystem requires a tremendous amount of resources. If you start bickering for a $500k allocation here, a $1M partnership program there, it will go nowhere. But most of the community stress is driven by the uncertainty of the unlock from the 750M. Most people are looking out for their bags, but again necessary evil. So the next step could be a simple unlock schedule that gives the Foundation enough dry powder to maximize success, but that makes sense operationally for the community. No, you don’t have $500M in year 1, not even in year 3. Having managed a multi-billion dollar ecosystem, I can tell you I wouldn’t even know how to spend that much money in a short time - there are not enough devs/partners unless you are paying $10M for a partnership - something better avoided tbh (remember GameStop?).