A proposal seeking the return of 700 million ARB governance tokens to Arbitrum’s DAO treasury has been rejected by the community after receiving only 14.5% of the total votes. The proposal, called AIP-1.05, was introduced after the Arbitrum Foundation transferred funds without community approval in March. The proposal asked the foundation to return the tokens as a symbolic gesture to demonstrate that the governance holders ultimately control the DAO, not the Arbitrum service provider nor the Foundation.

The proposal was defeated by 118 million votes, representing 84% of the total votes received. Approximately 21 million ARB tokens voted for the proposal, while 2 million tokens abstained. Some community members with large token holdings voted against the proposal, stating that it was a power play that would add an unnecessary step and delay the foundation’s ability to support the growth of the Arbitrum ecosystem.

Arbitrum’s community and its foundation are engaged in a dispute over the foundation’s governance proposal AIP-1, which called for an investment of nearly $1 billion worth of ARB tokens to fund its operations. The foundation later clarified that AIP-1 was a ratification, not a proposal, and that some of the tokens were already sold for stablecoins. The AIP-1 proposal was Arbitrum’s first attempt at governance after its tokens airdrop in early March.

The rejection of AIP-1.05 highlights the challenges faced by decentralized autonomous organizations in achieving consensus among their members. It also highlights the importance of community engagement in the decision-making process and the need for transparency and accountability in the management of decentralized platforms.

Arbitrum’s foundation has released a new set of improvement proposals to reestablish dialogue with the community. The proposals aim to address concerns raised by the community and provide a framework for the platform’s governance going forward. The rejection of AIP-1.05 and the ongoing dispute over AIP-1 demonstrate the need for continued dialogue and collaboration between the community and the foundation to ensure the success and growth of the Arbitrum ecosystem.

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