Over the weekend, a proposal to finance the Arbitrum Foundation with 750 million ARB tokens — over $1 billion — sparked debate in the ARB community, since the Foundation stated that it was merely ratifying an already-made choice.
According to an early Sunday blog post from one employee, the Arbitrum Foundation began selling ARB tokens for stablecoins before its governance council of token-holders had “ratified” the organization’s almost $1 billion budget. After CoinDesk’s coverage of the article, the price of ARB plummeted to $1.17, a 9% drop in the previous 24 hours.
Arbitrum Is Creating Controversy
According to Patrick McCorry, the ARB Foundation viewed the omnibus management package ARB Improvement Proposal (AIP-1) as a “unanimous consent” of decisions it had already taken, such as getting 7.5% of all ARB tokens.
To that aim, McCorry stated that the Foundation “has begun to utilize these tokens for the benefit of the DAO, including conversion of certain cash into stablecoins for operational purposes.”
The statement raises additional questions about Arbitrum’s initial foray into community government. Arbitrum airdropped ARB governance tokens to thousands of wallets just one week ago to empower owners in important choices. The first seemed to be AIP-1, an all-encompassing package that included everything from administration and emergency powers to finance and grants.
The Foundation later tweeted that it had loaned 40 million ARB tokens to “a smart participant in the financial markets,” alluding to market maker Wintermute. To cover operations, it sold an extra 10 million tokens for “fiat.” Arbitrum vowed to “provide further information regarding the issue as soon as possible.”
