It’s been a little over a month since the Arbitrum Foundation drama, where the foundation transferred funds from Arbitrum DAO without the community’s approval, sparking an uproar. But if you ask Steven Goldfeder, CEO and co-founder of Offchain Labs, that blunder was just one of the early steps on the journey to decentralization.
In late March, Arbitrum’s decentralization mission hit a hurdle: Its foundation had proposed to transfer 750 million ARB tokens, worth about $1 billion at the time, to its own wallets, but before the DAO could finish voting on the proposal, the foundation, a centralized entity, sent the majority of the tokens to itself. That backfired when the community voted against the move.
Predictably, that didn’t go down well with the community. In response, the Arbitrum Foundation proposed to expand ARB token holders’ oversight of the budget as well as their voting powers. At the time, the foundation said it would not move the 700 million ARB tokens that were transferred to its Administrative Budget Wallet until the community approved “an acceptable budget.” It also said it would propose new actions to make governance of the DAO “more accessible.”
This was followed by a couple rounds of votes in which the community approved proposals addressing what would happen to the ARB tokens moved to the foundation’s wallet, and amendments to the DAO’s governance, constitution and bylaws.
The dust seems to have settled now, but these events indicate the DAO’s governance voting model is working (for now) and may lead to greater transparency and community control.
For Goldfeder, the course of events, while damaging, eventually led to a good thing. “It was unfortunate that this was the way it happened,” Goldfeder said. “The right intentions were there and I was hopeful the foundation and DAO community would resolve this.”
Goldfeder’s company helped develop Arbitrum, a layer-2 scaling platform for Ethereum. He’s also a launch partner and community member, but he was careful to note that he doesn’t speak on behalf of the DAO or the foundation.
“If anyone had any qualms or questions about who’s in control there, this situation made it clear to the foundation and Offchain [Labs] that the DAO is in control because the very first governance proposal failed. It’s hard for anyone to bypass it,” Goldfeder said.