Arbitrum: This is how the protocol should be democratized


After Arbitrum published its own token, which got off to a great start, the scaling solution received a lot of criticism. Now the developers want to fix everything and are releasing two new proposals that the user community can vote on. The votes are intended to democratize the protocol.

Arbitrum publishes AIP-1.1 and AIP-1.2

Arbitrum’s own token ARB launched in March. The supply of the ten billion tokens was determined in advance by developer Offchain Labs . Accordingly, 26.9 percent of the ARB go to the developers themselves.

The largest share, 42.8 percent, goes to the treasury of the DAO. Of those 4.28 billion ARB, however, the Arbitrum Foundation wanted to divert 750 million of the digital coins. This money should cover the running costs of the foundation and also serve as a budget for future cooperation.

This idea caused a lot of resentment among the holders of the token. The mood became even more negative after the developers declared that the idea was already final and that a decision had long been made – although the majority of users rejected the underlying AIP-1 proposal.

Now the developers are waiting with new proposals. They split the complex content of AIP-1 into the two new drafts AIP-1.1 and AIP-1.2.

Reading tip: Arbitrum is cheating? That’s why users are now sounding the alarm

Arbitrum Improvement Proposal 1.1: What is it?

The Arbitrum Improvement Proposal 1.1 deals with the distribution of the 7.5 percent of all ARB tokens that serve as a budget for the Arbitrum Foundation. 0.5 percent of this was used by the foundation before the rejection of AIP-1.

The remaining seven percent, according to this new proposal, should not be used until the DAO actively makes the decision to allocate the funds.

If AIP-1.1 gains the necessary approval among ARB holders, the remaining 700 million tokens will be locked in a smart contract that will gradually unlock the funds over a four-year period. This equates to 175 million ARBs per year.

In order to ensure that the assets are used appropriately, the Arbitrum Foundation intends to provide the Arbitrum DAO with regular transparency reports.

AIP-1.2 aims at democratization

AIP-1.2 addresses a less controversial topic. The draft deals with the management of the Arbitrum Protocol. Notably, it includes a paragraph that lowers the initial investment needed to start voting within the DAO.

While AIP-1 still planned a lower limit of five million ARB for this, AIP-1.2 only plans a fifth of this amount – one million ARB. The reduction is intended to ensure that ideas that have less initial support are also seen.

In addition, the proposal establishes processes leading to the determination of the Data Availability Committee . This committee is responsible for providing data that is presented to the DAO on specific occasions such as voting.

The Arbitrum DAO is therefore responsible for determining the members of the data committee. These can be selected and deselected from the DAO.

The remainder of the two proposals deal mainly with formalities. Formulations are adjusted and functions within the DAO are explained in more detail. For example, it should be made clear that the DAO appoints the chairmanship of the Arbitrum Foundation and can request measures from it.

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