• The price of ARB tokens surged to an all-time high of $11.80 before experiencing a sharp drop – currently trading at $1.21, reflecting a significant 90% decline from its peak.
• The Arbitrum Foundation races to save the first ARB proposal which aimed to allocate 750 million ARB tokens (valued at approximately $1 billion) towards a “special grants” program designed to boost growth on the layer 2 solutions protocol, Arbitrum.
• Controversy has arisen due to the proposal granting the Arbitrum Foundation full discretion in allocating the nearly $1 billion sum, excluding ARB token holders from decision-making process.
ARBITRUM PRICE DROPS
Following a much-hyped airdrop, ARB surged to an all-time high of $11.80, only to experience a sharp drop – currently trading at $1.21, reflecting a significant 90% decline from its peak. This massive pullback is mainly attributed to an overwhelming selling pressure caused by the ‘buy the rumors sell the news narrative.” Investors positioned themselves for the March 23 airdrop but started dumping ARB tokens immediately. In the last 24 hours, Arbitrum price lost another 5% although its trading volume is still above the 1 billion mark after increasing by 80%, in the same period.
FIRST AIP PROPOSAL
The ecosystem’s inaugural governance proposal aimed to allocate 750 million ARB tokens (valued at approximately $1 billion) towards a “special grants” program designed to boost growth on the layer 2 solutions protocol, Arbitrum. However, this proposal has been met with controversy as it grants full discretion in allocation of funds and excludes token holders from decision making process.
AIP-1 IS A RATIFICATION
Facing pressure from members of community ,the foundation assured that prior decisions and actions were essential for success and competitive standing among peers .They also explained their role in initiating and streamlining decision making process .It was acknowledged that lack of clear communication with community was present but all actions were executed in good faith .
ACTIONS FOR SUCCESS
The foundation emphasized that certain decisions and actions are essential for ecosystem’s success such as who hosts various governance forums and who kicks off governance .They have taken action earlier for ensuring success of protocol like initiating various partnerships ,developing tools for developers etc which will help them achieve their goal .These decisions have been made after consulting experts in respective fields or with other stakeholders who can add value into ecosystem development .
CONCLUSION
Arbitrum is faced with some tough times following this controversial proposal but they have set up measures like special grants program which could help them turn things around if it is executed properly .It remains to be seen how they tackle issues related to decentralization without comprising key principles while still achieving their goals efficiently .