It has been a little over a month since the Arbitrum Foundation drama, where the foundation transferred money from Arbitrum DAO without the approval of the community, which caused an uproar. But if you ask Steven Goldfeder, CEO and co-founder of Offchain Labs, that blunder was just one of the first steps towards decentralization.
In late March, Arbitrum’s decentralization mission ran into a hurdle: The foundation had proposed transferring 750 million ARB tokens, worth about $1 billion at the time, to its own wallet, but before the DAO could vote on the proposal, the foundation, a centralized entity, sent the majority of tokens to itself. That failed when the community voted against the move.
Predictably, that did not go down well with the community. In response, the Arbitrum Foundation proposed expanding ARB token holders’ oversight of the budget and their voting rights. At the time, the foundation said it would not move the 700 million ARB tokens transferred to its administrative budget wallet until the community approved “an acceptable budget.” It also said it would propose new actions to make DAO governance “more accessible”.
This was followed by a few rounds of voting in which the community approved proposals on what would happen to the ARB tokens moved to the foundation’s wallet, and changes to the DAO’s governance, constitution, and bylaws.
The dust seems to have settled now, but these events indicate that the DAO’s governance voting model is working (for now) and could lead to greater transparency and community scrutiny.
For Goldfeder, the turn of events, while detrimental, eventually led to something good. “It was a shame it turned out that way,” Goldfeder said. “The right intentions were there and I was hopeful that the foundation and the DAO community would sort this out.”
Goldfeder’s company helped develop Arbitrum, a layer-2 scaling platform for Ethereum. He’s also a launch partner and community member, but he’s careful not to speak for the DAO or the foundation.
“If anyone had any doubts or questions about who is 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 get around it,” Goldfeder said.