Arbitrum’s withdrawal raises concerns about DAO governance

Arbitrum, for its part, has been forced to withdraw its key proposal. This was the $1 billion transfer of ARB tokens for the capitalization of the Arbitrum Foundation. In this specific case, it so happened that the token holders in the Ethereum Layer 2 scaling project found this offensive and decided to vote against it to express their outrage. Ironically, the protocol’s decentralized autonomous organization is under the control of these very token holders.

Even though this seemed like a victory for DAOs, it brought up some uneasy but related matters. The point in question was whether it was possible to alter decisions made by the lower ones in the hierarchy and yet remain immune to consequences, especially when they happen to be related to significant amounts of money or, for that matter, high profits.

According to the Head of Marketing at Maple Finance, Charlotte Dodds, and as per her own professional exposure at TikTok, it makes sense for centralized decision-making when considering speedy growth. This is the point that Arbitrum wanted to make by giving it the tag of ratification. This is probably where they erred in calling it that and not a mere consultation.

In the case of establishing a DAO, it becomes essential to first work out issues related to code transfers, as well as the creation of a security council or, for that matter, drafting a constitution. In all of this, the case of the airdrop of Arbitrum governance tokens, which witnessed over 1 billion arbitrum tokens being distributed to almost 300,000 wallets, also happened to come up. The resultant factor was the building of the Arbitrum DAO. According to the Vice President of Growth at Gauntlet Network, Nick Cannon, in some instances, it seems more beneficial to back down, but the inherent need is always to first go for the general opinion.

The big tent method seems to go over well with many, but according to the general partner of BlockTower Capital, Thomas Klocanas, issues arise when there is a lesser number of people taking part with regard to decentralized organizational frameworks. In his opinion, in most scenarios, things do not go the way they are expected to. Some token holders are just not bothered about matters related to governance. Maple Dodds agreed to this point. She happened to have accepted the fact that there also happen to be those token holders who are only looking out for earning profits. For them, anything long-term does not make any sense. She believes these are the prime points one needs to consider closely.

Roxanne Williams

Roxanne Williams has recently joined as a market reporter for CryptoNewsZ - the 24/7 crypto news site, where she produces recent stories, technical analysis and price updates on world's leading cryptocurrencies.

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