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Arbitrum Straightens Token Allocation Records as AIP 1.1 & 1.2 Head to an On-Chain Vote

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The Arbitrum blockchain last month morphed to integrate DAO governance following a successful, albeit controversial, airdrop. The layer two ecosystem drew even more attention in the first half of April after a tendentious governance proposal (AIP 1) floated by the Arbitrum Foundation resulted in a dispute within the community.

Setting the records right

To resolve the arising issues, the community agreed to separate the first proposal into two, i.e., AIP 1.1 and AIP 1.2, in order to accommodate changes and other previously unaccounted-for provisions. In a tweet on Tuesday, Arbitrum said the pair will now advance to an on-chain vote.

“With the snapshot temperature check reaching consensus in favor of AIP 1.1 & 1.2, the proposals will go live on Tally for an on-chain vote, pending a routine audit of the codebase and changes that is currently in progress.”

Beyond the governance milestone, Arbitrum has continued making strides to become wholly community-governed.

Arbitrum Foundation conducts seamless DAO airdrop

Arbitrum's transition to decentralized governance in mid-March birthed the Arbitrum DAO as the “ultimate governing body” tasked with overseeing and protecting the ecosystem by acting in its best interest. The hatched entity will leverage a self-executing governance model to implement its decisions.

“The Arbitrum DAO will have the ability to authorize additional Layer 2 chains on Ethereum, irrespective of whether the chain is governed by $ARB, ensuring that the community is in full control over the future of Arbitrum and its technology,” the primer blog read.

To spur growth on Arbitrum, the Foundation also set aside a 1.13% token allocation of the entire ARB airdrop supply for an airdrop to building teams and companies that have contributed to its growth. This allotment would be separate from the supply of tokens distributed to the early adopters of the layer two scaling system and participants at the testnet phase. On Tuesday, the Arbitrum Foundation embarked on the agreed-upon distribution of 113 million ARB tokens to eligible decentralized autonomous organization (DAO) wallets.

The bigger picture: Ecosystem growth

In the last 48 hours, several analytic teams, including Nansen, Arkham, and LookOnChain, have shared updates on the allocation. Treasure, GMX, Uniswap, SushiSwap, and Dopex DAOs are the top five largest recipients, cumulatively set to receive as much as 28.5 million tokens. The list of qualifying teams also featured Curve, Balancer, and Protocol Guild, which have received significant allocations of between 3 and 4 million ARB each. More than 120 other projects, including MakerDAO, Uniswap, and 1inch Network met the criteria and are part of the ARB airdrop, receiving at least 75,000 ARB tokens.

The eligible DAO teams will have independence on how to use the share of tokens in their treasuries as spelt out in documents on token distribution. Lido proposed a fortnight ago to use its claimed ARB airdrop of 772,621 tokens (roughly $1.2 million) as emission rewards to incentivize liquidity providers in wrapped staked ether pools on Arbitrum. In a tweet acknowledging the airdrop on Monday, Arbitrum-native governance aggregator PlutusDAO said it will use the funds to foster development on Plutus.

Market action

Notably, some of the receiving addresses sold their claims. One entity ‘TRIDENT' disposed of 131,345 ARB held across three addresses, trading them for $172,000. Notwithstanding, the latest developments pertaining to token allocation don't necessarily call for caution among holders.

ARB/USD price course thus far in April. Source: TradingView

Besides, the volume of dumped tokens is meager compared to an incident earlier this month when two whales separately sold off 2.03 million ARB and 1.7 million ARB tokens. ARB token was, at writing, trading up 8.15% on the day and closing in on $1.45.

Network activity

Arbitrum's networks have fared decently, for the most part, this month, with daily transactions exceeding Ethereum's on a couple of occasions. Data from DeFi analytics platform Artemis shows Arbitrum's daily activity surpassed that of Ethereum thrice between April 17 and April 23.

Arbitrum network activity. Source: Artemis

Last week, Arbitrum revealed in an update that Arbitrum One's network had processed more than 200 million transactions. Nonetheless, the ecosystem's bid to attract more builders and expand its community has yet to deliver success.

Total value locked in Arbitrum. Source: DeFiLlama

On one hand, Arbitrum ranks behind Ethereum, Tron, and BNB Chain in terms of total value locked (TVL), with its protocol cumulatively contributing to a TVL figure of almost $2.2 billion per DeFiLlama data. However, developer activity on the network is wanting. Token Terminal data shows that the number of core developers has been decreasing in April after topping 32 at the end of March.

To learn more about Arbitrum, check out our Investing in Arbitrum guide.

Sam is a financial content specialist with a keen interest in the blockchain space. He has worked with several firms and media outlets in the Finance and Cybersecurity fields.