ARB Token Holders Set to Expand Budget Supervision and Governance Powers

According to reports, the Arbitrum Foundation proposed on Wednesday to expand the budget supervision and governance powers of ARB token holders through two new proposals to address the collapse of cryptocurrency governance over the weekend. The first proposal, AIP-1.1, proposes to place the remaining 700 million ARBs of the foundation in a “smart contract controlled lock” that will be unlocked within four years. According to the proposal, the foundation will not be able to use tokens until community members approve the token allocation budget.

The Arbitrum Foundation Releases Two New Proposals to Expand Budget Supervision and Governance Rights for ARB Token Holders

The Arbitrum Foundation recently unveiled two new proposals that aim to address the cryptocurrency governance crisis that occurred over the weekend. The proposals, which were announced on Wednesday, aim to grant ARB token holders greater powers when it comes to budget supervision and governance.

AIP-1.1 Proposal: Locking Up the Foundation’s ARBs

The first proposal, AIP-1.1, plans to put the remaining 700 million ARBs, owned by the foundation, in a “smart contract controlled lock” which will automatically unlock within four years. According to the proposal, the foundation will not be able to use any of the tokens until community members approve the token allocation budget.
The foundation plans to transfer the ARBs into the smart contract in several tranches. The community will then have the responsibility of deciding how these tokens will be distributed over the next four years. This proposal aims to offer more financial responsibility to the community members, giving them the power to decide how the remaining tokens will be used.

AIP-1.2 Proposal: Adding TCR to the Governance System

The second proposal, AIP-1.2, proposes the addition of a Token Curated Registry (TCR) system within the governance of the Arbitrum protocol. A TCR is a decentralized system that allows users to create and manage a list of valid entries.
In this scenario, the TCR would allow the community to propose and vote on the addition or removal of validators who are responsible for securing the security and operation of the Arbitrum network. Validators who fail to maintain the necessary security requirements could be removed from the system.

The Need for the Proposals

The need for the proposals was brought about by the recent cryptocurrency governance crisis. Many projects and protocols in the cryptocurrency space hold a significant proportion of their tokens in reserve, but these reserves can be misused if not properly managed. The community’s lack of control over how these tokens are allocated can lead to vulnerability in governance and financial stability.
The proposed solution by the Arbitrum Foundation aims to empower the community by giving them the tools to prevent any misallocation of tokens. They will also have more control over the protocol governance, ensuring that the network remains stable and secure.

Possible Outcomes of the Proposal

If these proposals are implemented, the community will be in a stronger position to supervise the budget and governance of the Arbitrum Foundation. The proposals suggest that the foundation will not be able to use any of the tokens until community members approve the token allocation budget.
However, community members are sometimes divided over how to allocate funds, with competing interests potentially causing disagreements. In such cases, it is unclear how such a stalemate would be resolved.

Conclusion

The proposals by the Arbitrum Foundation are a significant milestone in cryptocurrency governance. The financial management of cryptocurrency projects is a concern for many investors and participants, and this move by the foundation could serve as a template for other projects in the space.
The community’s involvement in the governance and financial management of a cryptocurrency project is essential to its success. Still, it requires the creation of a structure that enables unbiased decision-making and voting. The Arbitrum Foundation’s proposals could be a step towards achieving this goal.

FAQs

**Q1:** What is the impact of the proposals on the control of the Arbitrum Foundation?
A1: The proposals aim to grant ARB token holders greater powers when it comes to budget supervision and governance. The foundation will not be able to use any of the tokens until community members approve the token allocation budget.
**Q2:** How does the TCR system work in the governance of the Arbitrum protocol?
A2: The TCR system would allow the community to propose and vote on the addition or removal of validators who are responsible for securing the security and operation of the Arbitrum network. Validators who fail to maintain the necessary security requirements could be removed from the system.
**Q3:** Could the community’s inability to reach a consensus over how to allocate funds affect the proposals’ success?
A3: It is unclear how a stalemate over fund allocation would be resolved, and the community’s divided interests could cause disagreements, affecting the success of the proposals.