Key Takeaways:
- The Arbitrum team transferred nearly 2.7 billion ARB tokens despite the 4-year vesting period.
- Decentralization claims did not live up to expectations.
- ARB token dropped 10% but partially pared its gains on Apr 3.
YEREVAN (CoinChapter.com) – Arbitrum Foundation distributed its ARB token through airdrop on March 23, and according to the contract, tokens allocated to investor and team wallets are subject to a 4-year vesting or locking period.
However, the transaction log showed Arbitrum builder Offchain Labs, “Future Team, and Advisors,” allocated roughly 2.7 billion ARB tokens to 140 Externally Owned Accounts (EOA) on April 2 via address “0x1e70”. LookonChain, a web3 data analysis tool, provided the snapshots of the said transactions.
Arbitrum’s governance documents confirm the 4-year vesting period applicable to “all investor and team tokens.”
Blockchain data tracker Nansen claimed 40 million ARB tokens went to 0xcce adress and subsequently multiple CEXs.” 10 million ARB went to crypto market maker Wintermute after being sent to 0xba01. Another 10 million tokens were sold.
Arbitrum’s decentralization claims bogus?
Arbitrum protocol claims to stand for “decentralized governance.” On March 16, when Arbitrum launched its decentralized autonomous organization called ArbitrumDAO, the protocol claimed the latter is self-governed.
Arbitrum’s DAO governance is self-executing, meaning that the DAO’s votes about on-chain actions will directly have the power to effect and execute its on-chain decisions, without relying on an intermediary to carry out those decisions.
says the blog post.
In the same breath, Arbitrum combined its decentralization with the concept of a “chain owner.”
A chain owner […] is an administrator of the chain, responsible for managing how changes are made to the system. More specifically, a chain’s owner can modify core system parameters, pause incoming transactions, and update any of the contracts that define and enforce the core protocol.
reads the document.
Also read: Arbitrum Token ARB Could Rise 30% by April as Locked Capital Nears Record High.
AIP-1 apparently stated the transactions were lawful
Meanwhile, the community has yet to “ratify” the organization’s nearly $1 billion budget. However, according to the blog post from an Arbitrum Foundation employee Patrick McCorry, the Arbitrum Improvement Proposal (AIP-1), which dictated the structure of the ArbitrumDAO, failed to clearly outline the said ratification parameters.
In other words, Arbitrum Foundation thought of the AIP-1 as a “ratification” of decisions it had already made, such as receiving 7.5% of all ARB tokens and swapping them for stablecoins before the community vote.
One of the mistakes in the drafting of AIP-1 was a failure to note at the outset that this proposal was intended to act as a ratification of the initial setup of both the Arbitrum DAO and the Foundation that has been created to serve the DAO;
he said in a blog post.
McCorry added that the AIP-1 closing section entitled “Steps to Implement” spelled out the process, “but it should have been made clear earlier on.”
Arbitrum’s online following split into two camps after the transactions were brought to public attention. One side claimed that the violation of the vesting period equaled a violation of retail investor trust. The other side claimed that it was “not a big deal” as long as the chain functioned properly.
Shattered trust tanked ARB price by 10% in a day.
After the transactions surfaced, the ARB token lost 10% of its valuation on April 2, dropping to $1.1, but partially recovered to $1.2 ahead of the European session on April 3.
Notably, the ARB token price charted in unison with OP, the token of a fellow Ethereum Layer-2, Optimism. The OP token tanked alongside Arbitrum on Apr 2, but partially pared its losses on Apr 3, reaching $2.1 ahead of the European session.
Notably, right after its own airdrop in late May 2022, the Optimism token lost 75% of its valuation within the first three weeks, bottoming out at $0.4 on June 18. As of April 3, the token reached $2.2 after a 5% intraday gain.
An initial downturn after an Airdrop is common as many retail investors opt to sell their tokens for profit. On the March 23 airdrop, ARB reached its peak of $1.5, trading at a 25% loss 11 days later. The upcoming sessions will show if the token faces more backlash from the governance fiasco and drop further.
Also read: Binance Lists Ethereum L2 Arbitrum Token Ahead of Airdrop — But ARB Crash Fears Persist.
