Arbitrum’s recent withdrawal has sparked concerns about the effectiveness of DAO governance. As one of the leading Layer 2 scaling solutions for Ethereum, the platform’s sudden withdrawal has left many questioning the role of DAOs in managing decentralized networks. This article explores the reasons behind Arbitrum’s withdrawal and the implications for DAO governance in the future.
The Decentralized Autonomous Organizations (DAOs) have been in the spotlight recently, especially when it comes to making decisions related to significant amounts of money or high profits. Recently, the Ethereum Layer 2 scaling project, Arbitrum, had to withdraw its proposal of transferring $1 billion of ARB tokens for the capitalization of the Arbitrum Foundation as token holders found it objectionable and voted against it to express their outrage. This raised the question of altering decisions made by the lower ones in the hierarchy and still being immune to consequences.
Maple Finance’s Head of Marketing, Charlotte Dodds, believes centralized decision-making is crucial for speedy growth. Arbitrum wanted to make a ratification point, but the project erred in calling it that and not a mere consultation. Establishing a DAO requires resolving issues related to code transfers, creation of a security council, drafting a constitution, and seeking a general opinion.
The airdrop of Arbitrum governance tokens led to the creation of the Arbitrum DAO, but some token holders are only interested in earning profits and do not care about matters related to governance. According to Nick Cannon, the Vice President of Growth at Gauntlet Network, in some instances, it’s better to back down, but the inherent need is always to seek the general opinion.
Many people support the big tent method, but issues arise when fewer people take part in decentralized organizational frameworks. Thomas Klocanas, the general partner of BlockTower Capital, believes that in most scenarios, things don’t go as expected. Maple Dodds agrees, and she believes it’s essential to consider token holders who prioritize profits over long-term goals.
In conclusion, DAOs have to strike a balance between speedy growth, centralized decision-making, and fulfilling the interests of both token holders and the project. It’s crucial to work out issues before establishing a DAO and seek the general opinion before making significant decisions, especially when they’re related to high profits or significant amounts of money. By doing so, the DAO can remain decentralized while ensuring its success.
Title 1: Lessons Learned from Arbitrum’s Withdrawal of $1 Billion Transfer Proposal
Title 2: Establishing a DAO: Considerations for Code Transfers and Governance Tokens Airdrop