Arbitrum Provides 40 Million ARB Tokens as Loan to Market Makers
Arbitrum, one of the leading Layer 2 scaling solutions for Ethereum, has responded to recent discussions regarding their governance process and token distribution.
In a tweet, the team at Arbitrum confirmed that they provided 40 million ARB tokens as a loan to market makers, while the remaining 10 million ARB was converted to fiat and used for operating costs.
1/ There’s a very lively discussion on the Arbitrum governance forums regarding AIP-1. Decentralized governance is working as intended. We are all one community and fierce public discourse will yield the best outcomes.
— Arbitrum (💙,🧡) (@arbitrum) April 2, 2023
The team also highlighted that compared to other similar projects like Polygon, Starknet, Solana, Optimism, and Avalanche, the proportion of tokens held by the foundation is relatively small, at just 7.5%.
In response to community feedback, the team at Arbitrum also provided a long-form response to address questions about the ratification process for AIP-1. They explained that with DAO launches, there is often a chicken-egg problem where certain decisions must be made before a broader launch can take place. The goal of AIP-1 was to engage the community in initial decisions and ultimately have token holders signal their support by ratifying the decisions and framework via DAO voting.
To clarify two key questions, the team emphasized that they did not sell 50 million ARB tokens, and the rationale behind an initial allocation of 750 million ARB was covered in significant detail in their forum post.
With the loan of 40 million ARB tokens to market makers, Arbitrum aims to ensure that there is enough liquidity on their platform to support trading activity. This move is not uncommon in the crypto industry, where market makers often borrow large amounts of tokens to provide liquidity for traders.
Overall, the response from Arbitrum highlights their commitment to transparency and community engagement. The team’s willingness to engage in open discussion and provide detailed explanations of their decisions bodes well for the future of their platform and the wider crypto industry.
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