On July 6, Arbitrum decentralized autonomous organization (DAO) locked up 700 million ARB tokens (≈ $770 million for today) in a vesting contract. This means that the funds will be gradually allocated to the Arbitrum Foundation over the next four years.
In case you are not familiar, Arbitrum is a Layer 2 solution for Ethereum scalability developed by Offchain Labs. They are focused on providing low-cost and scalable smart contract capabilities. The DAO members come up with different initiatives known as Arbitrum Improvement Proposals (AIP) and then vote on them.
The context
This development is a result of the approved AIP 1.1 proposal and comes in the wake of a contentious period within the Arbitrum ecosystem. Earlier this year, the project had experienced substantial backlash over a “special grants” program designed to allocate more than 700 million ARB tokens straight to the Arbitrum Foundation. While the Foundation expressed intentions to use the funds to foster Arbitrum-based initiatives, users were not too happy as they felt that it lacked transparency, considering the project's ethos of collective decision-making.
To address these concerns, the AIP-1.1 was put forward and got the green light. It introduces stricter controls on how DAO treasury's are allocated. Now, the DAO has the power to adjust the vesting period for the tokens, so they can extend it, reduce it, or even stop it altogether if they want to.
Also read: What is Arbitrum
