Ethereum Scaling Network Arbitrum Transitions To DAO Governance, Launches New Token
On Thursday, March 16, Arbitrum Foundation – the group leading the development of the Ethereum-based Layer-2 scaling solution Arbitrum – announced it will be launching a decentralized autonomous organization (DAO) for the governance of the Arbitrum One and Arbitrum Nova networks. To mark the occasion, the Foundation will airdrop $ARB tokens to the ecosystem’s users on March 23.
Arbitrum Launches $ARB Token As Part Of Transition To DAO Governance
According to the Foundation, the decentralization of the Arbitrum network will be facilitated by the $ARB token, which will also act as the Arbitrum DAO’s governance token. $ARB holders will have the power to vote on key governance decisions surrounding the Arbitrum ecosystem.
The protocol’s two networks – Arbitrum One and Arbitrum Nova – allow users to conduct faster and cheaper transactions on the Ethereum blockchain.
Users have been asked to visit the gov.arbitrum.foundation website to verify their eligibility to receive tokens via the airdrop and claim a share in the network’s governance. The press release also noted that a majority of the token’s supply will be controlled by the community through the Arbitrum Foundation.
Arbitrum creators Offchain Labs is working with blockchain analytics firm Nansen to create snapshots of user activity. This will help the network determine which users are eligible for the $ARB airdrop. The qualifying criteria will be based on how long the user has been on Arbitrum One and Arbitrum Nova, the number of transactions they conducted, and the number of applications they used on the ecosystem.
$ARB will have a total supply of 10 billion tokens. According to data provided by the Arbitrum Foundation, 11.5% of the total supply will go to the network’s users, 1.1% will go to DAOs operating on Arbitrum, 43.4% will be transferred to the network’s treasury that will be controlled by the Arbitrum DAO, and the remaining 44% will go to investors and employees of Offchain Labs.
Arbitrum will also become the first Layer-2 network on Ethereum to launch self-executing governance. This means, DAO votes will have the power to directly influence on-chain decisions and will be carried out without relying on any intermediary. Thus ensuring the Arbitrum ecosystem is decentralized and the community has the power to govern the blockchain.
Arbitrum Security Council
The Foundation will also form a 12-member multi-sig Arbitrum Security Council. The group comprising 12 highly regarded community members will be responsible for ensuring the network’s security and acting quickly in the event of a security vulnerability. Any changes to Arbitrum will require approval by multiple members on a smart contract. The council can act quickly in the event of an emergency with participation required from 9 out of the 12 members. The Arbitrum Security Council will be governed by the Arbitrum DAO. Members will be elected to the council via an election conducted twice a year.
Steven Goldfeder, CEO of Offchain Labs, said his team is excited to become the first Ethereum Virtual Machine (EVM) rollup to achieve Stage 1 decentralization. The co-founder also noted that Offchain Labs will no longer have any control over Arbitrum and will rather be a service provider for the network that will answer the DAO’s calls.
The Foundation also explained how the governance process will function. Users can delegate their voting power to individuals they view as “effective stewards of their values”. These delegates, who represent the $ARB holders that assigned the voting power to them, will be expected to vote on governance proposals that pass through the Arbitrum DAO. Users can visit the Arbitrum governance forum and apply to become a delegate.
With $3.61 billion in total value locked (TVL), Arbitrum is the leading Layer-2 scaling solution on the Ethereum network. The protocol is responsible for 55% of the L2 market share. Arbitrum is so popular that it surpassed Ethereum in daily transactions on two occasions.
Arbitrum’s biggest rival, Optimism, launched a DAO and airdropped its OP tokens last year. Both networks are called “Optimistic” rollups, which combine multiple groups of transactions and process them as a single transaction, helping reduce transaction costs on Ethereum. Optimistic rollups have gained massive popularity in the industry largely due to their efficiency.
At the time of writing, Ethereum (ETH) is trading at $1,768 – up over 6% in the last 24 hours. OP is trading at $2.73 – up 10.4% since yesterday.