• 13 July, 2024
News

Arbitrum Takes Bold Step to Ensure Liquidity: Provides $40M ARB Loan to Market Makers

Arbitrum, the Ethereum layer 2 solutions provider, has announced a $40 million ARB loan to market makers in a bold move aimed at ensuring liquidity amidst the ongoing market volatility. 

The remaining 10 million ARB has been converted to fiat and used for operational costs. This move follows a recent tweet from the Arbitrum Foundation, which acknowledged the backlash received from token holders over its first governance proposal, AIP-1.

The foundation had faced criticism over the proposal, which would have given it control over 750 million Arbitrum (ARB) tokens, worth around $1 billion. Critics, including decentralization advocates, argued that the proposal was nothing but “decentralization theatre.” 

The foundation has now backtracked on the proposal and announced plans to split the proposal into smaller segments, allowing the community to discuss and vote on the different subsections.

The foundation has also responded to community feedback, stating that they will work on adding more accountability, such as a vesting period of 4 years, and that tokens held by the foundation cannot be used to vote. In addition, the foundation will propose transparency reports to make the community aware of how the funds are spent over time.

Arbitrum emphasized that compared with other leading solutions providers, such as Polygon, Starknet, Solana, Optimism, Avalanche, etc., the proportion of tokens held by the foundation (7.5%) is smaller. This proportion was one of the reasons for the foundation’s decision to provide market makers with a $40 million ARB loan to ensure liquidity and stability.

The foundation’s move towards decentralization has been welcomed by the community, and the foundation’s response to community feedback has been described as a step in the right direction. 

The community is encouraged to continue the dialogue around these important issues, and the foundation has pledged to actively monitor community feedback and share more information soon.

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