Over the weekend, Arbitrum governance took center stage as the self-titled foundation reconsidered the controversial proposal AIP-1 and its “ratification” vote for financial actions it had already implemented. As votes against the proposal poured in, the Arbitrum Foundation admitted that AIP-1 was unlikely to pass and announced plans to split the dense AIP into smaller segments. The foundation stated, “AIP-1 is too large and covers too many topics,” and added that it would “follow the DAO’s advice and split the AIP into parts. This will allow the community to discuss and vote on the different subsections.”
The governance drama led to a significant drop in the price of Arbitrum’s governance token, which has fallen by about 5% in the last 24 hours. However, despite the weekend’s price declines, on-chain analysis indicates that many proverbial whales, or large holders with market-swaying influence, are unwilling to sell.
Arbitrum whale 0xe04d bought ARB governance tokens on Binance three days ago and has yet to sell any. This whale currently holds 4,048,948 tokens. Another whale, 0xadf5, has also not sold any ARB governance tokens since purchasing them on OKX three days ago. This whale holds 4,099,518 tokens worth $4,837,431.
Arbitrum whale 0xa252 received around 676,000 tokens from Binance at approximately noon EDT. It now has a total of 1,679,798 tokens, which on-chain analysis account Lookonchain notes were purchased at an average cost of $1.24 per token. The largest buyer of Arbitrum, 0xb154, still holds 9.94 million tokens at an average buying cost of $1.26 after acquiring an additional 111 tokens late last night, according to Lookonchain.
Some whales are not as committed to holding their ARB tokens, however. Whale 0x1dd9 sold 2.03 million tokens for ether at an average price of $1.15, realizing a loss of about $141,000. This whale still holds 500,102 ARB tokens. More recently, just a few hours ago, whale 0x09d4 sent 700,000 Arbitrum governance tokens to Binance. According to Lookonchain, their average buying cost was $1.41, and they still hold 1,215,453 tokens.
Although whales seem to be holding onto their governance tokens for the most part, The Arbitrum Foundation has received its fair share of criticism. In response to what some perceive as “decentralization theater,” the foundation announced plans to propose transparency reports to better illustrate how funds will be used. It also intends to rename its special grants program to “Ecosystem Development Fund.”
The Arbitrum Foundation tweeted, “We believe that having a Foundation that is empowered to act in the service of the DAO is important for Arbitrum’s success,” adding, “We clearly could have communicated that better, and will take this opportunity to improve and continue to build Arbitrum as the most community-centric L2.”
In conclusion, while recent on-chain analysis shows that most Arbitrum whales are not selling their governance tokens amid the ongoing governance drama, the foundation nonetheless faces criticism for its proposal process and communication. By splitting AIP-1 into smaller subsections and pledging to improve transparency, The Arbitrum Foundation aims to foster a more community-centric ecosystem and pave the way for the platform’s future success. It remains to be seen how these new steps will impact the price of Arbitrum’s governance token and the platform’s overall development in the coming days and weeks.
