Ethereum Layer-2 scaling solution Arbitrum has confirmed a token airdrop next week and a transition to self-executing DAO governance.
In an announcement on Thursday, Arbitrum revealed that its new token ARB would be airdropped to eligible users on March 23. With the airdrop comes decentralized governance, giving ARB tokens holders the ability to vote on proposals on the Arbitrum One and Arbitrum Nova chains.
ARB will have an initial supply cap of 10 billion tokens, of which 11.62% will be airdropped to users and 1.13% to DAOs building apps on Arbitrum. The remaining tokens will be split between the Arbitrum DAO Treasury and the protocol’s creators Offchain Labs and its investors.
The amount of tokens users are qualified to receive was determined by a snapshot taken on Feb. 6.
We couldn’t have done this without your help! 💙🧡
— Arbitrum (💙,🧡) (@arbitrum) March 16, 2023
Users were assessed on the number, frequency and value of transactions they executed and whether they provided liquidity on the platform after they bridged to Arbitrum.
Unlike many other native tokens, ARB will not be used to pay fees, and instead be used exclusively to facilitate decentralized governance. Perhaps, the most interesting part about the way Arbitrum is incorporating this is that governance will be “self-executing.” This means that proposals will be enacted on-chain automatically after a successful vote, without the need for a core team member to manually implement it.
While Arbitrum is the first Layer 2 network to give its community this level of control, it does not come without its own set of risks. Self-executing DAOs could insert malicious code into the platform if it gets past the governance stage.
However, something that could mitigate the chances of this happening is Arbitrum’s slow voting process, which takes around 21-37 days to ensure proposals are carefully deliberated before they are passed. On the other hand, if a quick fix is required (like patching a security vulnerability), an Arbitrum Security Council will have the power to swiftly deploy changes.
The Arbitrum Security Council consists of 12 members controlling a multi-sig wallet. To approve emergency changes, at least nine members need to participate.
Arbitrum is the largest Layer 2 solution with 56% market share and $1.69 billion in Total Value Locked. Last month, Arbitrum became the first rollup solution to surpass the Ethereum mainnet in daily transactions. At the time, many attributed the massive surge in network growth to the anticipation of an upcoming airdrop. It looks like they were right.