Starknet

In 2023, ArbitrumDAO was launched by airdropping $ARB, the ERC-20 governance token for Arbitrum Nova and Arbitrum One. The $ARB token allows holders to participate in the Arbitrum DAO's on-chain governance protocol by controlling protocol updates, funds and electing ArbitrumDAO’s Security Council.

This transfer of power included:

• Control of the upgradeability and technical future of the chains
• Control over the DAO treasury and net fee revenue - i.e., the net difference between fees collected by on-chain operations and L1 fees paid by the Sequencer
• All Arbitrum social media platforms and accounts
• Ability to elect and, if deemed appropriate, remove the Security Council and Directors

AIP-1

The Arbitrum Foundation submitted the AIP-1 proposal to delineate ArbitrumDAO's structure and governance rules. The community raised several transparency, accountability, and decentralization concerns.

Most importantly:

• The allocation of 1B dollars worth of tokens (7.5% of the total supply) to the Foundation's Administrative Budget Wallet. The Foundation needed to clarify who would sign for that wallet and how its money would be spent.
• The Security Council establishment did not clarify any election process.

The Foundation had begun selling $ARB tokens for stablecoins before its governance community of token holders had "ratified" the organization's nearly $1 billion budget.

AIP-1 did not pass. After AIP-1’s communication received negative feedback, the Foundation rectified decisions through AIP-1.1 Lockup, Budget, Transparency, where they clarified their processes and the next steps in the governance journey to the community.

ArbitrumDAO has quickly become one of the most engaged communities, with more than 633.43k token holders and 137.02k voters.

Arbitrum DAO Governance

Governance Framework

ArbitrumDAO's governance has three main bodies:

• The DAOis comprised of $ARB holders who vote to pass proposals.
• The Security Council can take action in two ways:
  • Emergency actions: 9 of 12 multisig enables fast action in an emergency.
  • Non-emergency actions: 7 of 12 multisig enables action for routine upgrades that bypass the need for DAO member voting
  • The Security Council has the power to cancel or block proposals.
• Data Availability Committee: This committee stores data batches for transactions on the Arbitrum Nova chain on a specific server

  (Data Availability Server)

Establishing the Arbitrum Foundation marked the initial phase of launching the DAO. Its primary objective is to serve the ArbitrumDAO community by guiding and facilitating the DAO’s decision-making. It also fosters the ecosystem development.

Governance is responsible for the following assets:

• Treasury - DAO holds and is responsible for a portion of $ARB tokens.
• Arb One Contracts and Arb Nova Contracts - Governance holds upgradability rights over these contracts on these contracts deployed on Ethereum Mainnet.
• Arb One and Arb Nova L2 parameters - All Arbitrum chains have a chain "owner" that can set specific parameters. Read more here. Governance has control over the chain owner.
• Governance contracts - Governance can upgrade and modify itself.
• Arbitrum Foundation Administrative Budget Wallet — See here for more info.

Governance specifications and details can be found in the Constitution.

Governance Proposals

Arbitrum Improvement Proposals

An Arbitrum Improvement Proposal (AIP)is submitted by a member of the Arbitrum DAO to modify to the Arbitrum ecosystem

There are two types of AIPs:

• Constitutional AIPs change the text or procedures of the Constitution or AIP-1, install or modify the software on any chain, or take any action that requires "chain owner" permission.
• Non-constitutional AIPs are all other AIPs, such as those that request funds/grants or provide general guidelines or information to the community.

Security Council Actions

The Security Council has the power to execute emergency actions and non-emergency actions. These differ from traditional AIPs because the Security Council can approve them without going through the above process

Governance Process and Mechanisms

Voting Power

The Arbitrum DAO may be new, but it has already gained a large and active community. With over 633.43k token holders and 137.02k voters, members are dedicated to advancing the goals of the Arbitrum Mission and the Ethereum ecosystem.

Voting Process

For proposals not enacted by The Security Council:

Step 1: Temperature check using Snapshot Poll

This preliminary vote gauges the community's interest in a proposal before it moves on to the next stage.

Step 2: Submit your on-chain proposal using Tally

To submit a proposal you need to have an Ethereum Wallet Address representing at least 1,000,000 tokens.

Today, 19 delegates can submit on-chain proposals to the Arbitrum DAO ecosystem.

To be approved, more than 50% of tokens must have voted in favor of the proposal:

• Constitutional AIPs must receive votes from at least 5% of all votable tokens;
• Non-constitutional AIPs must receive votes from at least 3% of all votable tokens.

The entire AIP voting process typically takes 34 days for Constitutional or 21 days for Non-Constitutional AIPs.