Arbitrum’s new ARB crypto is not doing very well.
Leaving aside what happened on launch day, the initial price good enough to be taken as a reference would seem to be $1.4, which is the price it had stabilized on after the very strong initial rise and fall due to a lack of supply.
Until 1 April, the price of arbitrum crypto had remained around that threshold, but in recent days it has fallen all the way below $1.15, only to rise again to around $1.2.
These are still levels above the $1.13 of 28 March, though yesterday’s descent was due to technical problems.
Problems of crypto Arbitrum and the impact on the ARB crypto
There are even those who speak of a real scandal over what happened.
It all happened just in the last couple of days, when the Arbitrum Foundation, which launched the ARB governance token and is actually the undisputed leader of the Arbitrum DAO, launched a ratification vote on decisions it had already implemented. These included sending nearly $1 billion in tokens to itself.
The fact is that the decision to self-assign tokens worth $1 billion had sparked real anger in the community revolving around the DAO itself, not least because the Arbitrum Foundation is for all intents and purposes a centralized corporation, charged with promoting the self-described decentralized Arbitrum ecosystem.
Indeed, what has happened in recent days casts serious doubt on whether the Arbitrum ecosystem is truly decentralized, and the ratification vote only underscores how the governance of the DAO is far from clear.
Later the foundation itself also had to declare that it will break the controversial governance package it is trying to introduce into a series of separate votes.
It is important to keep in mind that within a crypto DAO, the votes do not represent the people who vote, but the amount of governance tokens that the voters own and use to vote.
Thus it is enough for a single individual to vote with a very large number of tokens to be able to control or influence the final outcome of the vote at will.
Despite this, the Arbitrum community seems to be able to fight back and impose corrective strategies on the foundation that might actually succeed in balancing its enormous power in the DAO.
The scandal ascribed to Arbitrum Foundation
The real scandal lies in the fact that the foundation apparently had already transferred some of the tokens even before the vote that was to approve their transfer was concluded.
In fact, the Arbitrum Foundation probably considered that vote a mere formality, yet instead the vote was negative.
So the foundation was not able to force or control the outcome of the vote, but would still have been able to move a significant amount of tokens without the approval of the DAO.
This affair has clearly highlighted that the Arbitrum crypto project calls itself decentralized, when in fact it is only partially so.
The DAO does indeed appear to operate in a decentralized manner, although within it the foundation probably has significant power.
At this point, one doubts that it is actually the DAO that has sole power over the evolution of the Arbitrum ecosystem. From this point of view, it would seem that the real power lies in the hands of the foundation.
As if that were not enough, TrustCheck reported that during the Arbitrum airdrop there were more than 400 sites in circulation trying to scam users interested in the airdrop.
Arbitrum had absolutely nothing to do with these scam attempts, but the high number shows that the current situation is far from straightforward.
TrustCheck is a Google extension that detects smart contract scams, and it found at least three scammy smart contracts that were trying to exploit the Arbitrum airdrop news. According to their analysts, more than $20,000 in ETH was stolen, as well as other unspecified amounts in MATIC, LINK, DAI, USDC and other tokens.
The price of the Arbitrum (ARB) crypto
However, it is worth mentioning that these dynamics are actually not at all anomalous within the vast world of DAOs. Scandals like this should not happen, but they do indeed occur, and not even that infrequently.
This is probably why the price of the ARB token has suffered very little from this scandal.
Taking as a reference the $1.4 of 24 March, on the following day the price of ARB touched its highest value for this period, excluding that of the initial day, at a high above $1.53.
In the following days, it fell first to $1.2, and then to $1.13, which constitutes the lowest peak for now if we exclude the $1.11 touched very briefly on the launch day.
So the 20% descent in the last two days that has brought the price back below $1.2 is not all that surprising, because it could also seem merely a trivial reverse rebound after returning above $1.4 in late March.
If a scandal such as the one just highlighted was not able to produce new lows, only four days after the previous lows, it means that the markets did not care that much about this inconvenience, perhaps because investors in ARB have already previously priced in similar risk.
However, it remains to be seen whether this problem was just a single event, or whether it is a symptom of some broader and deeper problem that could cause other similar mishaps in the future.
It is worth noting that Arbitrum is by far one of the most widely used layer 2s on Ethereum.