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HomeCryptoArbitrum's $237 million game industry catalyst proposal passes despite significant opposition

Arbitrum’s $237 million game industry catalyst proposal passes despite significant opposition

23.7% of the total number of votes participating in on-chain voting opposed the proposal to use 225 million ARB tokens from Arbitrum DAO’s treasury, including famous individuals such as Bitcoin OG Eric Wall, GFX Labs, Michigan Blockchain and Camelot.

A $237 million program to boost the gaming sector is coming to the Arbitrum ecosystem – or maybe not?

Community members of the layer 2 blockchain network have adopted one on-chain proposal on Friday, enabling the allocation of 225 million ARB tokens aimed at expanding Arbitrum adoption by developers and players in the gaming industry. However, some people want a repeal or a re-vote.

Although the gaming proposal received majority support in both the heat test in March and the on-chain vote on Friday, the proposal still faces significant opposition. Finally, 23.7% opposed the allocation to the gaming industry.

The voting period begins on May 24 and ends on Friday, June 7. (Tally)

Opposition from major investors

Bitcoin OG and NFT project Taproot Wizards co-founder Eric Wall voted against the on-chain proposal, saying the 225 million ARB allocation was “too much of a budget.” Similar gaming ecosystem pools of competing chains are just much smaller in size.

GFX Labs, the team behind Uniswap’s Oku interface, voted against the game proposal on Arbitrum. In the forum discussion, GFX Labs shared many concerns about this proposal such as how the 225 million token inflow could affect the market.

Over the past year, Arbitrum’s native token ARB has underperformed, falling 4.3%. Meanwhile, Ethereum (ETH) has increased 105% to $3,780 and Optimism (OP) has increased 83% to $2.51, according to CoinGecko.

Despite its strong fundamentals, Arbitrum’s price decline “reflects the continued dilution that Arbitrum’s spending programs have caused to the token,” GFX Labs said in comments opposing the proposal. “Arbitrum has a spending problem, and putting 8% of the chain’s total TVL into a very speculative venture is poor financial management.”

Lack of clarity

Risk management company Karpatkey, despite its interest in growing Arbitrum’s gaming ecosystem, also voted against the proposal, citing a number of reasons such as lack of “clarity on the legal structure that will used for these investments,” significant operating costs, and “management of the fund appears to have been entrusted to the Arbitrum Fund without any protection or assets.”

Karpetkey also said, “This proposal represents a major expenditure by the Arbitrum DAO added to the already high annual spending impact on the Treasury.”

People change votes

Some voters initially supported a seven-digit allocation to the gaming industry during the previous administration, but then changed their votes at the end. Some people changed their minds because the original proposal asked for 200 million ARB from the DAO treasury, but after editing, the total number of tokens increased to 225 million.

Faced with increased operating costs, Michigan Blockchain, a student organization at the University of Michigan, changed its vote, citing GFX Labs as the reason.

Camelot, a decentralized exchange with a total locked value of over $112 million, supported the proposal in the Snapshot vote but then opposed it in the on-chain vote. Camelot highlighted the increase in the 25 million ARB compensation package, pointing out a lack of clarity on legal structures and “how the DAO will effectively manage assets from the companies in which it invests.”

Supporters of Arbitrum’s Game Catalyst Program

Closing the vote on Friday, with funds officially approved to target the gaming sector, Arbitrum joins other blockchain networks in attracting game developers with capital.

For example, the Starknet Foundation, the non-profit organization that supports the Starknet layer 2 network, announced in March 2024 the formation of its Gaming Committee, with a budget of 50 million STRK worth $66 million to fund suggestions. Also in March, Immutable, King River Capital and Polygon Labs launched the $100 million Inevitable Games Fund, dedicated to identifying investment opportunities in the gaming industry.

The wallet belongs to TreasureDAO, founded in 2021 to create a decentralized gaming ecosystem, has the largest voting power in Arbitrum’s on-chain voting and voted in favor. Other votes of support came from Ethereum analytics firm L2Beat, risk management firm Gauntlet, Wintermute Governance, Princeton Blockchain Club and @OlimpioCrypto on X.

Re-vote? Rejected?

The governance proposal was approved with 162.41 million votes in favor and 50.48 million votes against. However, some want a re-vote, while others say they will focus their energy on repeal.

Camelot hopes “this proposal will be resolved by a re-vote or specific sub-proposals to overcome the issues raised above and which other delegates are asking.”

“With high certainty of dilution by minting 225 million ARB, low certainty of investment returns, and high operating costs, this proposal should fail on its merits,” GFX Labs said. “If it passes by a little luck or inertia, we and other stakeholders will consider its immediate repeal if it is not amended.”

Thach Sanh

According to Unchained Crypto

Mark Tyson
Mark Tyson
Freelance News Writer. Always interested in the way in which technology can change people's lives, and that is why I also advise individuals and companies when it comes to adopting all the advances in Apple devices and services.
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