Arbitrum is down 86% in two weeks and is in trouble

Cryptocurrency Arbitrum (ARB), which has seen an extreme devaluation of 86% in the past 11 days, is now facing a trust test with its community.

That’s because the Arbitrum Foundation, a company registered in the Cayman Islands, has drafted a proposal to create an autonomous decentralized organization DAO of the project.

This allowed all Arbitrum holders, who have received free cryptocurrencies in recent days, to vote for the creation. However, the vote, which ends on Monday (3), indicates that the community does not want the proposed DAO to vote against.

While voting, users saw the foundation that manages the cryptocurrency and sells part of its reserves. For some investors, the case may involve a sale that tends to put pressure on the price of the currency, i.e. cause to dump in the price of the ARB.

Controversial measure could worsen cryptocurrency startup, which has already been brutally devalued in a matter of days

In fact, many investors in the cryptocurrency market waited for the arrival of Arbitrum only to receive “free cryptocurrencies”, with an airdrop promoted by the project.

However, at the beginning of the project, many who received the ARB tokens have already liquidated their positions and taken profits, leaving out the new project.

For those who stayed, all that was left was a massive loss, now added to a controversy that could further bury the currency’s listing in the market.

That’s because investors and fans of the project realized that the foundation ended up putting 10 million ARB on the market. Since there was a prediction in the project that the foundation would not sell anything, many were disappointed with the novelty, which put a strain on confidence in the new project, which apparently began to lie.

“Before going into more detail, we would like to clarify why the 10 million ARB tokens were sold by The Arbitrum Foundation.”

Before we dive in, we want to clarify why 10 million ARB tokens were sold by The Arbitrum Foundation.

— Arbitrum (💙,🧡) (@arbitrum) April 2, 2023

All told, Arbitrum distributed nearly $2 billion in tokens, but the coins are not worth the same as they were a few days ago.

Foundation tries to explain itself and promises to improve communication

With the damage already done and reflected in the price of the ARB cryptocurrency, which devalued from $8.67 on March 23 to the current $1.17 on April 3, 2023, the community is demanding an explanation.

In a post published on its forum, the Arbitrum Foundation regrets that it has not been clear about the beginning of the use of the project’s tokens. According to the note, the segment was already defined in a chart, but they acknowledge that it was not clear information.

Perhaps the most significant miscommunication is the unclear layout of the initial distribution for the Foundation in the original pie chart in the governance documentation. The documentation described the attribution for the address of the DAO Treasury and for the Foundation in a Bucket as “DAO Treasury”. It would have been clearer if this had been split in two, with most of the money distributed to the on-chain treasury controlled by the DAO and part to the Foundation, employed by the DAO.

For the future, even if it is not clear whether there will be time to save the project from a possible neomorto, the foundation promises to provide better information on the news.