Arbitrum Decentralized Autonomous Organization (DAO) has approved the allocation of $23.54 million in a one-time “backfund” for distribution to about 26 projects that were not able to participate in its initial grant funding round. The proposal was acceded to after the DAO voted two-to-one in favor of the distribution of the 21.1 million ARB tokens valued at approximately $23.54 million.
The initiative is targeted at developing and incentivizing the use of the different projects’ applications on the Ethereum Layer 2 network.
Arbitrum STIP Exceeds 50M Budget
All of these projects were earlier selected to partake of Arbitrum’s Short-Term Incentive Program (STIP) but were unable to because the initial budget for the initiative was 50 million ARB tokens. In the end, only 29 projects received a portion of the grant in the first round. Of the 26 projects in this second round, Gains Network is the Biggest benefactor as it is set to receive up to 4.5 million tokens.
The likes of Stargate Finance and Synapse will each receive 2 million tokens while Wormhole is entitled to only 1.8 million ARB. The new allocation brings the STIP’s budget to a total of 71.1 million ARB tokens. According to the proposal, the distribution of the funds to the 26 projects will take place after a three-day waiting period.
Flaws of the Backfund Proposal
Camelot and MUX, two projects that received funds in the first round of the STIP initiative, are part of the one-third who voted against the backfund proposal. For context, Camelot explained its stance in the matter. “We see major flaws in this backfund proposal as it currently stands.”
“Several delegates have voted in the context of a 50m budget and the specific parameters known at the time……..Votes were made under known parameters, and therefore taking them as valid into an entirely new circumstance sets a worrying precedent,” Camelot outlined.
Backfund Proposal Weakens Projects Goodwill
Additionally, the DEX pointed out that many of the participants in the first round reduced the amount of funds which they requested to ensure that the 50 million budget accommodates more projects. In Camelot’s opinion, the backfund proposal suggests that their proposal was weakened for nothing.