Arbitrum Launches $ARB Token and Introduces Self-Enforcing On-Chain Governance
Two big suprises from the announcement: Arbitrum Orbit and Self-Enforcing governance
Arbitrum has just unveiled the $ARB token, a major milestone in progressively decentralizing the Arbitrum protocol. Check if you are eligible here
With the $ARB token, Arbitrum has established a new governance model, enabling decentralized proposals and protocol upgrades.


Currently, L2s are centralized.
Historically, Arbitrum chains had a "chain owner" responsible for managing system changes, such as modifying core parameters, pausing transactions, and updating core contracts.
However, this introduced centralization, which is undesirable in the crypto space.
Unlike Layer 1 (L1) protocols like Ethereum that are governed by social consensus, Layer 2 (L2) protocols like Arbitrum are governed by L1 smart contracts, necessitating formal on-chain governance for upgrades.
Enter ARB token
The $ARB governance token solves this problem by handing over the chain ownership role to the "Arbitrum DAO", which consists of $ARB token holders.
Governed by The Constitution, the Arbitrum DAO outlines the operating principles for the decentralized organization.
The Constitution outlines Chain Ownership, how DAO proposals and voting works, what is the role of The Security Council, the elections and Community Values.
The values guiding ArbitrumDAO and its community are:
Ethereum-aligned: Deeply connected to the Ethereum ecosystem and community.
Sustainable: Prioritizing long-term health and thriving of the protocol, technology, and community.
Secure: Ensuring safety and preserving security derived from Ethereum.
Socially inclusive: Welcoming diverse individuals with constructive participation.
Technically inclusive: Enabling ordinary people to fully participate in the Arbitrum protocol.
User-focused: Managing the ecosystem to benefit all users.
Neutral and open: Promoting open innovation, interoperation, user choice, and healthy competition.
Self-Executing Governance
Arbitrum leads the way as the first L2 solution with "self-executing governance," meaning that governance occurs entirely on-chain without requiring manual implementation of proposals by the core team.
For example, to modify the Constitution, you need to submit the proposal as an AIP, undergo the voting and delay phases, and obtain a supermajority of votable tokens in favor.
The Security Council must also ratify the change with a 7-of-12 approval for it to take effect.
The Security Council for Emergency
The Security Council is a 12-member group elected by the DAO's members.
In emergency situations, the Security Council can upgrade the protocol directly, bypassing potential delays.
The Constitution of the Arbitrum DAO ensures that the Security Council uses its powers only for emergencies and issues transparency reports when necessary.
DAO votes in semi-annual elections to select Security Council members, with each elected member serving a one-year term.
The Council can also trigger non-emergency upgrades subject to a delay period. But DAO members have the power to remove Security Council members if they aren't acting in the best interests of the DAO.
Delegation and Voting
Voting power is determined by the number of $ARB tokens a voter holds or represents.
Token holders can delegate their voting power to others on Tally, making governance participation more accessible.
The $ARB token will govern both Arbitrum One (for DeFi/NFT) and Arbitrum Nova (for gaming/social apps).
A reminder, that Arbitrum Nova sacrifices some security for lower fees by managing data off-chain via an external Data Availability Committee. Nova has been recently chosen by Reddit for the community MOON tokens.
Interestingly, the Arbitrum DAO can authorize the creation of new L2 chains via constitutional governance proposals.
Arbitrum Orbit
Lastly, Arbitrum announced Arbitrum Orbit, a development framework for Layer 3 (L3) solutions. L3s offer massive scalability and retain the security guarantees of L2s.
Deploying L3s is permissionless (unlike deploying L2s), meaning it won't require the DAO's permission. This exciting development opens up new opportunities for growth and innovation within the Arbitrum ecosystem.
There are three reasons to launch an L3:
Better Scalability: Multiple chains alleviate scaling bottlenecks, as each chain manages its resources separately.
Different Security Models: Chains can experiment with varying security models, such as Arbitrum One's trust-minimization and Nova's lower fees.
Different Execution Environments: Chains can explore unique execution environments, optimizing performance with restrictive smart contract functionality.
The Arbitrum Orbit will definately bring a lot more attention to the Arbitrum ecosystem.
Will be exciting to see the deployment of L3s in action.