Arbitrum DAO considers clawing back $215M gaming fund

Arbitrum’s (CRYPTO:ARB) decentralised autonomous organisation (DAO) is debating whether to reclaim funds from its Gaming Catalyst Program (GCP), citing unsustainable operations and lack of transparency.

“We must wind down GCP activities and secure all possible funds to safeguard the DAO’s funds and restore investor confidence,” DAO member Nathan van der Heyden stated in a March 24 proposal, arguing that the program’s $468 million allocation (225 million ARB tokens) has failed to deliver promised results.

The GCP, launched in March 2024, aimed to position Arbitrum as a Web3 gaming hub by funding studios and network development.

However, its rollout coincided with a $2.2 billion ARB token unlock, contributing to an 81% price decline for ARB since the program’s inception.

By June 2024, the allocated tokens’ value had halved to $215 million, and ARB now trades at $0.38.

Community sentiment is divided.

While some support an immediate clawback, others advocate for phased recovery and flexible reporting standards to avoid stifling innovation.

“Immediately resorting to a complete clawback seems overly harsh and potentially counterproductive,” a DAO member countered.

The proposal reflects broader challenges in Web3 gaming funding, with Snpit founder Toshiyuki Otsuka noting investors now prioritise projects demonstrating long-term viability amid market volatility and oversaturation.

Arbitrum’s situation mirrors ZKsync’s (CRYPTO:ZK) recent decision to end its ZKsync Ignite liquidity rewards program, citing unfavorable market conditions.

The GCP’s future hinges on balancing accountability with flexibility.

As van der Heyden emphasised, the DAO must “think about a good and meaningful way of going forward” while addressing transparency gaps.

ARB’s prolonged decline underscores the urgency of resolving these issues to restore stakeholder trust.

At the time of reporting, the Arbitrum (ARB) price was $0.3942.