Members of the decentralized autonomous organization (DAO) associated with Arbitrum are currently contemplating a possible clawback of funds designated for the development of a gaming ecosystem on the platform. This discussion arises due to concerns regarding insufficient progress and a lack of transparency surrounding the allocated resources.
On March 24, DAO member Nathan van der Heyden put forth a suggestion aimed at reclaiming unutilized funds assigned to the Arbitrum Gaming Catalyst Program (GCP). This initiative, initiated in 2024, sought to establish Arbitrum as a prominent venue for on-chain gaming innovation.
Van der Heyden remarked that the approval for the GCP was made based on excessively optimistic forecasts, which he stated became unsustainable over time.
“We need to halt GCP operations and secure all available funds in order to protect the DAO’s resources and regain investors’ trust in its capital allocation,” van der Heyden expressed in a governance forum entry.
He also highlighted the GCP’s hesitance to document its initiatives and indicated that the program was failing to meet its commitments.
### Diverging Opinions on the Proposal
Another member of the DAO supported this proposal, arguing that it was essential for the community to safeguard the remaining funds:
“The DAO should act now to secure what’s left and then consider a thoughtful and effective pathway forward.”
While many individuals concurred with the urgency of reclaiming the funds, some voiced that it could be counterproductive. One member pointed out that even if the intention to protect the DAO’s funds and ensure transparency was justifiable, an immediate and total clawback might come off as excessively severe and possibly harmful.
“The intent to safeguard DAO resources is valid, but executing a complete clawback right away could prove ineffectual,” this member commented.
They proposed phased clawbacks instead of an abrupt withdrawal of the program’s funding and suggested implementing flexible reporting standards for a more manageable approach to the GCP.
### A Significant Decline in Token Value
The GCP was launched on March 12, 2024, with the objective of promoting the growth of Web3 gaming within the Arbitrum ecosystem.
It allocated approximately 225 Arbitrum (ARB) tokens, roughly valued at $468 million, for investment in promising studios and games to enhance network development and position Arbitrum as a leader in on-chain gaming.
However, this program coincided with a $2.2 billion token unlock, which might have triggered a decline in the token’s value. By June 2024, the tokens allocated to the GCP had plummeted to around $215 million in worth, representing a loss of more than 50% in value.
As of this writing, ARB tokens are trading at $0.38, an 81% decrease since the launch of the GCP.
### A Market in Retreat for Web3 Gaming
The proposal from the Arbitrum DAO emerges during a downturn in investments related to Web3 gaming. Toshiyuki Otsuka, founder of the GameFi platform Snpit, explained that factors such as market instability and an oversaturation of subpar projects are hindering funding in this sector.
“Many investors are opting for a more conservative stance, waiting to identify which projects can show long-term potential before investing,” Otsuka remarked.
He noted that the speculative frenzy of previous years is giving way to a more sustainable investment environment for Web3 gaming, where only the most promising ventures can attract capital.