On May 7th, the Arbitrum community - Ethereum's Layer 2 network - is considering adjusting the minimum threshold required for governance proposals to pass, from 5% down to 4.5%. This proposal comes in a context where Arbitrum DAO's governance participation rate has been significantly declining recently.
Specifically, over the past year, the voting participation rate in the Arbitrum community has dropped by 50%. During the same period, the Governance Token ARB has lost 71% of its value, and decreased a total of 87% from its historical peak. This negative development has caused most token holders to lose interest in governance activities, increasing the risk that high-quality proposals cannot be passed due to insufficient votes.
Some Arbitrum community representatives believe that reducing the voting threshold is a necessary temporary measure to maintain the DAO's operational capability during difficult times. However, many opinions also emphasize that the core issue lies in the fact that the Arbitrum ecosystem currently does not create enough real value to retain ARB holders long-term. The lack of motivation to use and invest in the token is reducing Arbitrum's attractiveness, thereby affecting the entire decentralized governance mechanism.
In a volatile market context, balancing technical criteria and community factors is becoming a major challenge for blockchain projects like Arbitrum. If no measures are taken to improve participation and enhance the ecosystem's intrinsic value, Arbitrum's DAO may continue to face crises in the future.
