Arbitrum Faces Vote-Buying Allegations, Raising Questions About DAO Governance

Updated

April 9, 2025

Gambar Arbitrum Faces Vote-Buying Allegations, Raising Questions About DAO Governance

Jakarta, Pintu News – The recent vote-buying in committee elections at Arbitrum has sparked serious concerns regarding the integrity of the decentralized autonomous organization (DAO) governance model.

This incident highlights token holders’ potential risks and threatens the basic principles of fairness and transparency in a decentralized financial system.

Check out the full news below!

Abuse of Power in DAO Governance

On Tuesday, April 8, it was revealed that an individual used 5 Ethereum to purchase approximately 19.3 million Arbitrum voting power. This shows that by spending just $10,000, a person can influence decisions involving governance weights of $6.5 million.

This is all the more worrying because the voting power purchased is greater than that held by large delegations such as L2Beat and Wintermute. Platforms like LobbyFi, which was used in this transaction, allow token holders to monetize their voting power by renting it out.

In this case, the purchased votes were used to favor CupOJoseph’s candidate in the election of Arbitrum’s Oversight and Transparency committee. Ironically, using vote buying to influence the election of a committee tasked with overseeing transparency raises serious questions about the legitimacy and security of DAO governance.

Also read: These 4 Altcoins Experience Price Recovery After Market Crash in Early April, What’s the Factor?

DAO Voice Purchase Security Risks

The old DAO model is in shambles:

Last weekend, hitmonlee.eth paid 5 ETH (~$10k) on @lobbyfinance to buy 19.3M ARB (~$6.5m) voting power.

That's more votes than experienced DAO delegates like Wintermute or L2Beat have.

All votes were cast for @CupOJoseph for Arbitrum's… pic.twitter.com/QRgeom9Otq
— Ignas | DeFi (@DefiIgnas) April 8, 2025

In July 2024, the DAO Compound was close to approving a proposal that gave $24 million, or 5% of its cash, to an outside protocol. One of the large COMP holders pushing the motion controlled the protocol. This proposal, which succeeded after two previous failed attempts, was considered by other DAO members to be an attack on governance.

Platforms like LobbyFi significantly lower the cost of governance attacks. Malicious actors can now influence critical DAO decisions at a much lower cost than previously required. This allows them to enrich themselves at the expense of token holders and the DAO itself.

Long-term Implications for the DAO Model

This incident highlights the vulnerability of DAO governance models that use a one-token, one-vote system. If any party has sufficient funds to buy votes, this model can be easily manipulated, threatening the fundamental principles of what should be a fair and open financial system.

According to Ignas from Pink Brains, surveillance roles pay around $7,500 monthly for 12 months. This shows that vote buying is driven not only by ideology but also by financial incentives. This incident opened many eyes to the importance of developing stronger mechanisms to protect the integrity of DAO governance.

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