A major airdrop is about to occur tomorrow (23 March) and the crypto community is all buzzing. About 2 million crypto users will have tokens airdropped to them by Arbitrum – a Layer 2 scaling solution for Ethereum, which is making significant strides towards decentralization with the launch of its governance token.
The project will airdrop a governance token with the ticker ARB to its community members on March 23 in a move that marks an important step for Arbitrum in its journey towards complete decentralization.
However, the event is clouded with controversy by a hacker, who apparently found an exploit and if successful, will cause a large portion of the airdropped tokens to be allocated to his/her own wallet.
Let me explain.
First, about the airdrop.
This is an airdrop of the native Arbitrum token ARB which will be used to govern the Arbitrum One and Nova networks through a self-executing DAO, which will be supported by a security council.
Tokens will be distributed to users who have utilized the network over the last year, representing 12.75% of the token’s total supply. However, the token will not be used for paying transaction fees on the network.
“The goal of the airdrop and the token is really to give governance power over to the community members and identify the real community members that are active in the chain, are participating and will participate,” explained Steven Goldfeder, CEO of Offchain Labs, the maker of Arbitrum, in an interview.
The uniqueness of the transition lies in Arbitrum’s form of governance. A self-executing DAO means that governance members will be able to pass protocol upgrades that will automatically be applied on-chain. In doing so, Offchain Labs has gone for a more radical form of decentralization; one that Goldfeder believes is absolutely necessary.
“I think that it’s really the only way to decentralize,” said Goldfeder. “If it’s not self-executing, what it means is the DAO is just a signal, and there are some people with the keys to actually do it, and they could or could not break from the DAO, and it’s just that piece of trust. What we want is a decentralized system that doesn’t rely on trust in critical places.”
Offchain Labs also released Arbitrum Orbit, which allows developers to build Layer 3 networks on top of Arbitrum. The newly formed governance system will be able to approve licenses for other Layer 2 networks that settle on Ethereum using Arbitrum’s technology.
The governance token will be native to the Arbitrum One network, but will also be used to govern the Arbitrum Nova network and any other Layer 2 networks that the DAO officially endorses. Offchain Labs worked with crypto data provider Nansen to design the criteria behind who should receive the airdrop, with a focus on rewarding genuine users instead of those who tried to game the system.
You can check your eligibility for this airdrop and all the details about it in their official site: https://docs.arbitrum.foundation/airdrop-eligibility-distribution and here: https://docs.arbitrum.foundation/airdrop-eligibility-distribution#user-airdrop-eligibility-details
This link was provided on their Twitter account some time ago in this tweet.
A large portion of the supply — some 42.8% — will go to the Arbitrum Foundation, which will be under the control of the newly formed Arbitrum DAO. Offchain Labs and advisors will receive 27% of the token’s supply, while Offchain Labs investors will get 17.5% of the supply. The total supply of tokens is 10 billion.
Airdrop recipients will be able to check their balances from March 23, and they will be able to claim the tokens a week later. The Arbitrum Foundation will approve delegates during this time. Offchain Labs has not communicated with any centralized exchanges to list the Arbitrum token.
In conclusion, the launch of the ARB token is a significant step towards complete decentralization of the Arbitrum One and Nova networks. The self-executing DAO system and the unique governance token offer a level of decentralization that sets Arbitrum apart from other projects. The future looks promising for Arbitrum, with the possibility of approving licenses for other Layer 2 networks using Arbitrum’s technology. Overall, this is an exciting development for the Ethereum ecosystem and the broader crypto community.
Now, onto the hacking threat.
Reports have emerged that a bad actor is attempting to hijack the upcoming Arbitrum airdrop by taking advantage of 2,400 compromised crypto wallets. If the plan is successful, the thief could net around 3 million ARB tokens, which amounts to 0.26% of the user airdrop.
The criminal is sending ether to the wallets in question to approve a contract that allows recipients to claim the airdrop. This in itself would not be a problem, but the individual appears to have access to the private keys for the wallets, meaning that they will be able to claim the tokens automatically once the contract is approved.
The scheme was first brought to light by Arkham Intelligence and a post on GitHub. The ARB token will be used to govern the Arbitrum One and Nova networks through a DAO.
What makes this attempt to hijack the airdrop unique is that it is happening on Arbitrum, a layer 2 scaling project. This complicates matters for the affected wallets, as it would not be possible to use Flashbots to gain an advantage in claiming the airdrop first, as might have been the case on the Ethereum blockchain.
It is worth noting that some members of the community have called on Offchain Labs to blacklist the wallets in question in order to prevent the bad actor from getting hold of all the tokens. However, this could have the unintended consequence of stopping legitimate users from being able to claim the tokens too.
At the time of the airdrop announcement, Offchain Labs CEO Steven Goldfeder stated that there would be no changes to the airdrop allocation, and the company has not yet addressed this specific issue. It remains to be seen whether the thief will be successful in their attempt to hijack the airdrop, and what, if any, action will be taken to prevent this from happening.