The Arbitrum DAO is mulling whether to clawback funding from an organization set up to accelerate the gaming ecosystem on the largest Ethereum Layer 2, according to a proposal on Monday. The move represents a rare strategy for a DAO and also raises questions about the ultimate obligations of decentralized communities.

“The Gaming Catalyst Program (GCP) was approved during a period of exceptionally optimistic projections that, in hindsight, proved unsustainable,” the proposal read. “One of its primary backers – Treasure DAO – has already exited Arbitrum, and other key contributors have either stepped down or signaled waning commitment.”

In addition, the proposal’s authors argue that the GCP has failed to be fully transparent about its spending and has “recently sought to increase contributor compensation and lower its own reporting requirements.”

The Arbitrum Gaming Catalyst Program is an initiative launched in March 2024 by the Arbitrum Foundation and the Arbitrum DAO to foster the growth of web3 gaming on the Arbitrum network. It was initially allocated 225 million ARB tokens, worth approximately $215 million at the time, which would have been spent over a three-year period.

At launch, the GCP faced a cap of $25 million on operational expenses with the remaining tokens to be used to fund gaming grants. By the beginning of 2025, the council claimed to have over 64 projects in its pipeline. 

“The program has struggled to launch even basic operational processes such as transparent reporting and grant issuance,” the proposal continued. “In light of the significant mismanagement, opaque reporting practices, and management turnover within the GCP, it is in the best interest of the Arbitrum community to cut our losses now.”

David Bolger, a member of the GCP council, responded to the post noting that “Arbitrum has become a key hub for gaming projects” with “over 25 gaming-related chains building with Arbitrum’s tech stack” including traditional gaming industry giants such as Ubisoft, Square Enix, and Tap Nation.

So far the governance discussion has been civil, with no clear consensus formed on the issue.