By Leon Okwatch
Updated
3 min read
The Arbitrum DAO has approved a key proposal focused on increasing the utility of the ARB token and bolstering governance security. This staking initiative is set to play a crucial role in maintaining the network’s growth and strengthening its resilience.
The Arbitrum DAO has approved a key proposal focused on increasing the utility of the ARB token and bolstering governance security. The initiative, which received overwhelming support with 91% of over 25,000 participants voting in favor during an on-chain poll, highlights the strong backing from the Arbitrum community.
The proposal’s approval paves the way for a new staking mechanism for ARB token holders. When users stake their ARB tokens, they will receive a liquid staked token called stARB, which will represent their staked assets. This token will provide benefits like auto-compounding rewards and options for restaking. Moreover, stARB will be integrated with multiple decentralized finance (DeFi) applications, expanding its functionality within the ecosystem.
Arbitrum plans to implement this staking system using Tally’s liquid staking token model, which is based on the Unistaker framework. This system will be tailored to align with Arbitrum’s unique governance and fee structures. The proposal also considers the possibility of fee sharing and its potential effects on the ARB token.
The surplus revenue comprises earnings from Maximal Extractable Value (MEV) and sequencer fees. Going forward, any additional sequencer fee surpluses will be allocated to reward ARB token holders who stake and delegate their tokens to “active delegates”. These delegates will be chosen based on a Karma Score, which takes into account data from Snapshot voting, on-chain activity, and participation in forums.
The proposal seeks to tackle issues related to the limited use of the ARB token and the declining participation in voting. At present, less than 1% of ARB tokens are actively involved, and voter turnout has dwindled since the DAO’s inception. By implementing a staking mechanism, the DAO aims to boost community involvement and strengthen the network’s security.
In addition, the proposal is also set to tackle possible governance threats. With more than 16 million ETH accumulated in surplus fees from Arbitrum One and Nova, the risk of governance attacks has escalated. The staking system is designed to counter these threats by ensuring that if stARB is placed in contracts without a 1:1 delegation relationship, the associated voting power will revert back to the DAO. This measure helps the DAO retain control over how voting power is distributed.
The proposal adopts a modular strategy, enabling future upgrades and integration with additional staking systems. The projected cost for implementing this plan is $200,000 in ARB tokens, which will be allocated to developing smart contracts, integrating with Tally.xyz, setting up the Karma score system, conducting security audits, and supporting relevant working groups.
This staking initiative is set to play a crucial role in maintaining the network’s growth and strengthening its resilience. The proposal will now move forward to an on-chain Tally vote, with implementation anticipated to begin in October if it gains approval.
Earlier this month, the Arbitrum Foundation secured more than 75% approval for a $215 million fund dedicated to supporting gaming projects on the Arbitrum platform, further underscoring the DAO’s commitment to growing its ecosystem.
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Leon is a seasoned blockchain writer and reporter, dedicated to uncovering the stories behind decentralized technologies. He excels in providing in-depth analysis and thought leadership in blockchain media. His reporting sparks meaningful conversations and fosters a deeper understanding of the transformative potential of blockchain.
