Arbitrum Community Votes Overwhelmingly in Favor of ARB Token Staking
The Arbitrum community is set to achieve a significant milestone with the introduction of staking for the ARB token.
This ongoing vote aims to increase the token’s utility and strengthen its presence in onchain transactions. The voting process, which began on August 8th, concludes today with an overwhelming 98.8% majority in favor of the proposal.
A Governance Mechanism Powered by Tally
The implementation of ARB staking will be facilitated through the Tally governance system, a platform that plays a central role in managing DAOs.
With the adoption of this proposal, a new liquid staking token named stARB will be introduced. This token will allow users to stake their ARB tokens while continuing to participate in governance decisions. However, a key aspect of this proposal is that it does not yet activate fee redistribution to stakers.
Functionality of the stARB Token
The stARB token offers not only a simple staking mechanism but also paves the way for broader usage of ARB tokens in the DeFi ecosystem. stARB holders can continue to participate in governance while using their tokens in other DeFi protocols, or even restake them. However, it’s important to note that using stARB in other protocols involves delegating voting power to the DAO.
Context and Justifications for the Proposal
This initiative was primarily driven by insights from 0xFrisson, the Head of Revenue at Tally, who highlighted the current weaknesses of the ARB token structure. Less than 1% of ARB tokens are utilized in onchain transactions, and only 10% are involved in governance processes. stARB could provide a solution to enhance token holders’ involvement in the Arbitrum ecosystem.
Potential Fee Distribution
One of the most interesting aspects of this proposal is the future potential for fee sharing. The DAO Arbitrum treasury, currently holding $45 million in ETH, could choose to redistribute revenues generated by sequencers and MEV opportunities to stARB holders. These rewards would be automatically reinvested, thereby increasing the value of stARB tokens.
As the DAO’s ETH reserves grow, the risk of governance attacks also increases. The introduction of new features for the ARB token, such as staking and stARB, could make attacks more costly and enhance network security.
After the initial vote, which showed overwhelming support with 99% of votes in favor, the proposal still needs to be approved through an onchain vote on Tally. If all goes as planned, the implementation of this new system could take place as early as October, following necessary audits.
