Arbitrum Community to Vote on Implementing ARB Staking to Enhance Token Utility and Governance

Arbitrum Community to Vote on Implementing ARB Staking to Enhance Token Utility and Governance

The Arbitrum community is set to vote on a proposal to introduce ARB staking, a move expected to unlock greater token utility and strengthen governance within the ecosystem. If approved, this could also bolster the security mechanisms of the Ethereum layer 2 network. The proposal has garnered positive feedback across social media platforms, with users highlighting its potential impact.

Proposal to Implement ARB Staking on Arbitrum

Frisson, an Arbitrum delegate and the Head of Marketing at Tally, has put forward a proposal to introduce ARB staking on the network. This initiative aims to enhance governance, expand token utility, and improve the overall security of the ecosystem. However, it is important to note that no fees will be distributed to token holders at this stage. The proposal also includes the introduction of stARB, a liquid-staked ARB token, which will allow governance participants to capture value.

According to the proposal, “The implementation of a liquid-staked ARB token (stARB) via the Tally Protocol will enable any future rewards to auto-compound. The token will be (re)stakeable and compatible with DeFi applications. Additionally, we will collaborate with the Arbitrum DAO to determine if and how to fund rewards, as well as how to distribute these rewards between token holders and delegates.”

The proposal stems from concerns that ARB is struggling to gain value, with governance being the primary source of demand for the token. Currently, only 10% of the circulating supply is utilized for governance purposes, and ARB is not yet compatible with DeFi or restaking. If implemented, the proposal would introduce rewards from MEV fees, sequencer fees, and validator fees, making ARB compatible with restaking and DeFi applications.

Contributor Warns of Potential Vulnerability

While the proposal has been well-received, Frisson has also cautioned about a potential governance vulnerability. The Arbitrum DAO Treasury has accumulated 16 million $ETH in fees, making it an attractive target for economic attacks. This increase in treasury assets has not been matched by a corresponding increase in ARB voting power, leaving the network potentially vulnerable. The proposal is expected to cost $200,000 in ARB to cover development costs, including staking contracts, the network’s fee mechanism, and the integration of Karma Scores, among other components.