ARB Coin Holders Can Hold Arbitrum Staking

Bittime - ARB Coin holders will be able to stake Arbitrum. This is related to the approval of the Arbitrum proposal by the Arbitum DAO (decentralized organization). More in this article.

DAO Arbiturm Steps

Arbitrum DAO has just approved a proposal aimed at increasing the usability of the ARB token and strengthening governance security. This proposal received overwhelming support, with an approval percentage reaching 91% from more than 25,000 on-chain voting participants.

Through this proposal, ARB token holders will be able to stake and delegate their tokens to get a new token called stARB (liquid staked ARB). 

stARB will represent your stake holdings and enable several interesting benefits:

• Automatic Income: Staking results will increase automatically (auto-compounding) so you don't need to keep monitoring and claiming them.
• Restaking Options: You can easily restake stARB tokens to get more profits.
• DeFi Compatibility: stARB can be used in a variety of decentralized finance (DeFi) applications on Arbitrum.

Read also: Understanding Arbitrum (ARB): Definition and How it Works

ARB Staking Scheme and Corresponding Governance

This staking system will use Tally's liquid token staking technology which is built on Unistaker. However, the system will be adapted to Arbitrum's specific governance structure and fee collection mechanisms. 

Later, excess sequencer fees will be used to reward ARB token holders who actively stake and delegate their tokens to "active delegates".

“Active delegates” will be determined using the Karma Score, which combines Snapshot voting statistics, on-chain voting statistics, and forum activity. 

Arbitrum DAO has the authority to adjust the Karma Score formula and set the minimum score required for delegates to be eligible for staking rewards.

Addressing Token Utility and Security Issues

Supporters of this proposal argue that this step is necessary because the performance of the ARB token in terms of increasing value has not been optimal. They think this problem is mainly caused by governance issues. 

Currently, less than 1% of ARB tokens are actively used in the on-chain ecosystem, and voter participation has continued to decline since the DAO was created.

The proposal also aims to prevent potential governance attacks, given concerns over the growing attractiveness of Arbitrum's treasury as a target. 

With a fee surplus of over 16 million ETH accumulated from Arbitrum One and Nova, the risk of malicious actors attempting to launch governance attacks increases.

Balso: Arbitrum Now Supports USDC as a Custom Gas Token on Orbit Chain

To mitigate such risks, the staking system will return voting power to the DAO if stARB is held in a restaking, DeFi, or centralized crypto exchange smart contract that does not maintain a 1:1 delegation relationship. 

Arbitrum DAO has exclusive control over how this voting power is redistributed.

ARB Staking Flexible Design

This proposal outlines a modular implementation that allows for future upgrades and integration with other potential Arbitrum staking systems. This flexibility ensures that the staking mechanism can evolve along with the needs of the protocol.

The estimated cost of implementing this proposal is $200,000 in ARB tokens. This fee includes smart contract development, integration with Tally.xyz, Karma Score implementation, security audits, and funding for a working group focused on staking rewards and delegation strategies.

Important Steps for the Future of Arbitrum

This governance update is a significant step for Arbitrum in addressing the challenges of token utility and ecosystem participation. 

By incentivizing active staking and delegation, the DAO aims to encourage greater engagement, improve security, and align token holders' interests with the long-term success of the protocol.

Previously, the Arbitrum Foundation succeeded in gathering a majority vote (more than 75%) for a funding program worth $215 million allocated to support gaming projects at Arbitrum over the next three years.

By maintaining its position as one of the top Layer 2 solutions on Ethereum, this staking initiative can play an important role in maintaining the network's growth and ensuring its resilience to potential attacks.

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