The Arbitrum DAO community’s groundbreaking decision to enable crypto token staking for ARB holders is set to revolutionise the DeFi landscape, offering the potential for substantial returns on ARB holdings.
Summary
Arbitrum DAO community makes proposal to enable crypto token staking for ARB holders
The Arbitrum community has taken the first steps to allow ARB token holders to participate in staking, offering them the prospect of a return on their holdings.
The proposal, which has received initial approval, lays the groundwork to allow ARB token holders to stake their tokens and receive rewards, with funds being drawn from the Arbitrum treasury and distributed over one year via a smart contract, as outlined in the PlutusDAO proposal.
The first phase of the governance vote, which received the green light today, initially proposed a tiered system for the allocation of tokens.
Holders of ARB tokens were given the opportunity to choose between three tiered reward options: 1% (equivalent to 100 million tokens), 1.5% (equivalent to 150 million tokens) or 1.75% (equivalent to 175 million tokens) of the total 10 billion ARB offering.
In a temperature control vote conducted on SnapShot, the majority of DAO members, over 66%, voted in favour of the lowest allocation level of 1% (100 million tokens) for stakes.
However, a minority of 33% voted against the proposal, indicating a degree of disagreement within the community regarding the allocation of Treasury funds for staking incentives.
The way ahead for Arbitrum DAO
With the completion of this temperature check voting phase, the Arbitrum DAO is ready to proceed with a subsequent AIP (Arbitrum Improvement Proposal).
This proposal will detail the staking implementation and will require community approval. In addition, final community approval, facilitated by Tally, an on-chain DAO management platform, is required to formally allow stakers to receive token returns from the treasury.
It is important to note that these returns will be different from other mechanisms where tokens are staked to secure the network or distribute revenue.
One of the most pressing questions for ARB token holders is the potential return from staking.
The annualised percentage return is estimated to be in the range of 7.84% to 78.43% when 100 million tokens are used. The specific percentage return within this range will depend on the proportion of the ARB supply that is staked.
This expected return not only provides an attractive incentive for ARB holders, but also underlines the community’s commitment to improving the utility of the token.
Empowerment of ARB token holders
The approval of the first governance vote by the Arbitrum community represents a strong vote of confidence in the concept of token staking.
This move not only demonstrates the community’s commitment to expanding the utility of the ARB token, but also provides token holders with an attractive opportunity to actively participate in the network and receive tangible rewards.
The tiered reward system outlined in the initial proposal provides flexibility for ARB token holders. With the option to allocate 1%, 1.5% or 1.75% of the total 10 billion ARB offering as rewards for betting, ARB holders can tailor their participation in betting to suit their preferences and risk appetite.
The majority’s preference for the lowest level of 1% (equivalent to 100 million tokens) reflects a conservative approach and demonstrates a prudent use of treasury funds for wagering incentives.
The 33% minority vote against the proposal highlights a degree of disagreement within the Arbitrum community. This diversity of opinion is common in decentralised ecosystems, as stakeholders with different perspectives and priorities express their concerns.
It is a testament to the community’s commitment to inclusive and democratic decision-making.
With the first phase of the governance vote successfully completed, Arbitrum DAO now turns its attention to the critical next steps.
The next AIP proposal will address the specific aspects of implementing the staking system. During this phase, the community will have the opportunity to refine the staking mechanics to ensure that they are in line with the best interests of ARB holders and the long-term sustainability of the network.
Conclusion
In conclusion, the Arbitrum community’s decision to move forward with the token staking proposal marks a significant milestone in the evolution of the ARB ecosystem.
As the community navigates the complexities of implementing the staking system and the final approval processes, ARB token holders can look forward to the prospect of earning attractive returns, further consolidating the token’s position in the DeFi landscape.
However, it is important to continue to monitor community developments and discussions in order to gain a full understanding of the evolving staking ecosystem within Arbitrum.
