Arbitrum DAO Approves Proposal to Boost ARB Performance and Treasury Security
Arbitrum DAO has taken a significant step towards strengthening its ecosystem by approving a proposal to increase the utility of the ARB token and enhance governance security.
The proposal, which garnered overwhelming support from 91% of over 25,000 participants, introduces ARB staking and a new liquidity staking token, stARB, as a strategic move to address the token’s underperformance and secure the growing portion of the DAO’s treasury.
Introducing New Participation Mechanisms and ARB Staking
The recently approved proposal aims to unlock the utility of the Arbitrum token (ARB) by enabling a staking mechanism.
This initiative allows ARB token holders to stake and delegate their tokens in exchange for stARB, a liquidity staking token introduced through the Tally protocol.
stARB token offers automatic capitalization of future rewards, recovery options, and compatibility with various decentralized finance (DeFi) applications, allowing for deeper integration into the DeFi ecosystem.
While the proposal does not immediately distribute fees to token holders, it lays the groundwork for future benefits. By staking ARB tokens and actively participating in delegation, holders will eventually be eligible to receive remaining fees from the sequencer.
This mechanism is expected to incentivize more voters within the DAO to participate and address the current issue of low participation among ARB token holders.
Addressing Token Underperformance and Treasury Security
A key issue highlighted in the proposal is the poor performance of the ARB token in terms of value accrual. Currently, less than 1% of ARB tokens are actively used in the on-chain ecosystem, and voter participation has declined since the DAO’s inception.
The proposal also underscores the need to protect the Arbitrum vault, which has become an increasingly attractive target for potential governance attacks.
By implementing a staking mechanism and encouraging active delegation, the DAO aims to create a more secure governance structure.
This proactive approach is crucial in safeguarding the vault and ensuring the integrity of the governance process, marking a significant milestone in the ongoing development of the Arbitrum ecosystem.
