Arbitrum DAO Passes Proposal to Allow ARB Token Staking

The decentralized autonomous organization (DAO) of Ethereum-based layer-2 scaling solution Arbitrum has passed a proposal enabling users to stake the network’s native token, ARB, in exchange for rewards.

The proposal was released on October 30, and voting was concluded on November 6, with 66% of ARB holders voting in favor of the proposal and 33% voting against it.

The ARB Staking Proposal

The Arbitrum DAO treasury has grown significantly, currently holding 3.54 billion ARB and an additional stash of 69 million ARB tokens that were unclaimed during the network’s recent airdrop. The DAO deemed it fit to share the treasury’s growth with token holders, hence the staking proposal.

“We believe that the Arbitrum token needs a staking mechanism. We propose creating a mechanism that distributes ARB to token lockers. A locking mechanism would incentivize long-term token holders and become a fundamental building block for future token utility proposals,” the team said.

The organization believes implementing a staking mechanism would significantly increase the crypto community’s interest in the Arbitrum ecosystem and offer a major step towards introducing different forms of revenue sharing in the future.

The Arbitrum Coalition, a governance forum made up of Blockworks Research, Gauntlet, and Trail of Bits, will keep track of the effects of the staking mechanism for 12 months, providing quarterly updates and qualitative reporting to the community. The alliance will give recommendations on a sustainable incentive model that is most suitable for the ARB token.

A 12-month Trial Period

During the 12-month trial period, ARB holders can lock their tokens for up to 365 days, increase or pause their lock times, and claim accrued rewards according to their weights. A user’s weight is proportional to their lock time.

The proposal had five voting options: to fund the staking mechanism with 1%, 1.25%, 1.5%, or 1.75% of the total ARB supply, accounting for 100 million ARB, 125 million ARB, 150 million ARB, or 175 million ARB tokens, respectively. The option that suggested funding the mechanism with 1% of the total ARB supply received more votes.

Before the staking begins, the DAO will release another proposal to decide the service provider, associated contracts, and an auditor for the implementation. After the contracts and audits are completed, they will be provided to the community for review for two weeks and then deployed to Arbitrum.