Global: Arbitrum DAO Enhances ARB Utility with Staking and Governance Upgrades

The Arbitrum DAO has significantly strengthened its governance framework and increased the utility of its ARB token by introducing staking and security enhancements.

A recent temperature check proposal, aimed at improving the utility of the ARB token, received overwhelming support from the community. Over 25,000 participants engaged in the on-chain voting, which concluded on August 15 with a 91% approval rate.

ARB Staking and Governance Enhancements

At the heart of this proposal is the introduction of ARB staking, which aims to unlock the token’s potential within the ecosystem. While the proposal stops short of distributing fees to tokenholders at this stage, it introduces a new liquidity-staking token, stARB, through the Tally protocol.

The staking mechanism allows ARB tokenholders to stake and delegate their tokens in exchange for stARB, representing their stake in the ecosystem. The stARB token is designed to support automatic compounding of future rewards, restaking options, and integration with various decentralized finance (DeFi) applications.

This initiative is expected to foster greater participation within the Arbitrum ecosystem. By staking ARB tokens and actively delegating them, holders will eventually be eligible to receive surplus sequencer fees. The proposal also seeks to address the current low levels of voter engagement within the DAO, encouraging more active involvement from the community.

Tackling ARB Underperformance and Strengthening Security

The proposal also addresses the underperformance of the ARB token, particularly in terms of value accrual. Currently, less than 1% of ARB tokens are active within the on-chain ecosystem, and voter participation has been declining since the DAO’s inception.

A critical focus of the proposal is on enhancing governance security. As the Arbitrum treasury continues to grow, it becomes a more attractive target for potential governance attacks. The staking mechanism and active delegation are intended to create a more secure governance structure, protecting the treasury and maintaining the integrity of the governance process.

In a related move, the Arbitrum team allocated 225 million ARB tokens, valued at approximately $215 million, for distribution through the Gaming Catalyst Program over the next three years. This initiative underscores Arbitrum’s commitment to expanding its ecosystem and providing long-term value to its community.

Additionally, in March, the Arbitrum DAO made headlines by rejecting a proposal to cover the legal expenses of Roman Storm and Alexey Pertsev, the developers behind Tornado Cash, highlighting the community’s active role in governance decisions.