A suggestion was recently approved by the decentralized autonomous organization (DAO) for Arbitrum’s layer-2 scaling solution, an Ethereum-based improvement protocol. The move allows users to deposit ARB tokens into the network in exchange for rewards.
The proposal was announced on October 30, while the decision was made on November 6. The voting saw 66% of ARB holders supporting the proposal, while 33% opposed it.
The Staking Proposal
The Arbitrum DAO treasury has seen exponential growth, now holding 3.54 billion ARB, plus an additional reserve of 69 million ARB tokens that weren’t claimed during the network’s recent airdrop. Accordingly, the DAO has decided to distribute the benefits to token holders via a staking proposal.
The team behind the initiative explained that the Arbitrum token requires a staking mechanism, which is the reason for developing a system to allocate ARB to token lockers. The locking mechanism implementation can encourage long-term token holders and lay a solid foundation for future token utility proposals.
This is a significant move for the Arbitrum community because it allows token holders to engage in the network’s development and growth. Staking mechanisms stimulate stability and incentivize users to keep their tokens for long periods.
Furthermore, this proposal lays the groundwork for ARB tokens’ potential future utility, which could have a positive impact on the broader crypto ecosystem.
Boosting Crypto Community Engagement
The Arbitrum Coalition, comprising Blockworks Research, Gauntlet, and Trail of Bits, was the brain behind the launch of a staking mechanism to strengthen the Arbitrum ecosystem. This feature is expected to stir up the crypto community’s interest and pave the way for future revenue-sharing opportunities in the virtual assets landscape.
The Arbitrum Coalition further reiterated its commitment to tracking the impact of the staking mechanism over a year. Every quarter, they will provide regular updates to the community, including valuable insights.
Thus, the Arbitrum Coalition hopes to create a more engaging environment for crypto enthusiasts by introducing this staking mechanism. This feature encourages users to participate actively in improving the network’s overall security and stability.
In addition, the coalition intends to investigate various revenue-sharing models in the future to explore untapped opportunities. This advancement could transform how profits are distributed within the Arbitrum ecosystem.
The Trial Period
Within the year-long trial period, token holders can store their tokens for up to a year and adjust or halt their lock times. Users can claim rewards proportional to their contribution depending on how long they lock their tokens.
This trial period includes a voting process with five funding options for the staking mechanism. The allocation options range from 1% to 1.75% of the total ARB supply, equivalent to 100 million to 175 million ARB tokens.
However, the option proposing 1% of the ARB supply received the most votes. Meanwhile, the DAO will present another proposal before the staking mechanism goes into effect.
The purpose of this proposal is to select a service provider, associated contracts, and an auditor for implementation. After the completion of the contracts and audits, they will be shared with the community for a two-week review period before deployment to the Arbitrum ecosystem.
This procedure ensures that the community is involved in implementing the staking mechanism. Furthermore, it provides transparency and gives users confidence in the service provider, contracts, and auditor.
With this proposal, the ARB ecosystem takes a significant step toward empowering its community and lays a solid foundation for the network’s future.