TL;DR
- Arbitrum DAO approved a proposal to enhance the utility of the ARB token and strengthen governance, with 91% support from over 25,000 participants.
- The proposal introduces ARB staking, allowing holders to stake their tokens in exchange for stARB, which facilitates the accumulation of future rewards.
- The change aims to increase active participation in governance and address issues of underperformance and security of the ARB token.
Arbitrum DAO has successfully increased the utility of the ARB token and strengthened its governance system through the approval of a key proposal. This proposal received overwhelming support, with 91% approval from more than 25,000 participants, and was completed on August 15.
The main focus of the proposal is the implementation of ARB staking. This new mechanism allows ARB holders to stake their tokens and delegate them in exchange for a new asset called stARB, which represents their stake in the staking process. Unlike what might be expected, this initial phase will not include the distribution of fees to ARB holders. Instead, stARB will facilitate the automatic compounding of future rewards, offer reinvestment options, and be compatible with various decentralized finance (DeFi) applications.
This change seeks to encourage greater active participation within the Arbitrum ecosystem. ARB holders who participate in staking and delegation of their tokens will be eligible to receive future sequencer fees. The proposal also aims to address the current low levels of participation in the protocol’s governance, which has been a persistent challenge since the DAO’s creation.
Arbitrum Seeks to Protect Against Governance Attacks
In addition to increasing participation, the proposal addresses concerns related to the security and performance of the ARB token. Currently, less than 1% of ARB tokens are active within the on-chain ecosystem, and voter participation has shown a downward trend. The implementation of staking was intended as a measure to mitigate these issues and protect the DAO from potential governance attacks, given that the Arbitrum treasury, which currently holds $32 million in ETH, could become an attractive target for malicious actors.
On the other hand, according to the latest data from CoinMarketCap, Arbitrum (ARB) is facing a pronounced downtrend. It has accumulated a 31% decline over the past month. Over the last 7 days, the drop was just over 3%. Today, it has fallen by 7.2%, with its price standing at around $0.5253, far from the nearly $0.82 reached on July 23.
In June, Arbitrum allocated 225 million ARB tokens to its Gaming Catalyst Program, while in March, the DAO rejected a proposal to cover the legal expenses of the Tornado Cash developers.
