Arbitrum DAO votes to launch staking as $50M ARB tokens flood the market Arbitrum DAO votes to launch staking as $50M ARB tokens flood the market
Arbitrum's new staking proposal aims to bolster the network's security and governance.
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Updated: Aug. 16, 2024 at 12:53 pm UTC
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The Arbitrum Decentralized Autonomous Organization (DAO) has passed a proposal to introduce ARB staking for the largest Ethereum layer-2 network.
Staking initiative
The proposal, which received overwhelming community support, aims to launch ARB staking to enhance the token’s utility and governance participation.
This initiative seeks to protect the DAO Treasury from potential attacks. According to Tally’s Arbitrum data, the DAO currently holds approximately $1.9 billion in assets, including Arbitrum and Ethereum.
This significant holding makes the DAO an attractive target for malicious actors, as the cost of purchasing ARB for voting power isn’t rising proportionally to defend against attacks.
To counter this risk, the proposal suggests ARB staking to unlock utility and align governance. It plans to create a mechanism that streams future rewards from DAO-generated sources—such as sequencer fees, MEV fees, validator fees, token inflation, and treasury diversification—to token holders delegated to active governance participants.
This initiative will introduce ARB staking using the Tally governance system and launch a liquid staking token, stARB. However, fee distribution to token holders will not begin immediately.
Staking will also allow token holders to earn value on their assets. The Tally Protocol system for stARB supports auto-compounding and restaking of future rewards while remaining compatible with DeFi.
Token unlock
This approval coincides with the network’s planned release of over 92 million ARB tokens—accounting for 2.77% of the circulating supply—later today. The project will execute a “Cliff Unlock,” releasing the tokens simultaneously. At current prices, these tokens are worth more than $50 million, according to Token Unlocks data.
Typically, token unlocks can cause significant market volatility for digital assets because it could lead to a supply shock and a potential price drop. This possibility has fueled speculation that many holders might take short positions against the token.
Already, the anticipated unlock appears to have negatively impacted ARB’s price, which has dropped more than 2% in the last 24 hours to $0.60 as of press time, according to CryptoSlate’s data.
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Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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Also known as "Akiba," Liam is a reporter, editor and podcast producer at CryptoSlate. He believes that decentralized technology has the potential to make widespread positive change.
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