Arbitrum DAO Approves Proposal to Enhance ARB Performance and Treasury Security

• The Arbitrum DAO approved a proposal to increase the utility of ARB and enhance the security of funds.
• The proposal introduces staking of ARB tokens and re-staking using stARB tokens.
• These measures are intended to address the underperformance of the ARB token and strengthen the DAO structure.

Arbitrum DAO has taken a major step towards strengthening its ecosystem by approving a proposal to increase the utility of the ARB token and enhance governance security. The proposal, which received an overwhelming 91% support from more than 25,000 participants, introduces ARB staking and a new liquidity staking token, stARB, as a strategic move to address the token’s underperformance and secure the DAO’s growing treasury part.

Enhancing Utility Through ARB Staking

At its core, the newly approved proposal aims to unlock the utility of the Arbitrum (ARB) token by enabling a staking mechanism. This initiative allows ARB token holders to stake and delegate their tokens in exchange for stARB, a liquid staking token introduced through the Tally protocol. The stARB token offers automatic compounding of future rewards, restaking options, and compatibility with various decentralized finance (DeFi) applications, allowing for deeper integration into the DeFi ecosystem.

While the proposal does not immediately distribute fees to token holders, it sets the stage for future benefits. By staking ARB tokens and actively participating in delegation, holders will eventually be eligible to receive remaining sequencer fees. This mechanism is expected to motivate more voters within the DAO to participate and solve the current problem of low participation of ARB token holders.

Addressing Underperformance and Security Concerns

A key issue highlighted in the proposal is the poor performance of the ARB token in terms of value accumulation. Currently, less than 1% of ARB tokens are actively utilized in the on-chain ecosystem, and voter participation has declined since the DAO’s inception. The proposal also highlights the need to protect the Arbitrum vault, which has become an increasingly attractive target for potential governance attacks.

By implementing a staking mechanism and encouraging active delegation, the DAO aims to create a more secure governance structure. This proactive approach is critical to protecting the vault and ensuring the integrity of the governance process, marking an important milestone in the continued development of the Arbitrum ecosystem.