The Arbitrum DAO has approved a temperature check proposal that aims to boost the utility of the ARB token and strengthen governance security.
The proposal garnered overwhelming support with 91% approval from more than 25,000 participants and concluded its onchain voting on Aug. 15.
ARB staking and governance enhancements
The core of the proposal focuses on unlocking the utility of the Arbitrum (ARB) token by enabling ARB staking. However, it stops short of distributing fees to tokenholders for now. Instead, it introduces a liquidity-staking ARB token (stARB) through the Tally protocol.
The staking mechanism will allow ARB tokenholders to stake and delegate their tokens in exchange for stARB, which represents their stake. The stARB token supports the automatic compounding of future rewards, restaking options and compatibility with various decentralized finance (DeFi) applications.
This strategic initiative is anticipated to encourage greater active participation within the Arbitrum ecosystem. By staking ARB tokens and actively delegating them, holders will be eligible to receive surplus sequencer fees in the future.
This mechanism is intended to incentivize voter participation in the DAO, addressing the current low levels of engagement.
Addressing ARB underperformance and security measures
The proposal highlights a pressing issue: the underperformance of the ARB token in terms of value accrual. According to the proposal, less than 1% of ARB tokens are currently active within the onchain ecosystem, and voter participation has been on a decline since the DAO’s inception.
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Another critical aspect of the proposal is the focus on preventing potential governance attacks. As the Arbitrum treasury grows, it becomes an increasingly attractive target for malicious actors.
By implementing the staking mechanism and ensuring active delegation, the DAO aims to create a more robust and secure governance structure. This proactive approach is crucial in safeguarding the treasury and maintaining the integrity of the governance process.
In June, the team behind Arbitrum, a layer-2 network built on Ethereum, allocated 225 million ARB tokens worth roughly $215 million for distribution via the Gaming Catalyst Program over the next three years.
Additionally, in March, the Arbitrum DAO rejected a proposal to cover the legal expenses of Roman Storm and Alexey Pertsev, the developers behind Tornado Cash.
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