Arbitrum Proposes DAO Allocation of Rewards for ARB Token Holders
Arbitrum, a prominent ecosystem player, has proposed a mechanism to allocate 50% of future sequencer surplus fees to reward ARB token holders who actively stake and delegate their tokens.
Arbitrum Proposes DAO Allocation of Rewards for ARB Token Holders
Frission, a representative within the Arbitrum (ARB) ecosystem and a core member of Tally, has put forth a proposal to utilize 50% of future sequencer surplus fees to reward ARB token holders who stake and delegate their tokens.
new proposal by @0xfrisson for the ArbitrumDAO
— 𝗵𝘂𝗻𝘁𝗲𝗿 (@BFreshHB) June 21, 2024
stake + delegate ARB (to yourself or someone else) to receive 50% future surplus sequencer revenue
utilizes @tallyxyz's recently announced LST protocol to enable staked positions to participate in governance while being liquid 👇 pic.twitter.com/1SYn5zaCJp
Frission's proposal aims to incentivize participation in governance, enhance economic security for the DAO, and mitigate risks associated with the growing Arbitrum DAO treasury — currently exceeding $50 million in surplus fees. The proposal highlights concerns that with only 10% of ARB actively used in governance and decreasing voter turnout, the treasury could become an attractive target for potential attacks on the governance system.
By allowing ARB token holders to stake and delegate their tokens, the proposal seeks to allocate 50% of future sequencer surplus fees as rewards. Based on current prices, this system is expected to provide an estimated annual reward of about 7% for stakers. Importantly, Arbitrum's existing ETH treasury will remain unchanged — only future fees will be redirected to those who stake.
The proposal also plans to integrate Tally's liquid staking token system to maintain liquidity for staked tokens. This mechanism will enable staked positions to participate in governance while preserving liquidity.
An initial polling vote on this proposal is scheduled on Snapshot next month. Smart contract development will proceed upon approval, with a final on-chain voting expected by September.
Last year, another proposal suggested Arbitrum DAO use treasury funds to reward staking users who lock ARB tokens through a smart contract, with an option to allocate 1% of the total supply (100 million ARB tokens) over a 12-month period.
The latest proposal follows Arbitrum DAO's establishment of a gaming fund worth 225 million ARB, which faced criticism within the community earlier this month.
At the time of writing, ARB is trading around $0.78, showing a slight recovery after the recent market flash dump on June 24, led by Bitcoin, which may be heading towards the $50,000 mark in a double top pattern.
1D chart of ARB/USDT pair on Binance at 09:20 PM on June 24, 2024
