Arbitrum DAO signals approval to introduce staking for ARB tokens

With 91.5% approval, the Arbitrum DAO has signaled its support for implementing ARB token staking to enhance governance and security.

The Arbitrum DAO has supported the implementation of (ARB) token staking, a move aimed at enhancing governance and bolstering the protocol’s security. Per the temperature check proposal submitted by Tally’s head of marketing, Frisson, over 91% voted in approval, while 8.46% opposed it.

The initiative, designed to improve the governance and security of the Arbitrum protocol, noted that only about 10% of ARB’s circulating supply is “actively used in governance,” and voter participation has declined since the launch of the Arbitrum DAO.

The new staking mechanism is expected to allow ARB holders who delegate their tokens to active governance participants to capture value, while a liquid staked ARB token (stARB) will enable the auto-compounding of potential future rewards and compatibility with decentralized finance applications.

Staking as insurance against governance attacks

A key component of the staking proposal is its role in safeguarding the Arbitrum DAO treasury, which has amassed over 16 million ETH in surplus fees. Frisson highlighted the growing risk of governance attacks, noting that as the treasury’s value increases, it becomes more “economically attractive for a malicious actor” to launch a governance attack on the DAO treasury.

Tally is set to develop the staking solution with an allocated budget of $200,000 in ARB tokens. Smart contract audits are expected to be completed by September, with the full implementation of the staking mechanism scheduled for October. Despite the news, ARB’s price continued to decline, trading nearly 3% lower, per data from crypto.news.

The approval comes just a week after Franklin Templeton, a $1.66 trillion asset manager, announced plans to launch a money market fund on Arbitrum. The so-called Franklin OnChain U.S. Government Money Fund (FOBXX) is also available on Stellar (XLM) and Polygon (MATIC).