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Arbitrum DAO Approves Staking, With $100 Million Worth of $ARB for Rewards

The Arbitrum DAO has approved a proposal by PlutusDAO to create a staking contract for ARB tokens as a means of rewarding token holders who hold onto their coins for an extended period. The proposal was approved on November 6, after getting 66.76% of the votes cast by the community governance in its favour.

Arbitrum has established a strong presence in the market, curving a niche as an Ethereum L2 scaling platform. It speeds up transactions in the Ethereum ecosystem, while minimising gas fees and leveraging its secure blockchain. However, it has lagged behind in implementing staking, which is popular among her peers in the industry. The approval of the PlutusDAO proposal means that ARB holders will be able to stake their assets and earn yields straight from the Arbitrum treasury.

Notably, the timeline for the implementation has not been outlined, but it will ultimately be subject to the outcome of the vendor decision proposal, community review, and audit schedules and findings. One of the key effects of the proposal is that it gives utility to the ARB token within the Arbitrum ecosystem, which could potentially trigger a rise in demand for the token.

A win for the proponents, but significant criticism exists nonetheless

Staking awards can be allocated from 1% (100 million tokens), 1.5% (150 million tokens), or 1.75 percent (175 million tokens) of the total 10 billion ARB supply, as detailed in the proposal that was finalised today. The APY for the staked ARB will depend on the ARB supply, and that will likely range from 7.84% to 78.43%.

Arbitrum’s staking yields will come directly from the DAO’s treasury, which is a significant diversion from the norm on how genesis tokens are typically used. The proposal will see reward tokens drawn from the 3.54 billion ARB tokens currently held in the DAO’s treasury. In total, $100 million worth of rewards will go towards distribution among stakers over twelve months.

The fact that the newly approved proposal will see stakers rewarded using token from the treasury has attracted some criticism. About 33% of voters rejected the proposal, signaling that a significant portion of the Arbitrum community members may support staking grudgingly. Details of the staking implementation will be the subject of a subsequent proposal that the DAO will evaluate.