The Arbitrum Decentralized Autonomous Organization (DAO) has officially approved a proposal that will allow holders of the native Arbitrum (ARB) token to stake their holdings in return for yields sourced directly from the Arbitrum treasury.
- The Arbitrum Decentralized Autonomous Organization (DAO) approved a proposal to allow ARB token holders to stake their tokens for yield.
- The yield will be sourced from the Arbitrum treasury and distributed over 12 months via a smart contract.
- The DAO voted to allocate 1% (100 million) of the total 10 billion ARB supply for staking rewards.
- The projected annual percentage yield ranges from 7.84% to 78.43% depending on amount staked.
- This allows stakers to earn yield directly from the treasury, unlike other systems.
- The ARB price surged over 3% to $1.13 following the announcement, with trading volume also increasing.
- The DAO will now evaluate details like selecting a service provider, contracts, and an auditor for the staking rollout.
- There will be a 2-week review period before final activation to allow for community feedback.
- The decision marks a significant evolution of the ARB token and Arbitrum ecosystem.
The yields will be distributed to stakers over a 12-month period through a decentralized smart contract. Of the initial options proposed, the DAO chose to allocate 1% (100 million tokens) of the total 10 billion ARB supply toward staking rewards.
This decision passed with over 66% of votes in favor, though a significant minority of 33% voted against the use of treasury funds for incentives. The projected annual percentage yields range from 7.84% to 78.43% based on the eventual ratio of tokens staked.
The approval catalyzed a swift price surge for ARB, which rose to $1.13 per token as of Monday – a 3.14% gain over 24 hours. Trading volumes also spiked to $358 million, underscoring increased market interest.
This staking model is novel in that it allows ARB holders to earn direct token yields from the treasury itself, rather than through conventional models like securing a network or distributing revenue. The Arbitrum DAO will now finalize details like selecting a technology provider, coding reward contracts, and appointing an external auditor.
A two-week review period will commence afterwards to incorporate community feedback before the staking system goes live. While not everyone agrees treasury funds should be utilized, the decision overall will greatly expand utility for ARB and likely attract new holders to the Arbitrum ecosystem.
It also comes at an opportune time, as decentralized applications seek to enhance liquidity and manage effects of the ongoing crypto winter. With prudent planning, Arbitrum staking could provide a significant new use case for ARB and play a role in the next market cycle upswing.