New ARB Staking Mechanism Will Reward Holders With 50% Surplus Fees

Key Points:

• A proposed ARB staking mechanism aims to boost security and encourage participation in Arbitrum.
• The initiative combats dwindling voter activity and potential DAO treasury threats.
• New staking systems will provide varied tasks and rewards for ARB holders.

An Arbitrum governance member proposed a new ARB Staking Mechanism using 50% surplus sequencer fees to boost security and active governance. This could yield a 7% annual reward rate.

A governance member from Arbitrum has submitted a proposal for an ARB staking mechanism that will use 50% of the future surplus sequencer fees to enhance economic security and incentivize active participation in governance. Staking and delegating ARB tokens will reward holders with surplus sequencer fees proportionate to their share of the total ARB staked.

Proposal for New ARB Staking Mechanism

The extra charges of the Arbitrum DAO have reached over $50 million. Considering allocation in a circulating supply of only 10% ARB state, only roughly $324 million vote actively on governance. As the number of unique voters continues to decrease since the launch of the DAO, the DAO treasury could remain open to attacks.

The proposed mechanism of ARB staking seeks to increase the security of the Arbitrum DAO by providing incentives for holders of ARB tokens to become more active in governance processes. Staking ARB resolves Arbitrum DAO’s emerging economic vulnerability since there will always be an incentive for ARB token holders to perform effective governance.

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Expansion of Staking Systems for Arbitrum

The proposal allocates 50% of the surplus sequencer fees to the ARB stakers. Assuming this is a 1:1 conversion of the current delegated ARB into staked ARB and an annual accumulation of 12K ETH in surplus fees, this will equate to roughly a 7% annual reward rate.

This means that more staking systems for Arbitrum will be added over time. Each system will ask the stakers for different tasks, risks, and rewards. ARB holders can opt for different risk/reward payoffs and select specialized work to secure their system.