Arbitrum DAO signals approval to introduce staking for ARB tokens

Arbitrum DAO has expressed support for the implementation of ARB token staking to improve governance and security, with a 91.5% approval rating.

Arbitrum DAO has supported the implementation of (ARB) token staking, a move aimed at improving governance and strengthening the protocol’s security. According to the temperature control proposal presented by Tally’s head of marketing Frisson, over 91% voted in favor while 8.46% were against.

The initiative, which aims 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 that voter participation has declined since the Arbitrum DAO was launched.

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

Staking as insurance against governance attacks

A key component of the staking offering is its role in protecting the Arbitrum DAO treasury, which collects over 16 million ETH in excess fees. Frisson noted the increasing risk of governance attacks, noting that as the value of the treasury increases, launching a governance attack on the DAO treasury becomes “economically more attractive for a malicious actor.”

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

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