New Proposal to Reward ARB Token Holders with 50% of Future Fees in Arbitrum Ecosystem

• Frission, a key figure within the Arbitrum community and a part of Tally’s core team, has recently suggested a method to reward ARB token holders by utilizing 50% of forthcoming transaction fees.
• The proposed initiative focuses on incentivizing stakeholders who actively delegate and stake their tokens, thereby addressing security issues as the Arbitrum DAO’s treasury amasses over $50 million.
• To support this proposal, Frission emphasizes its potential to enhance governance participation and secure the growing treasury against possible governance attacks.

Discover how Arbitrum aims to enhance its security and governance effectiveness by rewarding ARB token holders through an innovative staking mechanism.

Challenges Arbitrum Is Facing

Currently, only 10% of ARB tokens are involved in governance activities, with voter turnout decreasing steadily. Frission’s proposal outlines that without increased participation, the sizeable treasury is vulnerable to governance attacks. The recommendations aim to uplift governance involvement, strengthen economic security, and ward off potential treasury attacks.

Proposal’s Core Components

The proposal suggests that ARB holders should stake and delegate their tokens, with 50% of future sequencer fees converted into staking rewards, potentially offering approximately a 7% yearly return at current valuations. Crucially, the existing Ethereum-based treasury will remain unaffected, with only future fees directed towards this new incentive structure.

Key Elements of the Proposal

To maintain liquidity, the proposal incorporates Tally’s liquid staking tokens, ensuring that staked assets remain fluid and can still participate in governance activities. This strategy seeks to maintain a balance between asset liquidity and active governance participation, enhancing overall ecosystem stability.

Implications for Investors

– Investors can anticipate an annual return of around 7%, based on current token valuations.
– The separate nature of the existing Ethereum treasury minimizes risk exposures.
– Liquid staking tokens ensure that assets remain liquid while concurrently supporting governance activities.

Conclusion

A preliminary control vote on this proposal is set for next month on Snapshot. If approved, the development of related smart contracts will proceed, leading to a potential final vote in September. A prior proposal regarding the use of Arbitrum treasury funds for staking did not progress beyond initial feedback. The forthcoming vote will be pivotal in determining the future strategy for ARB token holders and the broader Arbitrum ecosystem.