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Arbitrum Delegation Staking Rewards Proposal to DAO Aims to Improve Security

Arbitrum

A new governance proposal to increase the security of the Arbitrum DAO calls for rewards for staking and delegating ARB tokens. The proposal includes allocating 50% of future excess sequencer fees on the Arbitrum network to ARB delegates.

Details and Purpose of the Recommendation

Frission, a delegate in the Arbitrum ecosystem and a core team member at Tally, offers to reward ARB token holders with 50% of future excess sequencer fees for staking and active delegation. This proposal addresses concerns about the security of Arbitrum DAO’s growing treasury. Currently the treasury contains excess fees exceeding $50 million. The proposal suggests that ARB tokens, of which only 10% are actively used in governance, and declining voting participation could make the treasury an attractive target for potential governance attacks.

Frission’s proposal aims to increase the DAO’s economic security and reduce the risk of treasury attacks by encouraging governance participation. By offering ARB holders the ability to stake and delegate their tokens, 50% of future excess sequencer fees are planned to be allocated as rewards. This system is expected to offer an annual reward rate of approximately 7% for stakers, based on current prices. Importantly, Arbitrum’s existing treasury funds will remain unchanged and only future fees will be directed to stakers.

Liquidity and Governance Participation

The proposal plans to use Tally’s liquid staking token system to maintain liquidity for staked tokens. This mechanism will allow them to participate in governance while preserving the liquidity of staked positions.

Voting Process and Future Steps

A priority temperature control vote on the proposal will be held on the Snapshot platform next month. If accepted, smart contract development will begin and final on-chain voting could occur in September.

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Last year, another proposal proposed funding staking returns using the DAO’s Arbitrum treasury funds and distributing them to stakers over 12 months via a smart contract. Although this proposal passed the initial temperature control vote, it did not become a formal AIP due to objections over its feasibility. This new proposal for Arbitrum DAO is considered an important step to increase governance participation and security.


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