Ethereum Layer 2 network Arbitrum’s decentralized autonomous organization Arbitrum DAO is currently voting on a governance proposal to “activate ARB staking.” The proposal was originally put forward by PlutusDAO in September, as the ARB token has lacked practical utility since its launch, it is proposed to enhance the attractiveness and composability of ARB through staking functionality.
If approved, ARB token holders will be able to stake their tokens and receive staking rewards in the form of ARB paid through smart contracts (funded by the Arbitrum treasury) over the next 12 months. There are currently four options available for voting, allowing the community to decide how many ARB tokens should be allocated as staking rewards, with options ranging from 1% to 1.75% of the total supply (equivalent to 100 million to 175 million tokens).
Furthermore, the proposed staking model includes penalties for early withdrawal to incentivize stakers to maintain their investments, aligning stakers’ commitments with the ecosystem’s long-term goals.
However, DeFi-native investment firm Castle Capital publicly expressed opposition to the proposal. Castle Capital stated that while they are open to innovative attempts to improve the Arbitrum ecosystem, they have raised several doubts about the necessity of this new proposed staking model and its alignment with the broader goals of Arbitrum DAO and the ARB token. Castle Capital stated:
Additionally, due to the lack of detailed “progress tracking and utility evaluation plans” in the proposal, Castle Capital expressed concerns about the feasibility of the staking plan.
Therefore, Castle Capital currently does not support the proposal. However, the company is willing to reconsider its position if the proposers or the community can address Castle Capital’s suggestions. Specific suggestions made by Castle Capital include:
– Directly linking the ARB token economy to sequencer revenue: Linking the value and distribution of ARB tokens directly to sequencer revenue on the Arbitrum network (whether through staking rewards or burning tokens). This approach helps create a sustainable economic model, ensuring that the interests of ARB token holders are directly tied to the success of the network.
– Presenting a detailed plan for data monitoring and staking model analysis: Formulating a detailed plan for tracking and monitoring the performance of the staking model, defining what constitutes success and what constitutes failure.
– Removing seemingly unnecessary locking mechanisms: Castle Capital believes that certain mechanisms proposed in the staking plan may be unnecessary or unfavorable to users, and thus suggests their removal to increase the flexibility and attractiveness of staking.
– Proposing the establishment of a working group or hiring service providers for comprehensive research: Establishing a dedicated team or hiring external service providers to conduct in-depth research and analysis of such mechanisms, collecting previous data, predicting impacts, and establishing a concrete monitoring and evaluation plan.
Despite the referenced concerns raised by Castle Capital, the majority of the community votes lean towards supporting the introduction of staking. Based on current voting results, 60% of the votes support allocating 100 million ARB tokens as staking rewards, while nearly 40% support allocating 175 million ARB tokens, with no votes against, indicating a high likelihood of approval for the proposal in the coming days.