The Arbitrum DAO has approved a proposal to launch ARB staking. This move attempts to promote token utility and governance engagement. The move occurs at an important time, coinciding with a large token unlock.
The primary aspects of the ARB staking proposal include the usage of the Tally governance system and the development of a new liquid staking token, stARB. The staking incentives will originate from a variety of DAO-generated sources. The system will also allow for automatic compounding and restaking of future rewards.
The staking effort serves two purposes. It safeguards the DAO's $1.9B treasury from potential threats while allowing token holders to earn value on their holdings.
Arbitrum will simultaneously release around 92M ARB tokens — about 2.77% of the circulating supply. At the current pricing, these tokens are worth more than $50M.
Token unlocks tend to create supply disruptions and possible price decreases. In fact, ARB's price has dropped by 2% in the previous 24 hours, probably in anticipation of the unlock. The now-approved staking mechanism seeks to balance these market factors. How well it will result remains to be seen.
