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Frission, a delegate of the Arbitrum ecosystem and a core team member of Tally, proposed a mechanism to use 50% of future transaction fees to reward ARB token holders who stake and actively delegate their assets. The proposal focuses on security concerns related to Arbitrum DAO’s growing treasury, which now exceeds $50 million in total value.
What’s Happening on the Arbitrum Front?
Due to only 10% of ARB being actively used in governance and declining voter turnout, it was claimed that the treasury could become an attractive target for potential governance attacks. Frission’s proposal aims to encourage governance participation, enhance the DAO’s economic security, and reduce the risk of treasury attacks.
The proposal aims to allow ARB holders to stake and delegate their assets, allocating 50% of future excess sequencer fees as rewards. This system is expected to offer an estimated 7% annual reward rate for stakers based on current prices. More importantly, Arbitrum’s existing Ethereum treasury will remain unchanged, and only future transaction fees will be directed to stakers.
The proposal plans to include Tally’s liquid staking token system to maintain the liquidity of staked assets. This mechanism will ensure liquidity while allowing staked positions to participate in governance.
Notable Details Regarding the Proposal
The preliminary process control vote for the proposal is planned to take place next month on Snapshot. If approved, the smart contract development process will begin, and the final on-chain vote could potentially occur in September. Last year, another proposal suggested using Arbitrum treasury funds to finance staking yields and distribute them to stakers through a smart contract over 12 months.
The initial process control passed but did not advance to an official AIP after receiving feedback on its feasibility. Following the Arbitrum airdrop event, ARB tokens did not receive the expected interest from investors. The main reason for this was the significant amount of token unlocks and the value of assets allocated for the team. How investors will react after this vote remains to be seen.
