At SEEDGov, we find this proposal interesting. Activating a Staking protocol aligned with increasing participation in governance is a great idea. We share the idea that with Quorum lowering down we are facing a potential attack to our DAO and it’s our job to prevent that by having robust and solid governance. With that said, we believe there is a fundamental problem being addressed indirectly rather than directly.
Arbitrum DAO has been generating significant selling pressure on the ARB, which, as we all know, has had a strong negative impact on the governance token’s price. Therefore, creating utility for the token while reducing selling pressure could be an effective mechanism to prevent its devaluation.
The idea of an LST is attractive and can bring positive effects such as increased competitiveness of our token. However, we believe that before moving forward, it would be responsible to obtain more precise data on how staking would impact the on-chain liquidity of the token. Also, on the opportunity cost of locking up a large percentage of the tokens and how it would affect a treasury that is mostly in ARB.
It would also be good to have data from an outcome analysis perspective. Considering the hypothetical returns that were calculated, how much do you expect to be staked? Do you think the current percentage of revenue is attractive enough to achieve the desired objectives?
Also, as a mention, with the Treasury Management proposal being discussed it would be wise to do some impact calculations and possible overlaps. (Considering that although both proposals can coexist, the STMG’s motivation is to generate the necessary yield to cover the gap between the DAO’s income and outflows, so that any direct allocation of income affects the STMG’s objectives in the long term.)
We strongly support the idea of using the surplus fees to enhance governance within our community, but yet we think the mechanism could be improved and be more meritocratic based on real contributions. Thinking loudly considering the idea to avoid overlap, start working on a framework that allows us to merge criterias and create a horizontal scoring system that works both for the Delegate Incentive Program and this proposal is the way to go for this.
In this way, mechanisms can be established to direct incentives in favor of those who delegate voting power to members of the community who make significant contributions. It would also be interesting to encourage delegation to actors with little VP but who still actively contribute to Arbitrum DAO. This is aligned with what the Foundation proposed with the (Re)delegation Week.