If utility goes hand in hand with a lock, how would you improve liquidity? You are possibly confusing the possibility of a “liquid token for the user” with the availability of onchain liquidity of ARB; which would be reduced by 1 ARB for every 1 ARB that is part of this initiative.
I personally don’t see why introducing ARB staking would inherently decrease ARB liquidity. I anticipate that many ARB tokens will be staked, but not necessarily those tokens which are already being used to make markets onchain. There will still be a use for unstaked ARB. If the ARB LST gains significant adoption in DeFi, it could even create a liquidity tide that lifts all boats. There are many examples of tokens that have a staked version, yet still have strong liquidity for the unstaked version. I could be wrong about this of course and am open to suggestions if folks have strong views on this topic.
gm Frisson, thanks for updating the proposal. I have been following it for a while and in general in support of it.
If you wanted to address @Jadmat’s liquidity concerns, it could be worth exploring a model where what’s staked is an LP token from a DEX, so liquidity <> staking would not be working in opposite directions.
Although it lacks customization, and not being CL can bring disadvantages in terms of liquidity depth; the case of veBAL is a good example to resolve this point.
I’m kinda late to the party here, but my thoughts from the ARDC post.
The ARB token has the ability to mint 2% of supply annually, why not use this as a baseline, thus if you do not delegate, you are diluted, thus tokenholders are incentivized to remain engaged with whom they are delegating to. (Split something like 95/5 owner/delegate)
There are a ton of delegation experiments that existed in the past that should be evaluated such as Holographic Consensus (Push) or Delegation Markets (Pull). This could be an alternative to using dilution as an incentive, although there are obviously other considerations.
Tally tARB is a bit scary from a concentration of power perspective; I think if we do create an incentivized re-delegation program, it should probably be enshrined, vendor agnostic, and upgraded via governance vote. Something that would need to be agreed upon before development begins. Then regardless of how we incentivize via sequencer fees, dilution, etc we have one location that arb holders are expected to stake and receive their pro-rata share, as well as for DeFi integrations.
I personally am supportive of turning on the 2% annual supply mint and including it in staking/delegate rewards. I think this should be done via a separate proposal (rather than including it in this one), but I’m open to your thoughts here.
Re: tARB
One note of clarification is that the core ARB Staking contracts are enshrined and only upgradeable by the DAO. tARB is an LST built on top of ARB Staking. The re-delegation component of tARB (described below) is controlled exclusively by the DAO.
Where re-delegation comes into play with tARB is in the case that tARB is locked in smart contracts that don’t support the ability to maintain the underlying account balance <> delegation relationship. In this case, the Arbitrum DAO exclusively has the ability to determine how this voting power is distributed via governance vote.
It’s a good point that the DAO will need to decide how to set up the initial redelegation logic for tARB in the above ^ state. I’ll edit the proposal to call that out.
I add some detailed information that may be useful for this proposal. While it is true that the number of voters decreased, we should note that most of the decrease is among the 0-10k VP voters. As can be seen in the table, most of the 0-100 VP voters decreased, we can interpret that some of them were farmers.
However as @pedrob mentions in overall VP remains stable. I think this proposal is interesting and can help the VP distribution among the delegates.
After gathering more feedback from delegates, I’ve made two important changes to this proposal.
I explicitly clarified that, in parallel with the development of ARB Staking, Tally will lead two separate DAO working groups that are focused on aspects of the system that will be implemented after development is complete. The working groups will be formed via an open call for contributors that will be posted after this proposal passes the temp check stage. Each working group will deliver their recommendations in October, so that the recommendations can be turned into DAO proposals and created following the implementation of ARB Staking.
The Staking Rewards working group will focus on how to fund staking rewards. It will develop a recommendation about whether staking rewards should be funded by sequencer fees, MEV fees, validator fees, token inflation, treasury diversification, and/or DAO venture investments and how to implement such rewards.
The ARB Staking & Delegation working group will focus on how to define an active contributor to the Arbitrum DAO, delegate incentives, and voting power distribution. It will collaborate with Tally and Karma to develop recommendations on Karma Score formula and the minimum Karma Score required to be eligible for staking.
I added to the cost of the proposal and broke the cost out into separate categories. I added $60,000 USD in ARB for an audit and $20,000 USD in ARB to pay for the working groups. We were originally hoping to work with the ARDC to audit the proposal, but received feedback that this may not be feasible. The final cost of the audit including documentation will be published on this thread. Any leftover funds from the $60,000 audit budget will be returned to the DAO.
We would like to share some final thoughts based on the amended proposal and the recent research of the ARDC.
As we have stated in the ARDC research on the proposal in question:
Here we will bring up another related comment we made in that post:
The information gathered by the ARDC indicates that we should work together to provide sufficient sources of revenue for the Staking program, as in principle the fees obtained from the sequencer may be relatively low compared to the capital staked. While it is true that today those who delegate tokens get 0% APY, it would be important to consider that the initial estimations have changed significantly.
It could be interesting to align the Scoring requirements with the current delegate program, although the process to obtain a Total Participation Score in DIP is different, it is important that as a DAO we are clear about what an active delegate means.
Regardless of the score requirements defined by the DAO, it would be good to be able to block any score individually if someone detects a delegate trying to raise his participation score in the forum with comments of little value.
We agree on the need to create these working groups for the reasons explained above. The proposal in the current format is interesting and we hope that in a joint effort the remaining details can be decided upon. We are aware of the importance of generating mechanisms to provide an additional use case for the token as well as increase the number of delegated ARBs.
We worked with Frisson and Tally team on fleshing out the details specifically around Karma’s implementation and enhancements needed for this initiative. We are in full agreement with the updated proposal Frisson posted.
I’ve voted for this proposal. The proposal introduces ARB staking, which can unlock additional utility for the ARB token and align governance incentives more effectively. By experimenting with staking, Arbitrum can gather valuable data to refine the model, potentially leading to a sustainable mechanism that benefits the entire ecosystem.
We mainly highlighted two important factors regarding integration risks with the Tally Protocol and the general risks that come with LSTs. We made recommendations for how the community could address these risks should they decide to move forward with the ARB Staking Proposal. You can read our analysis in full here:
I voted YES.
The ARB token is currently lacking utility. This can be seen in the price action, which shouldn’t be relevant in first place but because of the negative price action we see a lot initiatives and grants asking for more funds to fill the gap between their initial ask and now. This results in way more token being taken out of the treasury and creating further downside pressure and faster draining of the ARB holdings of the DAO.
I do hope this will help to stabilize the token price and basically extend the runway of the DAO.
@Frisson Thank you so much to coming up with this, We will vote FOR to the ARB Staking proposal because it offers a critical enhancement to the ARB token’s utility, addressing recent challenges with token value and treasury pressure. with the staking, it could stabilize ARB’s price and strengthen governance by incentivizing active participation. We see a lot of potential in this initiative and believe it will provide valuable insights for developing a sustainable model that benefits the entire Arbitrum ecosystem.
However, as @maxlomu mentioned, addressing the ADRC’s questions in more detail, especially regarding delegate incentives and the economic roadmap, would further strengthen the proposal and ensure a well-rounded approach.
I think @Frisson was able to find the best solution here which is:
tally builds the infra needed to having an lst on top of arb
the dao decides, with 2 different working groups, the parameters (specifically the type of rewards, where they come from etc + what means delegating to an active delegate)
This is likely the best solution because addresses the different vision everybody might just have about the topics above, especially the part about active delegates that could be seen in very different ways.
I am happy we have a partners as Tally in our dao, with interests alligned with ours, and I am looking forward to see this live and participating to the working groups
