ARB has a quite a significant inflation, and fees based in ETH – aside from governance power, we should incentivize speculative investors by generating protocol revenue back to holders. Some potential options here are as follows;
Timelock ARB for staking rewards – similar to Curve, people would timelock their ARB to acquire voting power relative to the duration. This can be the form of staking that part of the emissions would then distribute exclusively to those that timelock and stake. This not only increases scarcity, but brings a yield benefit to those that commit to greater lock times (skin in game theory)
Similar to ETH, introduce a burn % of TX fee. Pretty strait forward – the greater the protocol activity, the more deflation.
Change the unit of tx fee to ARB instead of ETH – Matic does this, Solana does this; its important to use the native token as that generates revenue and makes the token more valuable within the ecosystem.
From a speculative investment perspective, what is the value proposition to holding ARB? If ‘voting rights’ is all there is on offer, it will be difficult to sustain on-going investment. Voting rights is great, but that doesn’t really appeal to the larger audience in crypto if that is all there is to the token.
I think you’ve answered the core issue yourself in the last paragraph. This is a governance token, and that’s it. It’s not made to be traded or price-speculated on. It has no intrinsic value, so I don’t think anyone should look at it as an “investment”.
However, if you still end up speculating on its value just for the fun of it, I’d highly recommend delegating your tokens’ voting rights to one of the delegates who can participate in governance on your behalf.
I have to disagree with that – since there is no timelock criteria and governance is token weighted, if you do not introduce something like the ve-token model then you’re vulnerable to vote-buying exploit through escrow. That is a well-known issue with DAO’s and governance models which only a few have adapted to prevent.
I understand delegation already – I’m a delegate and governance coordinator for another project, have been for a few years now.
To put in simply;
Option #1 would be preferrable here as this mitigates ‘vote-buying’ and reduces circulating supply. Price does need to be sustained sufficiently otherwise it can undermine governance. Large whales can concentrate supply and thus voting power to influence direction, and without a locking criteria they’re not exposed to the outcome of any proposal post-voting if they wish. This mean price can be manipulated through pulling liquidity and doing a mark down > accumulate cheaper to grant more voting power > dump after voting is done. In short, the DAO can be gamed by larger stake holders if you do not incentivize widespread distribution and timelock mechanisms.
If you’re not familiar with ve-token governance – it basically means you would take your ARB and timelock it for a fixed duration; the longer you lock for equates to the more voting power you gain, which decays over time closer to lock expiry. This ensures that those larger holders participating in governance voting, are also exposed to the outcome and result of the proposal - ergo “skin in the game”. If you don’t do something like this, then the whole governance model can be easily undermined by vote-buying through escrow – that is, anyone from outside the community can temporarily have significant impact on voting without exposure to the outcome/result. Which means the door is wide-open for malicious governance attacks and exploitative proposals – yes, can use a veto council but that is not a decentralized process to solely depend on.
Providing additional incentives for holding ARB beyond governance power is a smart move @cryptomickbit . By implementing features such as timelocking ARB for staking rewards or introducing a burn percentage of transaction fees, we can create more value for ARB holders. These measures not only increase scarcity and generate deflation but also align the token’s utility with the protocol’s native ecosystem.
While voting rights are important, relying solely on them may limit the token’s appeal to a broader audience. By exploring these proposed solutions and seeking community input, we can enhance the investment proposition of ARB and attract more speculative investors. It’s essential to strike a balance between governance power and tangible benefits that resonate with the crypto community’s interests.