Can we get some clarity around this? I understand the tokens from the treasury would be replaced but what is the reasoning for pushing this now instead of waiting until March when the tokens are available to mint?
Also some clarity here. While I think it’s great PlutusDAO views this as a public good and is willing to fund/create the the contracts… what is the timeframe, once deployed, that the proxy contracts would be under PlutusDAO control?
I also understand there are some regulatory issues around distribution of sequencer fees but I think it’s better to either wait or spend time to find a way “around” the issue.
Arbitrum has real, live yield generation and I don’t think it’s a good idea to ignore that and settle for an old model that we’ve all seen fail a thousand times.
True @cryptowx , it is a classic move , recipe .
Ad also potentials new markets and and emergence of derivatives financial product , where we can bet on proposals. Like betting on sport.
If the proposal win or fail .
@Frisson maybe future features in tally or related or existing betting platforms @tnorm@krst@DisruptionJoe .
So delegates, vc whales , retail, an community , off chain labs, marke makers , quants, insiders can or not bet on proposals. In my humble imo.
I quess this is very much needed thing to do. Arbitrum ecosystem is vibrant, innovative etc… but if we lose the holders because of ARB token is losing its value it will eventualy decrease the holders and we will end up having less decantralization.
Unfortunaly accept or not, success of the projects are very well aligned with the token prices. If we can increase the utility of ARB it will help to bring even more people to the ecosystem.
Layer 2s are getting more and more = more competition, StarkNet token will have more utility as well.
The preferred long term way to accrue value to ARB. Timelocking this revenue is a fair proposal, long term users should be incentivized more heavily than other stakeholders.
Doing this in its current state will divert funds the Arbitrum DAO could otherwise use for growth/grant/marketing. There is likely a balance in there where the DAO could spend X% of this revenue once grants/growth gets it stride. At this point of a deep bear grants seem really appetizing.
Passing through revenue has regulatory risks. I do not agree with those risks and I dont agree with the SEC’s stance on things but it will cause issues in the present climate. Distributing the sequencer set will alleviate this.
Inflation
Inflation is just a form of payment from spot holders to lockers. Question is, if we set inflation at 175M tokens per year, why would ecosystem want to pay stakers $146M just to timelock their tokens? The opportunity cost decision is why not just use inflation for grants instead of paying time locked stakers?
Listed Reasons:
Significantly increase interest in Arbitrum and the ARB token
Increased interest from which stakeholders? Is there differentiation here from grants? It could increase interest from yield farming capital although its a tricky value prop
Allow for composability around a yield-bearing ARB token
This is a good reason IMO. It allows for more experimentation with tokenomics and would show Arb DAO governance can execute on chain decisions with a large stakeholder set, something that people have been critical of in the past.
Reward long-term aligned stakers with yield, while penalizing mercenary capital and short-term actors
Mercenary capital isn’t being penalized cause there currently aren’t opportunities they can take advantage of. Using grants to help teams build on ARB with the inflation also aligns long term stakers with yield.
Positively differentiate ARB from any other L2 tokens and bring the spotlight back to Arbitrum
Grants will bring some spotlight back too, user activity is what really brings this back with really good dapps and user growth.
Offer a first step and infrastructure towards introducing other forms of revenue sharing in the future
Taking the first step isn’t a bad thing but need to get it right and ensure it’s the right time. The question around VC locks shouldn’t be taken lightly. They are obvious supporters of the protocol and shouldn’t be tied to the bad rap everyone in crypto gives VCs. Ostracizing them through governance is not a benefit, and one option could be to execute these changes early next year or at least ensure we don’t throw them under the bus with inflation.
There’re probably synergies in some of these proposals:
One thing we could try is paying out grants with time-locked ARB. Could be a composable token that pushes the value to builders in the ecosystem. That gives the inflation a use for growth while also introducing a composable staking model in the ecosystem. At some point when VCs start unlocking this staking could get pushed into the entire float where inflation accrues to any staker who wants to receive. Ratio of how inflation is pushed (to DAO for grants vs public staking) can be up to governance votes.
I would vote no on this proposal. I also think the motivations of the posting “DAO” should be closely considered, on all proposals but especially in this situation.
reasoning for pushing this now instead of waiting until March
With the given timeframes, and assuming the audit takes a month, and that the contract could be written instantly, we’d be looking at mid-November as earliest possible release. That’s not factoring in any delays, time to code, governance back-and-forth, and so on. The amount shouldn’t be so much that the DAO is unable to carry it for the max. 4 months to the time when it can actually be triggered.
proxy contracts would be under PlutusDAO control?
I’ll check on this, but afaik it means owned by Arbitrum DAO when it says “owned by the DAO”, not Plutus; that is, they would be handed over to Arbitrum DAO to control effectively at the time of deployment.
(Update: Confirmed, OP now states this more explicitly)
I also understand there are some regulatory issues around distribution of sequencer fees but I think it’s better to either wait or spend time to find a way “around” the issue.
This could potentially be a way around the issue actually. To be clear, I’m not speaking to the proposal at hand here, and afaik there are no plans on the books to do this, but the regulatory issues that exist as disbursing the sequencer fees to arb holders would likely be far less or nonexistent if the sequencer fee revenue was used for grants and other Arbitrum DAO expenses rather than disbursed, and the arb stakers receive minted arb in this form instead. Grant recipients will likely need to sell anyway in order to fund whatever they have received their grant for, and are likely better served by greater liquidity in the form of eth, believers in the Arbitrum eco that they may be. Stakers are less likely to have the need or desire to sell, given that they hold and are willing to lock arb already.
Obviously “real yield” would be preferable, but governments are not known for moving speedily, and this would help satiate those looking for yield and would provide a head start on the tech if/when we get to a place where distributing sequencer fees is feasible, as well as provide useful metrics about the willingness to lock in order to receive yield.
I think it’s important to note that there’s no indication that Arbitrum’s leader election mechanism will rely on Proof of Stake (PoS). This suggests that if/when Arbitrum introduces new sequencers, they might not necessarily be required to stake $ARB to engage in the network’s sequencing operations.
With that in mind, one can envision the DAO holding a vote to elect new sequencers and determine the allocation of sequencer revenues. Options might include a) allocating a portion to infrastructure providers and b) reserving the remaining funds for the DAO itself.
In the case of Arbitrum, such a model seems more logical than any other PoS systems in terms of both governance and revenue distribution.
Giving power to the the DAO with decisions on sequencer revenues (i.e both fees and MEV) paves the way for different possibilities. These might range from burning the funds, redirecting them to the treasury, supporting public goods, and so on.
Also worth considering that if, over the span of a year, inflationary rewards are directed to the operators managing the sequencer, and a significant portion of the sequencer’s revenues are utilized to burn$ARB, the token would result in net deflation by year-end. Under the assumption of a stable market cap, this would likely lead to an increase in the $ARB’s price.
I don’t think it would leave any party out. Isn’t this the endgoal after all ? Happy to take feedback!
So, for disclaimer i dont hold pls-arb and i have no conflict of interest in this game, i dont arbitrage the token.
Maybe @Plutus dao aiming for product to stake more arb and more arb overtime for to be a dominant player but via a product like like Defract (yeah the prism idea can be fork)
Plutus Dao
you decompose your token in 2 parts :
users to split a yield- generating asset into its most basic components: a Yield Token (YT) and a Principal Token (PT). These new assets will allow users to isolate the exact risks they wish to speculate on or protect against.
Example
Fixing interest rates: A user could commit X to the new plutus dao stakiing derivatives for one year and receive a corresponding $PT and $YT.
Purchasing Tokens at a Discount:
Exposure to Interest Rates:
$/ FX Swap: A user may be swapping their yield received from X as a way of funding a purchase of another asset “Y”. Rather than performing the manual process of selling variable rewards, they instead sell their $YT and use that to purchase Y or Y’s $YT or $PT.
Here the part that you maybe to dig in or not if your are interrest or not plutus dao
Liquid Staking: A user wants to earn X’s staking rewards but wants the flexibility to trade their position without having to wait for the unstaking period of x days. They mint $PT and $YT and stake the $YT in your dao app . If they want to trade their position, there is no unstaking period for their $YT and they can immediately trade their $PT, $YT .
They could also lend out their $PT in a money market protocol to earn additional yield or be an LP in the $PT pool and earn AMM fees.
Arbitrage: The price of X moves down 90 , but the $PT remains at 85 $ or eth value, and the $YT remains at 15 $. A user buys X for 90 UST and mints $YT and $PT, which they immediately sell, netting a risk-free profit of 10 $ (85 + 15 – 90). This process can then be repeated until prices normalize.
To date, the ARB token shows weakness in relation to the entire market. This is due to the fact that holders have absolutely no reason to hold a token, buy a token. I repeat, none.
There are no votes, there are no changes, there are no more or less interesting projects. All projects are an attempt to receive a grant in order to spend it on their own needs rather than for the benefit of the ecosystem.
Arbitrum is already losing to Optimism, the main competitor, despite the fact that there have not even been unlocks yet, which will also put pressure on the price. The community is obliged to come up with some kind of value for the token, so that the holders would be motivated to hold the token, buy the token. This proposal is about exactly that. Otherwise, the arbitrum will be unnecessary to anyone. It is no longer in demand among developers, and if you do not give value to the token, then it will die as a project altogether, and will float like shit in a hole. I support this proposal to save a dying ecosystem!
The proposal to activate ARB staking is commendable for its comprehensive approach to introducing utility to the ARB token and encouraging long-term commitment from the community.
A few questions tho:
Could you please provide more details on how the proposed ARB staking mechanism would handle potential concerns related to token inflation and its impact on ARB’s value over time?
What are this proposal’s consequences in introducing utility to ARB, and how does it aim to differentiate ARB from other Layer 2 tokens?
handle potential concerns related to token inflation and its impact on ARB’s value over time?
Receiving one’s share of the rewards would mean locking up tokens, meaning that 100% apr would be the breakeven point between inflation and deflation, as aside from governance purposes, locked tokens effectively act like burnt tokens until they are unlocked, and people unlocking would mean higher apr to entice others to lock. So while it’s inflationary on the face of it, there is actually a reasonable likelihood of it being deflationary, as it’s reasonable to assume people will bid (by locking) the apr below 100%, making it effectively deflationary.
Further, any arb used as incentives to pull or retain people on Arbitrum will have somewhere else to go besides being immediately sold, i.e. it gives another option besides farm>dump>repeat.
What are this proposal’s consequences in introducing utility to ARB, and how does it aim to differentiate ARB from other Layer 2 tokens?
In addition to the points discussed in the Broader Implications for Arbitrum and Benefits for Users sections, protocols seeking grants could signal their dedication to Arbitrum by asking for their grant in the staked form of arb. Though this is technically already possible through vesting, the overhead associated with looking after potentially hundreds of vesting schedules could become cumbersome, vs. a dedicated token that offers an income stream in the meantime.
In a similar vein, it will provide a continuation of allocation of arb in the spirit of the original arb airdrop; where the original arb airdrop sought to disperse arb to users of Arbitrum, this seeks to reward continued loyalty towards Arbitrum. It means that those who didn’t immediately sell their airdrop, as well as newcomers to the space that missed the airdrop, have a chance to be rewarded for their loyalty.
Obviously real yield is preferable, but as has been discussed to death in Proposal: Distribution of DAO Revenue to ARB Token Holders, it is likely not feasible with the current regulatory environment, and any proposal in that direction is likely to be contentious at the very least and put Arbitrum’s future as a going concern at risk if it passes.
This proposal sets up a technical framework for distributing real yield once the regulatory issues can be sufficiently addressed, and would give Arbitrum DAO some insights on user behaviour vis a vis locking and what is done with the received rewards. This is a baby step towards real yield, not a step away from it.
I agree with you. They should have a multi-tier locking period. I would propose a 30, 90 & 180 day locking period.
I believe that we should focus on creating strategic partnerships with other DAOs and projects who want to build on our platform.
We need to focus on attracting new investment in our blockchain, be that DEXs, dApps, NFT marketplaces, and blockchain infrastructure, security and scalability.
While I like adding utility to ARB via a locking mechanism, exploring a more active use of these locked tokens would be interesting.
Radiant and other protocols have proven Balancer’s ve 80/20 model effective at bootstrapping liquidity and providing an alternative to voting in governance with single-sided tokens.
This method, or locking LP tokens on other dexes (potentially combined with automated liquidity management), will drastically increase yield and offset the need to use the total 1.75% inflation as rewards or complement those rewards.
Additionally, this opens an avenue to explore where Dexes and other DeFi protocols can bid with incentives/utility for this locked liquidity. This will increase TVL on Arbitrum, the depth of liquidity of the ARB token, and sequencer revenue for the DAO.
While your point in FAQ #1 is that this is a safer alternative to interacting with DeFi smart contracts, the implementation steps indicate that smart contracts will be involved regardless.
It could be worth exploring a spectrum of lock types with various levels of risk/reward.
Another matter is whether the alternatives would pass the Foundation’s legal counsel scrutiny.
Nonetheless, I favor activating a portion of inflation to reward lockers, though it may be worth exploring variable inflation determined by the quantity of locked ARB versus the overall yearly increase of circulating ARB.