What is this about?

The discussion revolves around a proposal by Plutus to activate a staking mechanism for ARB tokens, which would be funded by the Arbitrum DAO treasury instead of through token minting. The proposal includes the creation of the 'Arbitrum Coalition' to monitor the staking mechanism's impact over 12 months, with the goal of refining the staking process. The staking contract would allow ARB holders to lock their tokens for up to 365 days, with rewards based on the weight of the locked ARB and a sliding scale penalty for early withdrawal. The proposal aims to incentivize long-term holding and is designed to be legally palatable by using treasury funds to reward lockers.

How is the community reacting?

The community reaction is mixed, with some members expressing support for the proposal and its potential benefits, while others raise concerns about the necessity of the staking mechanism, potential inflation, and the motives behind the proposal. There are also discussions about the impact on ARB liquidity, the appropriateness of the 12-month trial period, and the handling of the plsARB situation. Some members, like Michigan_Blockchain and SEEDLatam, have decided to vote against the proposal, citing various concerns, while others like Limes and Brandonkumar support the initiative. Plutus has responded to concerns and clarified aspects of the proposal, emphasizing that the current Snapshot is to gauge interest and that the actual implementation will be decided later.

Why this is positive?

• The staking mechanism could increase interest in ARB and provide yield-earning opportunities for token holders.
• It rewards long-term stakeholders and differentiates ARB from other Layer 2 tokens.
• The proposal lays the groundwork for future revenue sharing models.
• Staked ARB will retain voting rights and can be delegated, maintaining governance participation.

Why this is negative?

• There are concerns about the necessity of a staking mechanism and its alignment with the broader objectives of the Arbitrum DAO.
• The proposal could potentially lead to ARB inflation and liquidity issues.
• Some community members question the motives behind the proposal and potential conflicts of interest.
• The use of treasury funds for staking rewards is seen as unsustainable by some, who prefer revenue-based rewards.

Next actions

The community is currently engaged in a Snapshot vote to determine the level of interest in ARB staking and the percentage of the total ARB supply to fund staking. The actual implementation details will be decided in a later Snapshot vote, and a group will be organized to work on the final implementation.