Changes Based on Feedback Since the Temperature Check Version (posted 20th Oct)
Changes Based on Feedback Since the RFC Version
The Arbitrum DAO treasury is growing rapidly, yet that growth is not currently being shared with token holders. The Arbitrum DAO treasury address holds 3,54B ARB tokens, and an unexpected $69,4M of unclaimed individual ARB airdrops were recently returned to the DAO treasury. The treasury is exceptionally well funded, and it’s important to note that the DAO fully controls the usage of the Arbitrum DAO treasury and that all surplus revenues belong to the DAO. This includes sequencer revenues.
We believe that the Arbitrum token needs a staking mechanism. We propose creating a mechanism that distributes ARB to token lockers. A locking mechanism would incentivize long-term token holders and become a fundamental building block for future token utility proposals (e.g., distributing sequencer revenues).
Along with creating a locking mechanism, we propose requesting 1.75%, 1.5%, 1.25% or 1% of the total ARB token supply from the Arbitrum DAO treasury and distributing this over 12 months through the proposed locking mechanism. The final amount would be decided with a Snapshot and that decision cemented on-chain with a Tally vote. We suggest that the ‘Arbitrum Coalition’ gathers data and monitors the impacts of this staking mechanism over the 12-month period and potentially audits the contracts if funded in time. Of course, this relationship is reliant on both proposals passing and the DAO and Coalition Advocate supporting the scope of work for the coalition. The goal is to use these insights to give the DAO the data and tools to refine the ARB staking mechanism further.
It is important to note that this proposal is entirely separate from the ongoing liquidity incentives framework and grant discussion. Both can and should co-exist - Arbitrum should have a functional grants framework and a staking mechanism. The Arbitrum DAO STIP program has recently concluded, and 50M ARB tokens will enter the market over the coming months. As proposed here, a supply sink through staking would benefit the Arbitrum ecosystem as a whole.
In the discussions over the previous months, we’ve seen the legal aspect be a deterrent to sharing value with ARB token holders in the form of revenue. The way we are proposing the staking mechanism through using existing treasury funds to reward lockers in ARB is the most palatable option from a legal perspective, as it does not involve sharing revenues. It also does not rule out the possibility of later moving on to a model that allows for other value accrual methods to the token. Should our proposal pass, when additional value accrual methods are proposed and the legal landscape is more mature and better understood, the process will likely be much quicker since a staking mechanism is already in use with audited contracts in place.
We thank the following delegates and others for their valuable feedback while drafting this proposal.
Westie from Blockworks Research Coinflipcanada And several others
The Arbitrum ecosystem would benefit in multiple ways from a staking mechanism that is constructed to heavily align incentives with those most aligned with the ecosystem long-term. While staking mechanisms are familiar and a mainstay across DeFi, sustainable models and their impact on the token in question have been scarcely studied. These staking mechanisms are often poorly designed and have rampant inflation that negatively affects the token.
Regarding staking mechanisms, there are few examples to model after in the Layer 2 token space. We propose that the Arbitrum ecosystem takes the first step in this endeavor and leads the way - as it already does in many other verticals. We believe that to construct a long-term staking mechanism that is sustainable, there is first a need to gather actual data that is strictly specific to the Arbitrum ecosystem and the ARB token.
Because of this, we propose that the ‘Arbitrum Coalition’ monitors the effects of this 12-month staking experiment and provides quarterly updates on the impacts of the mechanism through dashboards and qualitative reporting. After the 12-month staking experiment is over, we suggest that the DAO funds the ‘Arbitrum Coalition’ to produce a comprehensive report with results and recommendations on what they believe is the most sustainable way forward in building a staking mechanism and incentive model that is sustainable yet attractive for the ARB token. The expertise of the ‘Arbitrum Coalition’ is perfectly suited for analyzing the results of this experiment, given that Gauntlet is an industry-leading authority in tokenomics design, Blockworks spearheads the industry’s research efforts and Trail of Bits is a top-tier security organization. To read more about the Arbitrum Coalition, please visit their proposal here.
This proposal passing would have extremely positive implications for the entire Arbitrum ecosystem. Having a native staking model that the DAO officially approves would be likely to have the following consequences:
These are some of the benefits that will likely result from having a staking mechanism; however, verifying these predictions’ accuracy by an independent third party such as the ‘Arbitrum Coalition’ is important. These hypotheses cannot be truly verified without actual data, highlighting the importance of a 12-month trial period for staking.
By introducing a staking contract that responsibly distributes the allotted amount of tokens to users who are willing to lock their ARB, the incentives are aligned in a way that rewards those parties most loyal to the Arbitrum ecosystem. This includes long-term holders of ARB and DAOs that have received an airdrop and are willing to lock their tokens.
The figures below detail possible APRs for stakers at different staked percentages if 1.75%, 1.5%, 1.25% or 1% of the total supply was distributed annually. The current circulating supply of ARB is approximately 1.275B.
Example usage: ARB locker
A locking mechanism allows users who are long-term believers in Arbitrum to signal this belief through their actions and get rewarded for it accordingly. Locking for longer is always optional - users may lock for any time period. One year is a reasonable lock time compared to the previously popular 4-year locking model. A one-year lock is not too long to the point of disincentiving locking, as users can choose the lock duration. Not only does this give individuals optionality and a mechanism to earn a native yield on their ARB tokens, but it also gives protocols that were a part of the DAO airdrop or have otherwise accumulated ARB a mechanism to earn on their treasury.
Ultimately, this proposal introduces utility to ARB and gives users more incentive to hold. In addition, long-term believers will be net increasing their network share, which sets up a base from which we can build further proposals for ARB value accrual without worrying about the distribution mechanism.
From a user standpoint, it’s important to note that the ARB staked in the proposed contract will still have voting rights and can be delegated - voting power will not be diminished by a shorter lock length. The staking contract will be upgradeable and controlled by the DAO - this ensures that the DAO can pause this distribution at any time.
As it stands today, ARB has no native utility or yield. We propose approving the creation of the staking contract detailed above and distributing an equivalent of 1.75%, 1.5%, 1.25%, or 1% of the total ARB supply from the DAO treasury to the staking contract. These tokens would be distributed over a 12-month period, during which the ‘Arbitrum Coalition’ could - pending their proposal passing - monitor the impacts of the proposed staking mechanism and draft a report and recommendations by the end of the period. Note that the Arbitrum Coalition proposal is entirely separate yet synergistic to this proposal. The passing of either proposal is not conditional on the other proposal’s performance.
It’s important to highlight that to move toward a final and refined version of value accrual to the ARB token, trial and experimentation is required. We believe there is a strong need for actual data from a live staking mechanism, such as the one suggested in this proposal, from the unique context of Arbitrum’s growing ecosystem to make more informed decisions on what the ultimate mechanism for ARB staking and value accrual might look like.
Innovation has always been Arbitrum’s forte in both technical advancements and building a vibrant community - we believe that the approach to building a cutting-edge staking model for ARB through trial and experimentation is a logical way forward.
This proposal will follow the official lifecycle of an AIP detailed here. Please note that this proposal is a non-constitutional proposal.
The suggested timeline can be found below.
Week 36-37 - Forum post, request for comments and feedback (Complete) Week 43-44 - Temperature check forum post & Snapshot poll (1 week) Week 45 - Formal AIP and call-for-voting (3 days) Week 45-46 - On-chain DAO vote on Tally (14 days) Week 47 onwards - Implementation phase
If the proposal passes, a draft of the implementation phase is detailed below in “Suggested Steps to Implement.” The final implementation schedule depends on the result of the vendor decision proposal, community review, audit schedules, and subsequent findings. A concrete schedule for the implementation stage will thus be locked in at a later stage.
When this proposal moves to Snapshot, there will be five voting options. The voting method will be ranked choice voting. To read more about ranked choice voting, please visit this article from Snapshot.
The costs of this proposal are mainly related to the implementation process, during which a vendor and auditor will be decided. The true extent of these costs can only be estimated after these decisions are made.
Changes Based on Feedback Since the Temperature Check Version (posted 20th Oct)
Changes Based on Feedback Since the RFC Version
The Arbitrum DAO treasury is growing rapidly, yet that growth is not currently being shared with token holders. The Arbitrum DAO treasury address holds 3,54B ARB tokens, and an unexpected $69,4M of unclaimed individual ARB airdrops were recently returned to the DAO treasury. The treasury is exceptionally well funded, and it’s important to note that the DAO fully controls the usage of the Arbitrum DAO treasury and that all surplus revenues belong to the DAO. This includes sequencer revenues.
We believe that the Arbitrum token needs a staking mechanism. We propose creating a mechanism that distributes ARB to token lockers. A locking mechanism would incentivize long-term token holders and become a fundamental building block for future token utility proposals (e.g., distributing sequencer revenues).
Along with creating a locking mechanism, we propose requesting 1.75%, 1.5%, 1.25% or 1% of the total ARB token supply from the Arbitrum DAO treasury and distributing this over 12 months through the proposed locking mechanism. The final amount would be decided with a Snapshot and that decision cemented on-chain with a Tally vote. We suggest that the ‘Arbitrum Coalition’ gathers data and monitors the impacts of this staking mechanism over the 12-month period and potentially audits the contracts if funded in time. Of course, this relationship is reliant on both proposals passing and the DAO and Coalition Advocate supporting the scope of work for the coalition. The goal is to use these insights to give the DAO the data and tools to refine the ARB staking mechanism further.
It is important to note that this proposal is entirely separate from the ongoing liquidity incentives framework and grant discussion. Both can and should co-exist - Arbitrum should have a functional grants framework and a staking mechanism. The Arbitrum DAO STIP program has recently concluded, and 50M ARB tokens will enter the market over the coming months. As proposed here, a supply sink through staking would benefit the Arbitrum ecosystem as a whole.
In the discussions over the previous months, we’ve seen the legal aspect be a deterrent to sharing value with ARB token holders in the form of revenue. The way we are proposing the staking mechanism through using existing treasury funds to reward lockers in ARB is the most palatable option from a legal perspective, as it does not involve sharing revenues. It also does not rule out the possibility of later moving on to a model that allows for other value accrual methods to the token. Should our proposal pass, when additional value accrual methods are proposed and the legal landscape is more mature and better understood, the process will likely be much quicker since a staking mechanism is already in use with audited contracts in place.
We thank the following delegates and others for their valuable feedback while drafting this proposal.
Westie from Blockworks Research Coinflipcanada And several others
The Arbitrum ecosystem would benefit in multiple ways from a staking mechanism that is constructed to heavily align incentives with those most aligned with the ecosystem long-term. While staking mechanisms are familiar and a mainstay across DeFi, sustainable models and their impact on the token in question have been scarcely studied. These staking mechanisms are often poorly designed and have rampant inflation that negatively affects the token.
Regarding staking mechanisms, there are few examples to model after in the Layer 2 token space. We propose that the Arbitrum ecosystem takes the first step in this endeavor and leads the way - as it already does in many other verticals. We believe that to construct a long-term staking mechanism that is sustainable, there is first a need to gather actual data that is strictly specific to the Arbitrum ecosystem and the ARB token.
Because of this, we propose that the ‘Arbitrum Coalition’ monitors the effects of this 12-month staking experiment and provides quarterly updates on the impacts of the mechanism through dashboards and qualitative reporting. After the 12-month staking experiment is over, we suggest that the DAO funds the ‘Arbitrum Coalition’ to produce a comprehensive report with results and recommendations on what they believe is the most sustainable way forward in building a staking mechanism and incentive model that is sustainable yet attractive for the ARB token. The expertise of the ‘Arbitrum Coalition’ is perfectly suited for analyzing the results of this experiment, given that Gauntlet is an industry-leading authority in tokenomics design, Blockworks spearheads the industry’s research efforts and Trail of Bits is a top-tier security organization. To read more about the Arbitrum Coalition, please visit their proposal here.
This proposal passing would have extremely positive implications for the entire Arbitrum ecosystem. Having a native staking model that the DAO officially approves would be likely to have the following consequences:
These are some of the benefits that will likely result from having a staking mechanism; however, verifying these predictions’ accuracy by an independent third party such as the ‘Arbitrum Coalition’ is important. These hypotheses cannot be truly verified without actual data, highlighting the importance of a 12-month trial period for staking.
By introducing a staking contract that responsibly distributes the allotted amount of tokens to users who are willing to lock their ARB, the incentives are aligned in a way that rewards those parties most loyal to the Arbitrum ecosystem. This includes long-term holders of ARB and DAOs that have received an airdrop and are willing to lock their tokens.
The figures below detail possible APRs for stakers at different staked percentages if 1.75%, 1.5%, 1.25% or 1% of the total supply was distributed annually. The current circulating supply of ARB is approximately 1.275B.
Example usage: ARB locker
A locking mechanism allows users who are long-term believers in Arbitrum to signal this belief through their actions and get rewarded for it accordingly. Locking for longer is always optional - users may lock for any time period. One year is a reasonable lock time compared to the previously popular 4-year locking model. A one-year lock is not too long to the point of disincentiving locking, as users can choose the lock duration. Not only does this give individuals optionality and a mechanism to earn a native yield on their ARB tokens, but it also gives protocols that were a part of the DAO airdrop or have otherwise accumulated ARB a mechanism to earn on their treasury.
Ultimately, this proposal introduces utility to ARB and gives users more incentive to hold. In addition, long-term believers will be net increasing their network share, which sets up a base from which we can build further proposals for ARB value accrual without worrying about the distribution mechanism.
From a user standpoint, it’s important to note that the ARB staked in the proposed contract will still have voting rights and can be delegated - voting power will not be diminished by a shorter lock length. The staking contract will be upgradeable and controlled by the DAO - this ensures that the DAO can pause this distribution at any time.
As it stands today, ARB has no native utility or yield. We propose approving the creation of the staking contract detailed above and distributing an equivalent of 1.75%, 1.5%, 1.25%, or 1% of the total ARB supply from the DAO treasury to the staking contract. These tokens would be distributed over a 12-month period, during which the ‘Arbitrum Coalition’ could - pending their proposal passing - monitor the impacts of the proposed staking mechanism and draft a report and recommendations by the end of the period. Note that the Arbitrum Coalition proposal is entirely separate yet synergistic to this proposal. The passing of either proposal is not conditional on the other proposal’s performance.
It’s important to highlight that to move toward a final and refined version of value accrual to the ARB token, trial and experimentation is required. We believe there is a strong need for actual data from a live staking mechanism, such as the one suggested in this proposal, from the unique context of Arbitrum’s growing ecosystem to make more informed decisions on what the ultimate mechanism for ARB staking and value accrual might look like.
Innovation has always been Arbitrum’s forte in both technical advancements and building a vibrant community - we believe that the approach to building a cutting-edge staking model for ARB through trial and experimentation is a logical way forward.
This proposal will follow the official lifecycle of an AIP detailed here. Please note that this proposal is a non-constitutional proposal.
The suggested timeline can be found below.
Week 36-37 - Forum post, request for comments and feedback (Complete) Week 43-44 - Temperature check forum post & Snapshot poll (1 week) Week 45 - Formal AIP and call-for-voting (3 days) Week 45-46 - On-chain DAO vote on Tally (14 days) Week 47 onwards - Implementation phase
If the proposal passes, a draft of the implementation phase is detailed below in “Suggested Steps to Implement.” The final implementation schedule depends on the result of the vendor decision proposal, community review, audit schedules, and subsequent findings. A concrete schedule for the implementation stage will thus be locked in at a later stage.
When this proposal moves to Snapshot, there will be five voting options. The voting method will be ranked choice voting. To read more about ranked choice voting, please visit this article from Snapshot.
The costs of this proposal are mainly related to the implementation process, during which a vendor and auditor will be decided. The true extent of these costs can only be estimated after these decisions are made.
https://forum.arbitrum.foundation/t/proposal-activate-arb-staking-final/19068/62?u=krst
https://snapshot.org/#/arbitrumfoundation.eth/proposal/0xf22530295daee96dffd7f70854475c06216a4d3594929672f71c12bf638bb0c8
I don't believe the value of this outweighs the opportunity cost of funding other projects
https://twitter.com/CarlZielinski/status/1721246728353886420
Voting to signal support for the idea of staking. Support for subsequent stages will be based on the merits of a specific staking proposal.
Staking for the sake of it is not practical, it should secure the network in someway
https://x.com/Castle__Cap/status/1721158651161760071?s=20
In favor of experimenting here
Pulusdao is notorious and I don't think this helps the holders in any way.
https://forum.arbitrum.foundation/t/proposal-activate-arb-staking-final/19068/49
I don't think kickstarting staking before a value accruing mechanism to ARB is implemented makes sense.
This is a great experiment! We should start slow, 100M is more than enough rewards to start with, and we can always add more later.
https://forum.arbitrum.foundation/t/proposal-activate-arb-staking-final/19068/62?u=krst
https://snapshot.org/#/arbitrumfoundation.eth/proposal/0xf22530295daee96dffd7f70854475c06216a4d3594929672f71c12bf638bb0c8
I don't believe the value of this outweighs the opportunity cost of funding other projects
https://twitter.com/CarlZielinski/status/1721246728353886420
Voting to signal support for the idea of staking. Support for subsequent stages will be based on the merits of a specific staking proposal.
Staking for the sake of it is not practical, it should secure the network in someway
https://x.com/Castle__Cap/status/1721158651161760071?s=20
In favor of experimenting here
Pulusdao is notorious and I don't think this helps the holders in any way.
https://forum.arbitrum.foundation/t/proposal-activate-arb-staking-final/19068/49
I don't think kickstarting staking before a value accruing mechanism to ARB is implemented makes sense.
This is a great experiment! We should start slow, 100M is more than enough rewards to start with, and we can always add more later.
That is obviously. Arbitrum and Offchain Labs asked them about it. Because they don’t want launch staking. This is a power of DAO!
Staking ARB is dead.
Unfortunately ARB is the most terrible token on the market
https://medium.com/@plutusdao.io/unwinding-plsarb-03d428723313
6 months later still nothing...
jail
what happen to this proposal ? any update on this ?
is there anything new regarding this proposal? seems that team is silent now, does that mean that proposal is canceled or still clarifying issues
That is obviously. Arbitrum and Offchain Labs asked them about it. Because they don’t want launch staking. This is a power of DAO!
Staking ARB is dead.
Unfortunately ARB is the most terrible token on the market
https://medium.com/@plutusdao.io/unwinding-plsarb-03d428723313
6 months later still nothing...
jail
what happen to this proposal ? any update on this ?
is there anything new regarding this proposal? seems that team is silent now, does that mean that proposal is canceled or still clarifying issues
LOL the team is completely silent about this proposal...
In the discord they keep saying that they are working behind the scenes with some big ARB delegates to finalize the prop, can anybody confirm this? We have 0 trust in the Plutus DAO team so we have to question everything they say.
LOL the team is completely silent about this proposal...
In the discord they keep saying that they are working behind the scenes with some big ARB delegates to finalize the prop, can anybody confirm this? We have 0 trust in the Plutus DAO team so we have to question everything they say.
The best way forward for plsARB is still a full redemption not this bs, it would be a double win: plsARB holders who are unhappy with the product can redeem back their ARB and the Arbitrum governace gets rid of one of the largest voting block that do not deserve all this voting power especially since Plutus "DAO" is not a DAO at all.
Can we get an update please? What's the new timeline? @Plutus
hey, what happened to this proposal?
Is it still being worked on? The timeline in the proposal for the Tally vote was planned during Week 45-46, I guess it isn't accurate anymore.
Any idea when the Tally proposal is planned to go live? And what was the reason for this delay?
Thank you
100% spot on. While Plutus never outright lied they were disingenuous and suckered a number of retail investors to gain a large block of voting power. This proposal adds nothing to the Arbitrum ecosystem besides bailing out Plutus.
Staking mechanisms that earn rewards through inflation of the native token do not work (and we've seen countless examples of this). If it isn't real yield (ie. protocol revenue) then its rubbish.
Important to note, our vote is based on the context that this proposal is an “initial temp check” as pointed out by the Plutus team, which will serve as an important catalyst to mobilise the research efforts to discover a full spec for ARB staking. Therefore, our current vote does not reflect our final position once the full implementation and budget have been confirmed in a subsequent proposal.
Important to note, our vote is based on the context that this proposal is an “initial temp check” as pointed out by the Plutus team, which will serve as an important catalyst to mobilise the research efforts to discover a full spec for ARB staking. Therefore, our current vote does not reflect our final position once the full implementation and budget have been confirmed in a subsequent proposal.
agree here, supporting idea, and when all features are finalised, I will decide on support for complete proposal giving away 1% doesn't seem to be much, but there is a question if funds can be used better
I think options showing 0 ARB were "eliminated" by the counting process.
But this doesn't have to be forever. Staking can be for a limited time period
Some people here are worried about 1% of the supply given out as staking rewards over 1 year while in the same time frame team and investors get to dump almost 20% of the total supply.
What's wrong in giving 1% of the supply to part of the community that is willing to lock their tokens for months?
I'm in favor of this proposal, and I hope it passes. Thanks Plutus Dao for the initiative.
It’s even stranger now. Fund staking with 175m was the leading vote 2 days ago and now shows zero votes. I’m pretty curious how the vote tally is calculated on snapshot.
After reading Cobie's post, I have decided that I will be voting against this proposal with my 800 M $ARB voting power.
LOL the team is completely silent about this proposal...
In the discord they keep saying that they are working behind the scenes with some big ARB delegates to finalize the prop, can anybody confirm this? We have 0 trust in the Plutus DAO team so we have to question everything they say.
LOL the team is completely silent about this proposal...
In the discord they keep saying that they are working behind the scenes with some big ARB delegates to finalize the prop, can anybody confirm this? We have 0 trust in the Plutus DAO team so we have to question everything they say.
The best way forward for plsARB is still a full redemption not this bs, it would be a double win: plsARB holders who are unhappy with the product can redeem back their ARB and the Arbitrum governace gets rid of one of the largest voting block that do not deserve all this voting power especially since Plutus "DAO" is not a DAO at all.
Can we get an update please? What's the new timeline? @Plutus
hey, what happened to this proposal?
Is it still being worked on? The timeline in the proposal for the Tally vote was planned during Week 45-46, I guess it isn't accurate anymore.
Any idea when the Tally proposal is planned to go live? And what was the reason for this delay?
Thank you
100% spot on. While Plutus never outright lied they were disingenuous and suckered a number of retail investors to gain a large block of voting power. This proposal adds nothing to the Arbitrum ecosystem besides bailing out Plutus.
Staking mechanisms that earn rewards through inflation of the native token do not work (and we've seen countless examples of this). If it isn't real yield (ie. protocol revenue) then its rubbish.
Important to note, our vote is based on the context that this proposal is an “initial temp check” as pointed out by the Plutus team, which will serve as an important catalyst to mobilise the research efforts to discover a full spec for ARB staking. Therefore, our current vote does not reflect our final position once the full implementation and budget have been confirmed in a subsequent proposal.
Important to note, our vote is based on the context that this proposal is an “initial temp check” as pointed out by the Plutus team, which will serve as an important catalyst to mobilise the research efforts to discover a full spec for ARB staking. Therefore, our current vote does not reflect our final position once the full implementation and budget have been confirmed in a subsequent proposal.
agree here, supporting idea, and when all features are finalised, I will decide on support for complete proposal giving away 1% doesn't seem to be much, but there is a question if funds can be used better
I think options showing 0 ARB were "eliminated" by the counting process.
But this doesn't have to be forever. Staking can be for a limited time period
Some people here are worried about 1% of the supply given out as staking rewards over 1 year while in the same time frame team and investors get to dump almost 20% of the total supply.
What's wrong in giving 1% of the supply to part of the community that is willing to lock their tokens for months?
I'm in favor of this proposal, and I hope it passes. Thanks Plutus Dao for the initiative.
It’s even stranger now. Fund staking with 175m was the leading vote 2 days ago and now shows zero votes. I’m pretty curious how the vote tally is calculated on snapshot.
After reading Cobie's post, I have decided that I will be voting against this proposal with my 800 M $ARB voting power.
Thank you for presenting the proposal. I took some time to reflect on it due to personal commitments. While the idea of introducing a staking module to ARB is intriguing, its viability seems questionable without an established revenue model. Merely rewarding stakers with ARB from the Treasury appears to be an effort to artificially boost its utility. It's concerning that this could primarily benefit large ARB holders like Plutus DAO, potentially skewing governance. Generally, intertwining economic and political motives can be problematic. The proposal may inadvertently centralize power among major ARB holders, a direction we might want to reconsider. A dual staking model—staking for both incentives and governance—sounds more balanced, but even then, staking rewards may not be suitable at this juncture. Given these considerations, we can't endorse the proposal from Gains Network in its current form.
I honestly don't understand the rationale behind the structure of this proposal. I fully understand that there is a problem regarding the current usefulness of the $ARB token (like many others), in addition to governance functions, however it seems unreasonable to me to defend the remuneration of staked $ARB just because it is locked (without the staking operation has any other use other than receiving additional $ARB). We can discuss other types of solutions regarding the usefulness and appreciation of the $ARB token:
Thank you for presenting the proposal. I took some time to reflect on it due to personal commitments. While the idea of introducing a staking module to ARB is intriguing, its viability seems questionable without an established revenue model. Merely rewarding stakers with ARB from the Treasury appears to be an effort to artificially boost its utility. It's concerning that this could primarily benefit large ARB holders like Plutus DAO, potentially skewing governance. Generally, intertwining economic and political motives can be problematic. The proposal may inadvertently centralize power among major ARB holders, a direction we might want to reconsider. A dual staking model—staking for both incentives and governance—sounds more balanced, but even then, staking rewards may not be suitable at this juncture. Given these considerations, we can't endorse the proposal from Gains Network in its current form.
I honestly don't understand the rationale behind the structure of this proposal. I fully understand that there is a problem regarding the current usefulness of the $ARB token (like many others), in addition to governance functions, however it seems unreasonable to me to defend the remuneration of staked $ARB just because it is locked (without the staking operation has any other use other than receiving additional $ARB). We can discuss other types of solutions regarding the usefulness and appreciation of the $ARB token:
Hello @Plutus,
First, I’d like to note that I appreciate the effort and thought you've dedicated to crafting this proposal. I think it's vital for the DAO to recognize and appreciate members who initiate and engage in meaningful discussions such as these.
That said, I'd like to provide some constructive feedback on some areas where I believe this proposal could be improved:
Hello @Plutus,
First, I’d like to note that I appreciate the effort and thought you've dedicated to crafting this proposal. I think it's vital for the DAO to recognize and appreciate members who initiate and engage in meaningful discussions such as these.
That said, I'd like to provide some constructive feedback on some areas where I believe this proposal could be improved:
as a first step, maybe preparing a pitch with some quantitative metrics and like-for-like comparable numbers to other protocols that have successfully established a voting escrow model with irregular inflation, what percent of outstanding issuance is locked, any other projects that have a mint function they regularly call, how successful those projects have been, etc.
Echoing @dk3 and others, I’d like to see more depth regarding the potential impacts of implementing this proposal. The staking mechanism for the ARB token, as currently proposed, seems to lack substantial 'utility'. I might be overlooking something, but the best interpretation I can find is that it could potentially offer an alternative method for ARB distribution. However, even if the DAO decides that staking in the locker is a viable distribution strategy, I still question its necessity, given the recent STIP distribution.
This image suggests APRs ranging from 15%-27% for staking with half of the circulating supply locked. While these rates seem competitive, I urge the DAO to consider the broader implications of locking such a substantial portion of ARB's circulating supply. Should liquidity become an issue, with staking incentives out-competing LP fees/incentives, the repercussions could be significantly adverse for ARB and the broader initiative.
We at Timeswap are supportive of the ARB staking mechanism mentioned above post feedback from temperature check & RFC. As a leading layer 2 ecosystem, this proposal further cements Arbitrum as the hub for innovative experiments. We appreciate the efforts put in by the Plutus team into this proposal and for patiently engaging with the community. We believe this proposal is a net positive for the Arbitrum ecosystem.
The Lodestar DAO recognizes the continuous efforts made by various contributors, including our friends at PlutusDAO, to enhance the utility of the Arbitrum DAO Governance token, $ARB. Our collective vision has always revolved around strengthening the Arbitrum ecosystem in the most sustainable and beneficial manner possible.
We are aware that the topic of inflationary yield can be a point of contention in many DeFi circles. Yet, it's worth noting that when approached with caution, it can serve as a powerful tool to alleviate sell pressure and incentivise participation. In that spirit, while the Lodestar DAO remains hopeful for a future where $ARB staking yields are distributed from the DAO's or Sequencer's organic revenues, we believe that the current Plutus Proposal serves as an interim measure that aligns with our shared goal.
The Lodestar DAO recognizes the continuous efforts made by various contributors, including our friends at PlutusDAO, to enhance the utility of the Arbitrum DAO Governance token, $ARB. Our collective vision has always revolved around strengthening the Arbitrum ecosystem in the most sustainable and beneficial manner possible.
We are aware that the topic of inflationary yield can be a point of contention in many DeFi circles. Yet, it's worth noting that when approached with caution, it can serve as a powerful tool to alleviate sell pressure and incentivise participation. In that spirit, while the Lodestar DAO remains hopeful for a future where $ARB staking yields are distributed from the DAO's or Sequencer's organic revenues, we believe that the current Plutus Proposal serves as an interim measure that aligns with our shared goal.
The Lodestar DAO supports this proposal.
As a blockchain developer, I'm still in support of healthy inflation tactics (see reply)
Staking and value accrual to the ARB token is essential if the DAO and the token are to maintain stability in the coming months and years. It benefits and aligns long term holders whilst disincentivising short term thinking.
Look forward to seeing further debate on this subject.
I fully support this especially with a lock up. It will show who is committed to the project long term and could also be a valuable indicator for any future airdrops. Meaning, if there is a future airdrop staking could be beneficial for farmers. This would help decrease token sales and keep token price up. Keeping token price up brings perceived value to the network.
I support experiments like this to push the innovation needle forward. As mentioned by others, the addition of the Arbitrum Coalition to oversee this is a nice touch, and this proposal should only move forward if the funding for the Coalition passes. I would also err on the side of caution and see the 1% option used for this.
Interesting proposal. It's appropriate to go with a trial period to see how this staking mechanism works in the grand scheme. We would support trialing the 1% option.
I'm in favour of supporting an ARB staking mechanism, Plutus have been on Arbitrum since the beginning and in my opinion have the best interests of the chain in mind. I echo @krst thoughts around starting with a pilot version then iterating from there!
Hello @Plutus,
First, I’d like to note that I appreciate the effort and thought you've dedicated to crafting this proposal. I think it's vital for the DAO to recognize and appreciate members who initiate and engage in meaningful discussions such as these.
That said, I'd like to provide some constructive feedback on some areas where I believe this proposal could be improved:
Hello @Plutus,
First, I’d like to note that I appreciate the effort and thought you've dedicated to crafting this proposal. I think it's vital for the DAO to recognize and appreciate members who initiate and engage in meaningful discussions such as these.
That said, I'd like to provide some constructive feedback on some areas where I believe this proposal could be improved:
as a first step, maybe preparing a pitch with some quantitative metrics and like-for-like comparable numbers to other protocols that have successfully established a voting escrow model with irregular inflation, what percent of outstanding issuance is locked, any other projects that have a mint function they regularly call, how successful those projects have been, etc.
Echoing @dk3 and others, I’d like to see more depth regarding the potential impacts of implementing this proposal. The staking mechanism for the ARB token, as currently proposed, seems to lack substantial 'utility'. I might be overlooking something, but the best interpretation I can find is that it could potentially offer an alternative method for ARB distribution. However, even if the DAO decides that staking in the locker is a viable distribution strategy, I still question its necessity, given the recent STIP distribution.
This image suggests APRs ranging from 15%-27% for staking with half of the circulating supply locked. While these rates seem competitive, I urge the DAO to consider the broader implications of locking such a substantial portion of ARB's circulating supply. Should liquidity become an issue, with staking incentives out-competing LP fees/incentives, the repercussions could be significantly adverse for ARB and the broader initiative.
We at Timeswap are supportive of the ARB staking mechanism mentioned above post feedback from temperature check & RFC. As a leading layer 2 ecosystem, this proposal further cements Arbitrum as the hub for innovative experiments. We appreciate the efforts put in by the Plutus team into this proposal and for patiently engaging with the community. We believe this proposal is a net positive for the Arbitrum ecosystem.
The Lodestar DAO recognizes the continuous efforts made by various contributors, including our friends at PlutusDAO, to enhance the utility of the Arbitrum DAO Governance token, $ARB. Our collective vision has always revolved around strengthening the Arbitrum ecosystem in the most sustainable and beneficial manner possible.
We are aware that the topic of inflationary yield can be a point of contention in many DeFi circles. Yet, it's worth noting that when approached with caution, it can serve as a powerful tool to alleviate sell pressure and incentivise participation. In that spirit, while the Lodestar DAO remains hopeful for a future where $ARB staking yields are distributed from the DAO's or Sequencer's organic revenues, we believe that the current Plutus Proposal serves as an interim measure that aligns with our shared goal.
The Lodestar DAO recognizes the continuous efforts made by various contributors, including our friends at PlutusDAO, to enhance the utility of the Arbitrum DAO Governance token, $ARB. Our collective vision has always revolved around strengthening the Arbitrum ecosystem in the most sustainable and beneficial manner possible.
We are aware that the topic of inflationary yield can be a point of contention in many DeFi circles. Yet, it's worth noting that when approached with caution, it can serve as a powerful tool to alleviate sell pressure and incentivise participation. In that spirit, while the Lodestar DAO remains hopeful for a future where $ARB staking yields are distributed from the DAO's or Sequencer's organic revenues, we believe that the current Plutus Proposal serves as an interim measure that aligns with our shared goal.
The Lodestar DAO supports this proposal.
As a blockchain developer, I'm still in support of healthy inflation tactics (see reply)
Staking and value accrual to the ARB token is essential if the DAO and the token are to maintain stability in the coming months and years. It benefits and aligns long term holders whilst disincentivising short term thinking.
Look forward to seeing further debate on this subject.
I fully support this especially with a lock up. It will show who is committed to the project long term and could also be a valuable indicator for any future airdrops. Meaning, if there is a future airdrop staking could be beneficial for farmers. This would help decrease token sales and keep token price up. Keeping token price up brings perceived value to the network.
I support experiments like this to push the innovation needle forward. As mentioned by others, the addition of the Arbitrum Coalition to oversee this is a nice touch, and this proposal should only move forward if the funding for the Coalition passes. I would also err on the side of caution and see the 1% option used for this.
Interesting proposal. It's appropriate to go with a trial period to see how this staking mechanism works in the grand scheme. We would support trialing the 1% option.
I'm in favour of supporting an ARB staking mechanism, Plutus have been on Arbitrum since the beginning and in my opinion have the best interests of the chain in mind. I echo @krst thoughts around starting with a pilot version then iterating from there!
Hey all, I spoke to @stonecoldpat in the DMs about why my previous post was hidden. He explained to me so I am reposting with the requested changes. Please do not hide this one. I have also tried to change my name on the forum so the word SCAM doesn't appear anywhere. Sorry if that was wrong.
I have removed all opinions in the post and below is only facts
Hey all, I spoke to @stonecoldpat in the DMs about why my previous post was hidden. He explained to me so I am reposting with the requested changes. Please do not hide this one. I have also tried to change my name on the forum so the word SCAM doesn't appear anywhere. Sorry if that was wrong.
I have removed all opinions in the post and below is only facts
Plutus tell users that plsARB is not pegged because the arbitrum dao gives no yields to the underlying arb, so nobody has a reason to buy it. They are making this proposal so plsARB can have demand as they have forced 9M arb holders to lock forever.
MY OPINION: The Arbitrum DAO should not give them more ARB until they have made due on liabilities to their own users. It is our duty to help the plsARB holders escape this hostage situation as our incentives got used to enable it. We should not do it by giving out ARB yields but by holding plutus responsible for their own problems before we give them more money and yields.
Here is some needed history, backed by facts, without calling plutus a scam. The reader can decide for themselves if the arbitrum dao should consider proposals from this actor.
Today plsARB holders get 2% in PLS, not 200%, and they get 0 ARB yields unless we pass this proposal.
This exciting offer, coupled with the promise of liquidity if users wanted out, allowed them to suck in over 9 million arb tokens. This would be a great offering and not an issue if these users were happy and didn’t feel that they’d been tricked. But the truth is, thousands of small to large $ARB holders are stuck and begging to get out, but cant. Today these 9M arb are forced to accept less than 0.45 ARB per plsARB because the plutus dao is not doing anything to ensure good liquidity, despite having 100% of the 9M arb sitting in a wallet, fully able to provide deep liquidity at 1.
Here is their attempt to damage control the situation, please read the responses from real users to see evidence that users have been tricked and want out. This is just the comments on twitter. It is a fact, not an opinion. Every single day multiple users come into the plutus discord and ask how to get out, only to be met with the team saying something like “too bad you should have read the docs”. Many end up banned and silenced with their arb trapped in the dao treasury: https://twitter.com/PlutusDAO_io/status/1694726055926571071
The team promised deep and well incentivized liquidity. Instead they added $100k of liquidity themselves (this is less than 1% of all the plsARB in existence) and incentivized a 0-1 LP pool which ultimately ensures the price is… not 1 ARB per plsARB. Even if users knew they would have to swap out in the AMM, they would assume deep liquidity would mean far far more than 1%.
No voting: plsARB holders have no rights to use the underlying ARB to vote. plsARB holders cannot vote for themselves to be freed, they cant even lobby for pls holders to free them as plutus advertises itself as a dao but has no voting.
The team just decides how to wield the DAO arb, and uses it how they please (https://twitter.com/PlutusDAO_io/status/1702666102285963596).
Additionally, in the recent STIP grants votes for the arbitrum DAO the team used the ARB underlying the user owned plsARB to vote yes for teams they like. PLS holders had no say, plsARB holders had no say. The plutus team just voted to give their friends more ARB tokens using tokens that belong to ARB airdrop participants. (opinion: this is poor governance for our dao)
Discord users have made suggestions to repeg plsARB but the team will not accept any solution that involves redemptions. (opinion: many of these solutions are reasonable and would work. They are not short term minded)
To make matters worse, the team stole a significant amount of the last ARB airdrop from the PLS DAO.
Overall the plutus dao used the last airdrop to enrich themselves, trick users, and steal governance power in arbitrum. Tons of ARB airdrop holders are trapped and have no voice or vote to help themselves. Its time we help them or at least ensure we don’t enable more of this.
The plutus dao will likely give poor responses such as:
Plsarb 0x7a5D193fE4ED9098F7EAdC99797087C96b002907
Arb underlying plsarb 0x180Bb71666C4de074b4daA17Ed579aFcB8eB2C25
Hey, great read!
This locking mechanism may also be modified in the future to accommodate future AIPs, such as decentralizing the sequencer.
Hey, great read!
This locking mechanism may also be modified in the future to accommodate future AIPs, such as decentralizing the sequencer.
I think it’s important to note that there’s no indication that Arbitrum’s leader election mechanism to decentralize the sequencer will rely on Proof of Stake. 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 (i.e active and opinionated governance), such a model seems more logical than any other PoS systems in terms of both governance and revenue distribution. Thus, I don't really see the link between ARB staking and the sequencer decentralization.
Positively differentiate ARB from any other L2 tokens and bring the spotlight back to Arbitrum
I am not sure this is a very orginal way to differentiate ARB from other L2 tokens. That's why it's worth considering other possibilities e.g if during 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.
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 (as mentioned) burning the funds, redirecting them to the treasury, supporting public goods, and so on.
I don’t think it would leave any party out and imho this model should be taken into consideration for this proposal.
plutus want $ARB holders to fix their incompetence, aside from their broken product:
-they couldn't even organise themselves to submit for round 1 STIP -they can't even distribute their own token rewards correctly and had to pause emissions
plutus want $ARB holders to fix their incompetence, aside from their broken product:
-they couldn't even organise themselves to submit for round 1 STIP -they can't even distribute their own token rewards correctly and had to pause emissions
the proposal is dressed up as beneficial to the arbitrum ecosystem, make no mistake it's sole purpose is to bail out the plutus team of their atrocious centralized decisions
I would support a floating staking mechanism based on block fees, similar to Ethereum. As the chain becomes more utilized and adopted, the participants of the network are rewarded for their hard work in this endeavor.
Staking reward equal to block fees up to a maximum threshold of 2% annually. It would likely start quite low % APY, but would have the potential to grow as the participants increase.
My primary concern here is that we're creating a problem (inflation) then creating a staking mechanism to combat the problem we introduced. Once this is approved one time, it will be that percent inflation or higher until the DAO is out of ARB, so we should definitely make sure there is ample time for all the smartest people involved in Arbitrum to weigh in and get this right (the first time).
Past that, a secondary concern is why now? Pushing this to vote before we've seen the effects of the STIP and before we have all the data seems ineffective at best, but will also add sell pressure on top of the funds we've already approved. Minting becomes officially available in March and I don't see sufficient reasoning to start distribution before that time.
My primary concern here is that we're creating a problem (inflation) then creating a staking mechanism to combat the problem we introduced. Once this is approved one time, it will be that percent inflation or higher until the DAO is out of ARB, so we should definitely make sure there is ample time for all the smartest people involved in Arbitrum to weigh in and get this right (the first time).
Past that, a secondary concern is why now? Pushing this to vote before we've seen the effects of the STIP and before we have all the data seems ineffective at best, but will also add sell pressure on top of the funds we've already approved. Minting becomes officially available in March and I don't see sufficient reasoning to start distribution before that time.
We also have 50m tokens from STIP plus the undecided amount for round two entering the market over the next few months. If we add another 25m (3 months of 100m) will we be able to see the full effect of the STIP? Can we reliably separate the two?
I also don't understand the narrative of ARB token needing utility (right now) as several projects have it included already, with even more on the way. Radiant, GMX, Plutus, Lodestar all currently have options for yield on ARB and Notional is currently voting to add ARB to their project when it's fully launched as well. These are just off the top of my head and I'm sure I'm missing a lot.
plutus are just trying to get $arb holders to pay for fixing their failed broken product
why should $arb holders have to pay for plutus's failure?
I know this is a long shot, but it would be unique and awesome if Arbitrum could become the community that holds each other accountable.
In this case, Plutus DAO is infamous for their misleading advertising during the airdrop that tricked millions of arb into locking and then spending the next several months gaslighting retail investors who felt misled. This caused immeasurable damage to the ecosystem's reputation and countless people have been turned off to investing in arbitrum because of it. We should not reward people who act in this manner.
I know this is a long shot, but it would be unique and awesome if Arbitrum could become the community that holds each other accountable.
In this case, Plutus DAO is infamous for their misleading advertising during the airdrop that tricked millions of arb into locking and then spending the next several months gaslighting retail investors who felt misled. This caused immeasurable damage to the ecosystem's reputation and countless people have been turned off to investing in arbitrum because of it. We should not reward people who act in this manner.
There is no strategic ecosystem advantage to this proposal. While the token needs utility is doesnt need inflation for inflation's sake. Thats all this is. Printing more ARB in the hope that certain lockers can disproportionately benefit.
The only group this helps is people who launched a "governance blackhole" and now need an excuse to lock tokens to prevent people getting their money out of their protocol. I do not think we should turn up the inflation just so the Plutus team can justify holding 10 million arb hostage from unwitting retail investors.
L.S.,
I, much like L2BEAT, find myself pondering the proposed minting and subsequent staking mechanism aimed at alleviating some of the inflation. I contend that fostering scarcity, achieved through burning ARB, as opposed to minting additional ARB, represents a more favorable approach for long-term holders.
L.S.,
I, much like L2BEAT, find myself pondering the proposed minting and subsequent staking mechanism aimed at alleviating some of the inflation. I contend that fostering scarcity, achieved through burning ARB, as opposed to minting additional ARB, represents a more favorable approach for long-term holders.
The minting of 200 million ARB tokens for rewards would lead to a supply increase of approximately 15.69%, as calculated by [(1,475,000,000 - 1,275,000,000) / 1,275,000,000] * 100. Such inflation rates are notably high, even when considering the conservative 1% proposal, which would still result in an inflation rate of 7.85%.
To provide context, in traditional finance, developed countries typically experience an average inflation rate of around 2%. Additionally, when examining other crypto projects, one can find numerous unfortunate examples where excessive token issuance has had detrimental effects.
It is my assumption that, due to the expedited timeline and what appears to be a lack of long-term vision, the PlutusDAO has crafted this proposal primarily to fulfill their commitments to PlutusDAO investors who converted their ARB into plsArb with the expectation of native yield, only to find themselves in a challenging position.
O/T: I also ponder whether the Plutus Team should have the ability to vote on any Governance proposals with the ARB acquired through their plsArb offering. PlutusDAO is merely a "DAO in name" as there is no governance module in the project itself. Nevertheless, they did acquire over 9 million ARB through this plsArb offering, which they can use for voting.
In favor, for those who argue all token inflation = bad, you have bear market PTSD.
wait, the ARB token contract already exist some logic code like staking? if not, i'm not sure we should do this staking, whales would get more motivation to dump. i think $ARB holder get the ETH fee from L2 transaction would be a better choice.
as a bigger doge whale i going to vote yes.
Hey all, I spoke to @stonecoldpat in the DMs about why my previous post was hidden. He explained to me so I am reposting with the requested changes. Please do not hide this one. I have also tried to change my name on the forum so the word SCAM doesn't appear anywhere. Sorry if that was wrong.
I have removed all opinions in the post and below is only facts
Hey all, I spoke to @stonecoldpat in the DMs about why my previous post was hidden. He explained to me so I am reposting with the requested changes. Please do not hide this one. I have also tried to change my name on the forum so the word SCAM doesn't appear anywhere. Sorry if that was wrong.
I have removed all opinions in the post and below is only facts
Plutus tell users that plsARB is not pegged because the arbitrum dao gives no yields to the underlying arb, so nobody has a reason to buy it. They are making this proposal so plsARB can have demand as they have forced 9M arb holders to lock forever.
MY OPINION: The Arbitrum DAO should not give them more ARB until they have made due on liabilities to their own users. It is our duty to help the plsARB holders escape this hostage situation as our incentives got used to enable it. We should not do it by giving out ARB yields but by holding plutus responsible for their own problems before we give them more money and yields.
Here is some needed history, backed by facts, without calling plutus a scam. The reader can decide for themselves if the arbitrum dao should consider proposals from this actor.
Today plsARB holders get 2% in PLS, not 200%, and they get 0 ARB yields unless we pass this proposal.
This exciting offer, coupled with the promise of liquidity if users wanted out, allowed them to suck in over 9 million arb tokens. This would be a great offering and not an issue if these users were happy and didn’t feel that they’d been tricked. But the truth is, thousands of small to large $ARB holders are stuck and begging to get out, but cant. Today these 9M arb are forced to accept less than 0.45 ARB per plsARB because the plutus dao is not doing anything to ensure good liquidity, despite having 100% of the 9M arb sitting in a wallet, fully able to provide deep liquidity at 1.
Here is their attempt to damage control the situation, please read the responses from real users to see evidence that users have been tricked and want out. This is just the comments on twitter. It is a fact, not an opinion. Every single day multiple users come into the plutus discord and ask how to get out, only to be met with the team saying something like “too bad you should have read the docs”. Many end up banned and silenced with their arb trapped in the dao treasury: https://twitter.com/PlutusDAO_io/status/1694726055926571071
The team promised deep and well incentivized liquidity. Instead they added $100k of liquidity themselves (this is less than 1% of all the plsARB in existence) and incentivized a 0-1 LP pool which ultimately ensures the price is… not 1 ARB per plsARB. Even if users knew they would have to swap out in the AMM, they would assume deep liquidity would mean far far more than 1%.
No voting: plsARB holders have no rights to use the underlying ARB to vote. plsARB holders cannot vote for themselves to be freed, they cant even lobby for pls holders to free them as plutus advertises itself as a dao but has no voting.
The team just decides how to wield the DAO arb, and uses it how they please (https://twitter.com/PlutusDAO_io/status/1702666102285963596).
Additionally, in the recent STIP grants votes for the arbitrum DAO the team used the ARB underlying the user owned plsARB to vote yes for teams they like. PLS holders had no say, plsARB holders had no say. The plutus team just voted to give their friends more ARB tokens using tokens that belong to ARB airdrop participants. (opinion: this is poor governance for our dao)
Discord users have made suggestions to repeg plsARB but the team will not accept any solution that involves redemptions. (opinion: many of these solutions are reasonable and would work. They are not short term minded)
To make matters worse, the team stole a significant amount of the last ARB airdrop from the PLS DAO.
Overall the plutus dao used the last airdrop to enrich themselves, trick users, and steal governance power in arbitrum. Tons of ARB airdrop holders are trapped and have no voice or vote to help themselves. Its time we help them or at least ensure we don’t enable more of this.
The plutus dao will likely give poor responses such as:
Plsarb 0x7a5D193fE4ED9098F7EAdC99797087C96b002907
Arb underlying plsarb 0x180Bb71666C4de074b4daA17Ed579aFcB8eB2C25
Hey, great read!
This locking mechanism may also be modified in the future to accommodate future AIPs, such as decentralizing the sequencer.
Hey, great read!
This locking mechanism may also be modified in the future to accommodate future AIPs, such as decentralizing the sequencer.
I think it’s important to note that there’s no indication that Arbitrum’s leader election mechanism to decentralize the sequencer will rely on Proof of Stake. 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 (i.e active and opinionated governance), such a model seems more logical than any other PoS systems in terms of both governance and revenue distribution. Thus, I don't really see the link between ARB staking and the sequencer decentralization.
Positively differentiate ARB from any other L2 tokens and bring the spotlight back to Arbitrum
I am not sure this is a very orginal way to differentiate ARB from other L2 tokens. That's why it's worth considering other possibilities e.g if during 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.
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 (as mentioned) burning the funds, redirecting them to the treasury, supporting public goods, and so on.
I don’t think it would leave any party out and imho this model should be taken into consideration for this proposal.
plutus want $ARB holders to fix their incompetence, aside from their broken product:
-they couldn't even organise themselves to submit for round 1 STIP -they can't even distribute their own token rewards correctly and had to pause emissions
plutus want $ARB holders to fix their incompetence, aside from their broken product:
-they couldn't even organise themselves to submit for round 1 STIP -they can't even distribute their own token rewards correctly and had to pause emissions
the proposal is dressed up as beneficial to the arbitrum ecosystem, make no mistake it's sole purpose is to bail out the plutus team of their atrocious centralized decisions
I would support a floating staking mechanism based on block fees, similar to Ethereum. As the chain becomes more utilized and adopted, the participants of the network are rewarded for their hard work in this endeavor.
Staking reward equal to block fees up to a maximum threshold of 2% annually. It would likely start quite low % APY, but would have the potential to grow as the participants increase.
My primary concern here is that we're creating a problem (inflation) then creating a staking mechanism to combat the problem we introduced. Once this is approved one time, it will be that percent inflation or higher until the DAO is out of ARB, so we should definitely make sure there is ample time for all the smartest people involved in Arbitrum to weigh in and get this right (the first time).
Past that, a secondary concern is why now? Pushing this to vote before we've seen the effects of the STIP and before we have all the data seems ineffective at best, but will also add sell pressure on top of the funds we've already approved. Minting becomes officially available in March and I don't see sufficient reasoning to start distribution before that time.
My primary concern here is that we're creating a problem (inflation) then creating a staking mechanism to combat the problem we introduced. Once this is approved one time, it will be that percent inflation or higher until the DAO is out of ARB, so we should definitely make sure there is ample time for all the smartest people involved in Arbitrum to weigh in and get this right (the first time).
Past that, a secondary concern is why now? Pushing this to vote before we've seen the effects of the STIP and before we have all the data seems ineffective at best, but will also add sell pressure on top of the funds we've already approved. Minting becomes officially available in March and I don't see sufficient reasoning to start distribution before that time.
We also have 50m tokens from STIP plus the undecided amount for round two entering the market over the next few months. If we add another 25m (3 months of 100m) will we be able to see the full effect of the STIP? Can we reliably separate the two?
I also don't understand the narrative of ARB token needing utility (right now) as several projects have it included already, with even more on the way. Radiant, GMX, Plutus, Lodestar all currently have options for yield on ARB and Notional is currently voting to add ARB to their project when it's fully launched as well. These are just off the top of my head and I'm sure I'm missing a lot.
plutus are just trying to get $arb holders to pay for fixing their failed broken product
why should $arb holders have to pay for plutus's failure?
I know this is a long shot, but it would be unique and awesome if Arbitrum could become the community that holds each other accountable.
In this case, Plutus DAO is infamous for their misleading advertising during the airdrop that tricked millions of arb into locking and then spending the next several months gaslighting retail investors who felt misled. This caused immeasurable damage to the ecosystem's reputation and countless people have been turned off to investing in arbitrum because of it. We should not reward people who act in this manner.
I know this is a long shot, but it would be unique and awesome if Arbitrum could become the community that holds each other accountable.
In this case, Plutus DAO is infamous for their misleading advertising during the airdrop that tricked millions of arb into locking and then spending the next several months gaslighting retail investors who felt misled. This caused immeasurable damage to the ecosystem's reputation and countless people have been turned off to investing in arbitrum because of it. We should not reward people who act in this manner.
There is no strategic ecosystem advantage to this proposal. While the token needs utility is doesnt need inflation for inflation's sake. Thats all this is. Printing more ARB in the hope that certain lockers can disproportionately benefit.
The only group this helps is people who launched a "governance blackhole" and now need an excuse to lock tokens to prevent people getting their money out of their protocol. I do not think we should turn up the inflation just so the Plutus team can justify holding 10 million arb hostage from unwitting retail investors.
L.S.,
I, much like L2BEAT, find myself pondering the proposed minting and subsequent staking mechanism aimed at alleviating some of the inflation. I contend that fostering scarcity, achieved through burning ARB, as opposed to minting additional ARB, represents a more favorable approach for long-term holders.
L.S.,
I, much like L2BEAT, find myself pondering the proposed minting and subsequent staking mechanism aimed at alleviating some of the inflation. I contend that fostering scarcity, achieved through burning ARB, as opposed to minting additional ARB, represents a more favorable approach for long-term holders.
The minting of 200 million ARB tokens for rewards would lead to a supply increase of approximately 15.69%, as calculated by [(1,475,000,000 - 1,275,000,000) / 1,275,000,000] * 100. Such inflation rates are notably high, even when considering the conservative 1% proposal, which would still result in an inflation rate of 7.85%.
To provide context, in traditional finance, developed countries typically experience an average inflation rate of around 2%. Additionally, when examining other crypto projects, one can find numerous unfortunate examples where excessive token issuance has had detrimental effects.
It is my assumption that, due to the expedited timeline and what appears to be a lack of long-term vision, the PlutusDAO has crafted this proposal primarily to fulfill their commitments to PlutusDAO investors who converted their ARB into plsArb with the expectation of native yield, only to find themselves in a challenging position.
O/T: I also ponder whether the Plutus Team should have the ability to vote on any Governance proposals with the ARB acquired through their plsArb offering. PlutusDAO is merely a "DAO in name" as there is no governance module in the project itself. Nevertheless, they did acquire over 9 million ARB through this plsArb offering, which they can use for voting.
In favor, for those who argue all token inflation = bad, you have bear market PTSD.
wait, the ARB token contract already exist some logic code like staking? if not, i'm not sure we should do this staking, whales would get more motivation to dump. i think $ARB holder get the ETH fee from L2 transaction would be a better choice.
as a bigger doge whale i going to vote yes.
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.
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.
A lot of the reasoning in here is just not true in the sense of how capital markets work. Locking tokens does not create deflation because the expectations of future cashflows remain for locked holders. When inflation exits, people are diluted. When deflation exists, the opposite occurs. Locked tokens still have a claim on future cashflows (in a speculative way at least).
I'm supportive of some locking mechanism in general don't get me wrong. I just think we need to be fair in the terms we use and what actually is occuring.
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.
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.
IE: -single-sided lock -Single-sided lock + lending ARB on money markets -LP token lock -ARB perpetuals liquidity (GMX v2) -Delta neutral vaults
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.
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.
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.
real yield or no yield
%100 agree. This is what we need to focus
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:
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?
As shib whale i gone vote no or against this proposal
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)
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.
@ModalQuant @mrstego123 @Soby Just my 2 cents.
We believe this would not only incentivise token holders but also help become a fundamental building block towards future proposals for more token utility in the future (e.g. sequencer revenues).
If there is no corresponding BURNING plan, similar to EIP1559, I will vote against it
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.
Some feedback on a couple different approaches:
Some feedback on a couple different approaches:
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 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.
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.
Lets do this !
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.
Expectations arbfi、arbstables, and the long-term financial viability of start-up projects built through inflation.
We propose minting the 1.75% of eligible ARB to the staking contract above once enabled on March 15th 2024. Until then, an equivalent amount of funds would be taken from the Arbitrum DAO treasury and replenished with the mint when available.
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.
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.
A lot of the reasoning in here is just not true in the sense of how capital markets work. Locking tokens does not create deflation because the expectations of future cashflows remain for locked holders. When inflation exits, people are diluted. When deflation exists, the opposite occurs. Locked tokens still have a claim on future cashflows (in a speculative way at least).
I'm supportive of some locking mechanism in general don't get me wrong. I just think we need to be fair in the terms we use and what actually is occuring.
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.
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.
IE: -single-sided lock -Single-sided lock + lending ARB on money markets -LP token lock -ARB perpetuals liquidity (GMX v2) -Delta neutral vaults
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.
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.
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.
real yield or no yield
%100 agree. This is what we need to focus
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:
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?
As shib whale i gone vote no or against this proposal
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)
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.
@ModalQuant @mrstego123 @Soby Just my 2 cents.
We believe this would not only incentivise token holders but also help become a fundamental building block towards future proposals for more token utility in the future (e.g. sequencer revenues).
If there is no corresponding BURNING plan, similar to EIP1559, I will vote against it
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.
Some feedback on a couple different approaches:
Some feedback on a couple different approaches:
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 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.
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.
Lets do this !
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.
Expectations arbfi、arbstables, and the long-term financial viability of start-up projects built through inflation.
We propose minting the 1.75% of eligible ARB to the staking contract above once enabled on March 15th 2024. Until then, an equivalent amount of funds would be taken from the Arbitrum DAO treasury and replenished with the mint when available.
We believe this would not only incentivise token holders but also help become a fundamental building block towards future proposals for more token utility in the future (e.g. sequencer revenues).
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!
We propose minting the 1.75% of eligible ARB to the staking contract above once enabled on March 15th 2024. Until then, an equivalent amount of funds would be taken from the Arbitrum DAO treasury and replenished with the mint when available.
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.
Feels like 1.75% of the supply of Arb at this stage would be more impactful as grants/protocol incentives than a staking reward.
Feels like 1.75% of the supply of Arb at this stage would be more impactful as grants/protocol incentives than a staking reward.
Definitely agree with @Soby 's sentiment here. The community is still sorting out the best way for the Arbitrum ecosystem to move forward in terms of long-term growth and safety. While it makes sense to reward long-term holders in terms of this yield, the roughly $20M in capital may be more efficiently allocated on grants in the short term.
On the yield itself, 1.75% seems like a fair target as it is inflationary, but below the levels we see in the real economy. The Fed targets 2% price inflation and inflation (call it 3.5%) is running hotter than that. What the community should be aware of is that while the 1.75% staking yield is a nominal return, this nominal return is a negative real yield (1.75 - 3.5 < 0).
Hence, while this 1.75% staking yield seems inflationary on its face, it is less inflationary than the external monetary regime. In fact, on a relative basis it is actually deflationary.
Beyond these comments, the community could also consider options like burning tokens similar to ETH (which is the equivalent of a share buyback in the equity world). Such actions accrete value to all members of the network (ARB token price goes up as supply goes down when network value remains the same) and move the token in the direction of truly hard money.
Imagine the benefit from a protocol marketing perspective as well - timing is good for this as we move to the end of '23 and into early '24 - if the market stabilises and we start to see significant growth this kind of protocol marketing opportunity will make a big difference in a fairly full field
Which would ultimately make the entire process a lot easier in implementation.
Would be interested in hearing what Dopex and Radiant have to say on this as well as it would likely provide for some interesting opportunities for both of them too
I have reservations about whether this proposal, as written, aligns with Arbitrum's overall goal.
The core motivation seems to just be minting and handing out more ARB tokens, without clearly explaining how this will create tangible utility or value for the protocol. I worry it risks diluting the value of existing tokens through unnecessary inflation, without us regular users seeing meaningful benefits.
I have reservations about whether this proposal, as written, aligns with Arbitrum's overall goal.
The core motivation seems to just be minting and handing out more ARB tokens, without clearly explaining how this will create tangible utility or value for the protocol. I worry it risks diluting the value of existing tokens through unnecessary inflation, without us regular users seeing meaningful benefits.
What concrete uses or alignment does this offer for those who aren't already major ARB whales? The proposal lacks details on why minting these new tokens is so urgent right now, or how it substantially advances Arbitrum's technical roadmap versus just rewarding passive holding.
My biggest concern is that perpetual inflation could seriously undermine long-term confidence in ARB's scarcity and value. Without any compensating token sinks, the supply could keep expanding indefinitely. That gradual dilution could really hurt ARB's upside potential.
I'm also skeptical about staking rewards being offered solely for passive holding, rather than active contributions that enrich the ecosystem. To me, that misaligns incentives by promoting unproductive rent-seeking rather than value creation. I worry it will attract profiteers rather than builders.
Frankly, I'm concerned that users may lose faith in ARB if the supply keeps ballooning without being tied to real platform usage and economic activity. Shouldn't we reward contributions that strengthen Arbitrum, not just holding?
What really gave me pause is how the proposal frames inflation as a negligible “consideration” rather than a core design flaw. Also, the lack of any concrete plan to reduce reliance on inflation long-term seems shortsighted given the risks.
Hopefully, I explained my perspective clearly! I'm open to other views here.
Feels like 1.75% of the supply of Arb at this stage would be more impactful as grants/protocol incentives than a staking reward.
Love the proposal, I expect many will poo poo the inflation and cite Ohm fork 100,000% APY madness, however 1.75% is not comparable.
Without Arb yield for stakers, VC unlocks will dilute Arb holders, but with staking yield, the playing field is slightly more even. I strongly believe vesting tokens should not be allowed to stake!
Imagine the frenzy if max 1 year staked Arb is paying out 30-50% APR.
Interesting proposal, not sure this is really needed at this time (the focus perhaps should be on getting grants passed), but it's interesting nonetheless.
I'm not convinced that the locking formula should be linear (you mention weight = ARB amount locked * lock time / 365).
Interesting proposal, not sure this is really needed at this time (the focus perhaps should be on getting grants passed), but it's interesting nonetheless.
I'm not convinced that the locking formula should be linear (you mention weight = ARB amount locked * lock time / 365).
Instead having 2 or 3 types of locks with varying unstaking times seems more appropriate (similar to the Camelot xToken model). For example, having a 1 day cooldown, 30 day cooldown, and 180 day cooldown staked token. Give a set amount of tokens to each type and the yield is market determined.
Would like to see some discussion on this, but should probably be pushed off until after the finalization of the grants process.
We believe this would not only incentivise token holders but also help become a fundamental building block towards future proposals for more token utility in the future (e.g. sequencer revenues).
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!
We propose minting the 1.75% of eligible ARB to the staking contract above once enabled on March 15th 2024. Until then, an equivalent amount of funds would be taken from the Arbitrum DAO treasury and replenished with the mint when available.
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.
Feels like 1.75% of the supply of Arb at this stage would be more impactful as grants/protocol incentives than a staking reward.
Feels like 1.75% of the supply of Arb at this stage would be more impactful as grants/protocol incentives than a staking reward.
Definitely agree with @Soby 's sentiment here. The community is still sorting out the best way for the Arbitrum ecosystem to move forward in terms of long-term growth and safety. While it makes sense to reward long-term holders in terms of this yield, the roughly $20M in capital may be more efficiently allocated on grants in the short term.
On the yield itself, 1.75% seems like a fair target as it is inflationary, but below the levels we see in the real economy. The Fed targets 2% price inflation and inflation (call it 3.5%) is running hotter than that. What the community should be aware of is that while the 1.75% staking yield is a nominal return, this nominal return is a negative real yield (1.75 - 3.5 < 0).
Hence, while this 1.75% staking yield seems inflationary on its face, it is less inflationary than the external monetary regime. In fact, on a relative basis it is actually deflationary.
Beyond these comments, the community could also consider options like burning tokens similar to ETH (which is the equivalent of a share buyback in the equity world). Such actions accrete value to all members of the network (ARB token price goes up as supply goes down when network value remains the same) and move the token in the direction of truly hard money.
Imagine the benefit from a protocol marketing perspective as well - timing is good for this as we move to the end of '23 and into early '24 - if the market stabilises and we start to see significant growth this kind of protocol marketing opportunity will make a big difference in a fairly full field
Which would ultimately make the entire process a lot easier in implementation.
Would be interested in hearing what Dopex and Radiant have to say on this as well as it would likely provide for some interesting opportunities for both of them too
I have reservations about whether this proposal, as written, aligns with Arbitrum's overall goal.
The core motivation seems to just be minting and handing out more ARB tokens, without clearly explaining how this will create tangible utility or value for the protocol. I worry it risks diluting the value of existing tokens through unnecessary inflation, without us regular users seeing meaningful benefits.
I have reservations about whether this proposal, as written, aligns with Arbitrum's overall goal.
The core motivation seems to just be minting and handing out more ARB tokens, without clearly explaining how this will create tangible utility or value for the protocol. I worry it risks diluting the value of existing tokens through unnecessary inflation, without us regular users seeing meaningful benefits.
What concrete uses or alignment does this offer for those who aren't already major ARB whales? The proposal lacks details on why minting these new tokens is so urgent right now, or how it substantially advances Arbitrum's technical roadmap versus just rewarding passive holding.
My biggest concern is that perpetual inflation could seriously undermine long-term confidence in ARB's scarcity and value. Without any compensating token sinks, the supply could keep expanding indefinitely. That gradual dilution could really hurt ARB's upside potential.
I'm also skeptical about staking rewards being offered solely for passive holding, rather than active contributions that enrich the ecosystem. To me, that misaligns incentives by promoting unproductive rent-seeking rather than value creation. I worry it will attract profiteers rather than builders.
Frankly, I'm concerned that users may lose faith in ARB if the supply keeps ballooning without being tied to real platform usage and economic activity. Shouldn't we reward contributions that strengthen Arbitrum, not just holding?
What really gave me pause is how the proposal frames inflation as a negligible “consideration” rather than a core design flaw. Also, the lack of any concrete plan to reduce reliance on inflation long-term seems shortsighted given the risks.
Hopefully, I explained my perspective clearly! I'm open to other views here.
Feels like 1.75% of the supply of Arb at this stage would be more impactful as grants/protocol incentives than a staking reward.
Love the proposal, I expect many will poo poo the inflation and cite Ohm fork 100,000% APY madness, however 1.75% is not comparable.
Without Arb yield for stakers, VC unlocks will dilute Arb holders, but with staking yield, the playing field is slightly more even. I strongly believe vesting tokens should not be allowed to stake!
Imagine the frenzy if max 1 year staked Arb is paying out 30-50% APR.
Interesting proposal, not sure this is really needed at this time (the focus perhaps should be on getting grants passed), but it's interesting nonetheless.
I'm not convinced that the locking formula should be linear (you mention weight = ARB amount locked * lock time / 365).
Interesting proposal, not sure this is really needed at this time (the focus perhaps should be on getting grants passed), but it's interesting nonetheless.
I'm not convinced that the locking formula should be linear (you mention weight = ARB amount locked * lock time / 365).
Instead having 2 or 3 types of locks with varying unstaking times seems more appropriate (similar to the Camelot xToken model). For example, having a 1 day cooldown, 30 day cooldown, and 180 day cooldown staked token. Give a set amount of tokens to each type and the yield is market determined.
Would like to see some discussion on this, but should probably be pushed off until after the finalization of the grants process.
Why do you calculate the amount of $ARB for staking from total ARB supply and not from revenue? This makes absolutely no sense because total supply is growing rapidly and this is spending funds that should be allocated to development and investments. ARB for staking should be calculated as a percentage of current revenues/profits.
OK, but staking rewards should come from revenues and not from ARB token supply. This is a complete wrong concept with no way to continue in the future.
I think this is a bad idea. If we want staking, it should be counted from the revenues or profits from the protocol and not from the total ARB token supply. The Arbitrum DAO treasury should be used for building and development, not for paying "interest" on locking. It is always better to spend on investments than consumption. The number of ARBs is limited and this solution has no future. Paying out a percentage of earned profits in the form of staking is another matter.
Why do you calculate the amount of $ARB for staking from total ARB supply and not from revenue? This makes absolutely no sense because total supply is growing rapidly and this is spending funds that should be allocated to development and investments. ARB for staking should be calculated as a percentage of current revenues/profits.
OK, but staking rewards should come from revenues and not from ARB token supply. This is a complete wrong concept with no way to continue in the future.
I think this is a bad idea. If we want staking, it should be counted from the revenues or profits from the protocol and not from the total ARB token supply. The Arbitrum DAO treasury should be used for building and development, not for paying "interest" on locking. It is always better to spend on investments than consumption. The number of ARBs is limited and this solution has no future. Paying out a percentage of earned profits in the form of staking is another matter.
Hey all,
Lets keep all discussion focused on the proposal and not the authors. Activating ARB staking is a large topic that deserves extensive discussion. We will moderate along these lines.
Hey all,
Lets keep all discussion focused on the proposal and not the authors. Activating ARB staking is a large topic that deserves extensive discussion. We will moderate along these lines.
Hi all,
All comments that relate to the proposal at hand are important, but it should be done in a manner that is civil and respectful to all parties. Comments like "bad reputation", "scam", or "bad actors" will be deleted.
because the mint function is not yet available, we propose using an equivalent amount of funds from the Arbitrum DAO treasury and a mechanism for distributing it among ARB lockers.
Why so hurry about that? why don't we wait until there?
Obviously real yield is preferable, but as has been discussed to death in https://forum.arbitrum.foundation/t/proposal-distribution-of-dao-revenue-to-arb-token-holders/14412, 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.
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.
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.
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.
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.
To be clear, this would be newly minted tokens and would not affect the DAO's current allocations for such nor the treasury beyond what would be required to pay for the suggested auditing after the contracts are submitted by Plutus, and could be adjusted in the future when there are other potential revenue streams or greater regulatory clarity surrounding distribution of sequencer fees.
the focus perhaps should be on getting grants passed
Plutus would supply the contracts to be audited by an auditor of Arbitrum DAO's choosing, would likely have little impact on DAO resources beyond administrative efforts, and so would be unlikely to have any effect on grants timelines.
Hi all,
All comments that relate to the proposal at hand are important, but it should be done in a manner that is civil and respectful to all parties. Comments like "bad reputation", "scam", or "bad actors" will be deleted.
because the mint function is not yet available, we propose using an equivalent amount of funds from the Arbitrum DAO treasury and a mechanism for distributing it among ARB lockers.
Why so hurry about that? why don't we wait until there?
Obviously real yield is preferable, but as has been discussed to death in https://forum.arbitrum.foundation/t/proposal-distribution-of-dao-revenue-to-arb-token-holders/14412, 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.
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.
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.
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.
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.
To be clear, this would be newly minted tokens and would not affect the DAO's current allocations for such nor the treasury beyond what would be required to pay for the suggested auditing after the contracts are submitted by Plutus, and could be adjusted in the future when there are other potential revenue streams or greater regulatory clarity surrounding distribution of sequencer fees.
the focus perhaps should be on getting grants passed
Plutus would supply the contracts to be audited by an auditor of Arbitrum DAO's choosing, would likely have little impact on DAO resources beyond administrative efforts, and so would be unlikely to have any effect on grants timelines.
We support the general idea of experimenting with ARB staking and look forward to participating in its conception. Whilst several details need to be explored throughout the implementation process, we believe that if ARB staking is done in a way that is aligned with the ecosystem, then it can generate significant value.
However, we also have some important concerns, in particular regarding 1) the current ARB delegation limitations, and as pointed out by @AbdullahUmar 2) the possible draining of other staking activities (LPing/lending...).
We support the general idea of experimenting with ARB staking and look forward to participating in its conception. Whilst several details need to be explored throughout the implementation process, we believe that if ARB staking is done in a way that is aligned with the ecosystem, then it can generate significant value.
However, we also have some important concerns, in particular regarding 1) the current ARB delegation limitations, and as pointed out by @AbdullahUmar 2) the possible draining of other staking activities (LPing/lending...).
With that being said, we believe those issues could be circumvented through a collective research effort, and we've consequently chosen to vote in favour of this proposal on Snapshot.
Important to note, our vote is based on the context that this proposal is an "initial temp check" as pointed out by the Plutus team, which will serve as an important catalyst to mobilise the research efforts to discover a full spec for ARB staking. Therefore, our current vote does not reflect our final position once the full implementation and budget have been confirmed in a subsequent proposal.
The below response reflects the views of L2BEAT’s governance team, composed of @krst and @Sinkas, and it’s based on the combined research, fact-checking and ideation of the two.
When the proposal was first published, we raised our concerns regarding minting tokens to fund a staking program. Since this aspect of the proposal has been modified and now it’s just about funding the proposal through the treasury, we’ll be voting in favour during temp-check.
The below response reflects the views of L2BEAT’s governance team, composed of @krst and @Sinkas, and it’s based on the combined research, fact-checking and ideation of the two.
When the proposal was first published, we raised our concerns regarding minting tokens to fund a staking program. Since this aspect of the proposal has been modified and now it’s just about funding the proposal through the treasury, we’ll be voting in favour during temp-check.
However, we believe that there needs to be additional discussion about the parameters of the staking mechanism (especially the APR it offers) and ultimately these parameters should be controllable by the DAO. Moreover, the DAO should receive regular updates on the performance of the staking mechanism and its’ impact on the Arbitrum ecosystem. The proposer mentions the Arbitrum Coalition as a potential partner in this effort, but there should be a clear commitment that even if the Coalition proposal does not pass, some reporting will still be provided.
Lastly, we see this as an experimental initiative, and a result we’ll be voting to fund it with a smaller, rather than bigger amount to start with.
Having evaluated the positions, I'll be voting against ARB staking at this stage.
Generally, I'm opposed to pay-to-hold staking mechanisms, by which the staker isn't providing any value other than not selling. I'm open to the idea of some revenue distribution to ARB holders, however like any growth-stage startup, I feel that financial resources should go towards growth, not towards shareholders.
Hey!
It's ranked choice voting - designed so that users can express their preference better instead of just one binary choice. You can read more about it in Snapshot's docs here: https://docs.snapshot.org/user-guides/proposals/voting-types#ranked-choice-voting-instant-runoff-voting. This is the same method of voting that was used for deciding the total STIP amounts as well.
After thorough analysis and consideration of community feedback, we are voting against the proposed ARB staking mechanism. This decision is informed by a confluence of insights from notable community members, including Michigan Blockchain and SEEDLatam, as well as an analysis of the potential ramifications for the ecosystem.
Reflection on Community Insights
After thorough analysis and consideration of community feedback, we are voting against the proposed ARB staking mechanism. This decision is informed by a confluence of insights from notable community members, including Michigan Blockchain and SEEDLatam, as well as an analysis of the potential ramifications for the ecosystem.
Reflection on Community Insights
@Michigan_Blockchain raises valid points regarding the sustainability of the proposed staking rewards and the potential for creating a precedent that may not align with the long-term interests of the Arbitrum ecosystem. The substantial increase in circulating tokens, estimated between 7.8% to 13.7%, could lead to unintended consequences, such as liquidity drain and reduced usage as collateral, which could stifle the ecosystem's natural growth and health.
In conclusion, while incentivizing long-term holding is a noble goal, the proposed staking mechanism is not the optimal path forward. We should seek to provide utility to $ARB in ways that foster organic growth and participation in the ecosystem, and not merely through inflationary incentives.
hello, can you explain how this voting is configured?
I see that "Do not fund Staking" has 0 votes ARB
But there is a considerable amount of votes in that slot. Is it a sanpashots error?
We sincerely appreciate all the feedback we've received so far! Spurred by discussion and feedback, we wanted to post some clarifications here on how we plan to move forward if the proposal passes.
Firstly, this ongoing Snapshot is broadly meant to gauge the interest for ARB staking and get a ballpark for the amount that people feel would be reasonable for it. Should this pass, we believe it would be proof that there is a sufficient amount of interest for ARB staking.
We sincerely appreciate all the feedback we've received so far! Spurred by discussion and feedback, we wanted to post some clarifications here on how we plan to move forward if the proposal passes.
Firstly, this ongoing Snapshot is broadly meant to gauge the interest for ARB staking and get a ballpark for the amount that people feel would be reasonable for it. Should this pass, we believe it would be proof that there is a sufficient amount of interest for ARB staking.
The actual implementation and execution are both something that have not been decided yet - these will both be finalized in a later Snapshot vote. Should this current proposal pass, we’re looking to organize and put together a group of interested individuals to work on the final implementation, and then eventually progress to a DAO vote that finalizes the implementation and other practicalities (budget, coding, audits etc).
This is to say that we believe that creating and passing a staking model through the DAO is a multi-step process, and we’re keen to get it done in a way that’s collaborative and inclusive. After this first Snapshot, we’ll also be putting together a matrix to publicly address feedback we’ve received during the process from the discussion on the forums here and in other conversations!
I don’t think so. Arb is not dead yet
They have enough voting power to put it to a vote, why would they ask anyone's permission?
Wait, @Plutus DAO themselves wrote this proposal, but did not organize anyone to vote. What is the reason - they did not indicate in this article. If you look at the comments, many were interested in this proposal and asked why Plutus DAO suddenly went silent and stopped answering questions in their own sentence. (Last Post Nov 30, 2023)
Questions remain only for Plutus, why they abandoned their idea and stopped working on it.
Firstly, thank you for your proposal and keen interest in the Arbitrum ecosystem.
Proposal Synopsis: The proposal seeks to reward ARB lockers through a new staking model aimed at increasing ARB's attractiveness and composability, without sharing revenue from the platform's earnings.
Firstly, thank you for your proposal and keen interest in the Arbitrum ecosystem.
Proposal Synopsis: The proposal seeks to reward ARB lockers through a new staking model aimed at increasing ARB's attractiveness and composability, without sharing revenue from the platform's earnings.
Preliminary Stance: While we appreciate innovative efforts to improve the Arbitrum ecosystem, we question the necessity and alignment of such a model with the broader objectives of the Arbitrum DAO and the ARB token. Moreover, the absence of a detailed plan for tracking the progress and effectiveness of the proposal leaves us with significant concerns about its viability.
We currently do not support the proposal due to several unresolved issues. However, we are open to revising our stance if substantial changes addressing our concerns are made, particularly those improving emissions philosophy and detailing a monitoring and assessment framework of the staking model.
Castle Capital appreciates the efforts put forth by Plutus and the benefits they aim to establish within the Arbitrum ecosystem. We are voting Against the proposal due to the reasons stated above.
We hope that our feedback is received as a constructive contribution, aiding the further enhancement and success of the Arbitrum ecosystem.
Below is some feedback from the Uniswap DAO’s Arbitrum governance team, composed of @juanbug and @AbdullahUmar:
Vote (Ranked Choice Voting):
The @SEEDLatam delegation has decided to vote AGAINST this proposal at the Temperature Check.
After reading the entire proposal and all the debate it has generated, we have decided to vote against it for the following reasons:
Hey guys, thank you for the support and feedback.
As for your first point, this staking experiment would likely happen largely in parallel over large token unlocks for ARB, which will increase the circulating supply significantly. Between February 1st 2024 and March 1st 2025 over 2 billion ARB tokens will unlock and become liquid from the Offchain team and other seed investors (source: ARB | Token Unlocks - Your Unlock Schedule & Tokenomics Data). The current circulating supply is approximately 1.275B. We think that this injection of tokens to the market will far offset any potential concerns around liquidity being impacted by the staking proposal.
Thank you for voicing your opinion - we appreciate the feedback!
Something to consider - between February 1st 2024 and March 1st 2025 over 2 billion ARB tokens will unlock and become liquid from the Offchain team and other seed investors (source: https://token.unlocks.app/arbitrum). The current circulating supply is approximately 1.275B.
We support the general idea of experimenting with ARB staking and look forward to participating in its conception. Whilst several details need to be explored throughout the implementation process, we believe that if ARB staking is done in a way that is aligned with the ecosystem, then it can generate significant value.
However, we also have some important concerns, in particular regarding 1) the current ARB delegation limitations, and as pointed out by @AbdullahUmar 2) the possible draining of other staking activities (LPing/lending...).
We support the general idea of experimenting with ARB staking and look forward to participating in its conception. Whilst several details need to be explored throughout the implementation process, we believe that if ARB staking is done in a way that is aligned with the ecosystem, then it can generate significant value.
However, we also have some important concerns, in particular regarding 1) the current ARB delegation limitations, and as pointed out by @AbdullahUmar 2) the possible draining of other staking activities (LPing/lending...).
With that being said, we believe those issues could be circumvented through a collective research effort, and we've consequently chosen to vote in favour of this proposal on Snapshot.
Important to note, our vote is based on the context that this proposal is an "initial temp check" as pointed out by the Plutus team, which will serve as an important catalyst to mobilise the research efforts to discover a full spec for ARB staking. Therefore, our current vote does not reflect our final position once the full implementation and budget have been confirmed in a subsequent proposal.
The below response reflects the views of L2BEAT’s governance team, composed of @krst and @Sinkas, and it’s based on the combined research, fact-checking and ideation of the two.
When the proposal was first published, we raised our concerns regarding minting tokens to fund a staking program. Since this aspect of the proposal has been modified and now it’s just about funding the proposal through the treasury, we’ll be voting in favour during temp-check.
The below response reflects the views of L2BEAT’s governance team, composed of @krst and @Sinkas, and it’s based on the combined research, fact-checking and ideation of the two.
When the proposal was first published, we raised our concerns regarding minting tokens to fund a staking program. Since this aspect of the proposal has been modified and now it’s just about funding the proposal through the treasury, we’ll be voting in favour during temp-check.
However, we believe that there needs to be additional discussion about the parameters of the staking mechanism (especially the APR it offers) and ultimately these parameters should be controllable by the DAO. Moreover, the DAO should receive regular updates on the performance of the staking mechanism and its’ impact on the Arbitrum ecosystem. The proposer mentions the Arbitrum Coalition as a potential partner in this effort, but there should be a clear commitment that even if the Coalition proposal does not pass, some reporting will still be provided.
Lastly, we see this as an experimental initiative, and a result we’ll be voting to fund it with a smaller, rather than bigger amount to start with.
Having evaluated the positions, I'll be voting against ARB staking at this stage.
Generally, I'm opposed to pay-to-hold staking mechanisms, by which the staker isn't providing any value other than not selling. I'm open to the idea of some revenue distribution to ARB holders, however like any growth-stage startup, I feel that financial resources should go towards growth, not towards shareholders.
Hey!
It's ranked choice voting - designed so that users can express their preference better instead of just one binary choice. You can read more about it in Snapshot's docs here: https://docs.snapshot.org/user-guides/proposals/voting-types#ranked-choice-voting-instant-runoff-voting. This is the same method of voting that was used for deciding the total STIP amounts as well.
After thorough analysis and consideration of community feedback, we are voting against the proposed ARB staking mechanism. This decision is informed by a confluence of insights from notable community members, including Michigan Blockchain and SEEDLatam, as well as an analysis of the potential ramifications for the ecosystem.
Reflection on Community Insights
After thorough analysis and consideration of community feedback, we are voting against the proposed ARB staking mechanism. This decision is informed by a confluence of insights from notable community members, including Michigan Blockchain and SEEDLatam, as well as an analysis of the potential ramifications for the ecosystem.
Reflection on Community Insights
@Michigan_Blockchain raises valid points regarding the sustainability of the proposed staking rewards and the potential for creating a precedent that may not align with the long-term interests of the Arbitrum ecosystem. The substantial increase in circulating tokens, estimated between 7.8% to 13.7%, could lead to unintended consequences, such as liquidity drain and reduced usage as collateral, which could stifle the ecosystem's natural growth and health.
In conclusion, while incentivizing long-term holding is a noble goal, the proposed staking mechanism is not the optimal path forward. We should seek to provide utility to $ARB in ways that foster organic growth and participation in the ecosystem, and not merely through inflationary incentives.
hello, can you explain how this voting is configured?
I see that "Do not fund Staking" has 0 votes ARB
But there is a considerable amount of votes in that slot. Is it a sanpashots error?
We sincerely appreciate all the feedback we've received so far! Spurred by discussion and feedback, we wanted to post some clarifications here on how we plan to move forward if the proposal passes.
Firstly, this ongoing Snapshot is broadly meant to gauge the interest for ARB staking and get a ballpark for the amount that people feel would be reasonable for it. Should this pass, we believe it would be proof that there is a sufficient amount of interest for ARB staking.
We sincerely appreciate all the feedback we've received so far! Spurred by discussion and feedback, we wanted to post some clarifications here on how we plan to move forward if the proposal passes.
Firstly, this ongoing Snapshot is broadly meant to gauge the interest for ARB staking and get a ballpark for the amount that people feel would be reasonable for it. Should this pass, we believe it would be proof that there is a sufficient amount of interest for ARB staking.
The actual implementation and execution are both something that have not been decided yet - these will both be finalized in a later Snapshot vote. Should this current proposal pass, we’re looking to organize and put together a group of interested individuals to work on the final implementation, and then eventually progress to a DAO vote that finalizes the implementation and other practicalities (budget, coding, audits etc).
This is to say that we believe that creating and passing a staking model through the DAO is a multi-step process, and we’re keen to get it done in a way that’s collaborative and inclusive. After this first Snapshot, we’ll also be putting together a matrix to publicly address feedback we’ve received during the process from the discussion on the forums here and in other conversations!
I don’t think so. Arb is not dead yet
They have enough voting power to put it to a vote, why would they ask anyone's permission?
Wait, @Plutus DAO themselves wrote this proposal, but did not organize anyone to vote. What is the reason - they did not indicate in this article. If you look at the comments, many were interested in this proposal and asked why Plutus DAO suddenly went silent and stopped answering questions in their own sentence. (Last Post Nov 30, 2023)
Questions remain only for Plutus, why they abandoned their idea and stopped working on it.
Firstly, thank you for your proposal and keen interest in the Arbitrum ecosystem.
Proposal Synopsis: The proposal seeks to reward ARB lockers through a new staking model aimed at increasing ARB's attractiveness and composability, without sharing revenue from the platform's earnings.
Firstly, thank you for your proposal and keen interest in the Arbitrum ecosystem.
Proposal Synopsis: The proposal seeks to reward ARB lockers through a new staking model aimed at increasing ARB's attractiveness and composability, without sharing revenue from the platform's earnings.
Preliminary Stance: While we appreciate innovative efforts to improve the Arbitrum ecosystem, we question the necessity and alignment of such a model with the broader objectives of the Arbitrum DAO and the ARB token. Moreover, the absence of a detailed plan for tracking the progress and effectiveness of the proposal leaves us with significant concerns about its viability.
We currently do not support the proposal due to several unresolved issues. However, we are open to revising our stance if substantial changes addressing our concerns are made, particularly those improving emissions philosophy and detailing a monitoring and assessment framework of the staking model.
Castle Capital appreciates the efforts put forth by Plutus and the benefits they aim to establish within the Arbitrum ecosystem. We are voting Against the proposal due to the reasons stated above.
We hope that our feedback is received as a constructive contribution, aiding the further enhancement and success of the Arbitrum ecosystem.
Below is some feedback from the Uniswap DAO’s Arbitrum governance team, composed of @juanbug and @AbdullahUmar:
Vote (Ranked Choice Voting):
The @SEEDLatam delegation has decided to vote AGAINST this proposal at the Temperature Check.
After reading the entire proposal and all the debate it has generated, we have decided to vote against it for the following reasons:
Hey guys, thank you for the support and feedback.
As for your first point, this staking experiment would likely happen largely in parallel over large token unlocks for ARB, which will increase the circulating supply significantly. Between February 1st 2024 and March 1st 2025 over 2 billion ARB tokens will unlock and become liquid from the Offchain team and other seed investors (source: ARB | Token Unlocks - Your Unlock Schedule & Tokenomics Data). The current circulating supply is approximately 1.275B. We think that this injection of tokens to the market will far offset any potential concerns around liquidity being impacted by the staking proposal.
Thank you for voicing your opinion - we appreciate the feedback!
Something to consider - between February 1st 2024 and March 1st 2025 over 2 billion ARB tokens will unlock and become liquid from the Offchain team and other seed investors (source: https://token.unlocks.app/arbitrum). The current circulating supply is approximately 1.275B.
Below is some feedback from the Uniswap DAO’s Arbitrum governance team, composed of @juanbug and @AbdullahUmar:
Vote (Ranked Choice Voting):
Although the premise of this proposal is that it will create long-term ARB token holders, this activity is entirely incentivized by inflation and should therefore be discounted significantly–this is simply how all incentive programs should be viewed, especially this staking initiative. What makes an ecosystem thrive is the quality of the dapps. That’s why we were in favor of the STIP proposal. Driving users to use dapps is a more effective way to distribute treasury funds, as opposed to just paying token holders. Even though the hope is that a handful of the new ARB holders become long-term investors and/or Arbitrum ecosystem participants, stickiness is very difficult to measure. Instead, more sticky demographics should be rewarded, like builders and devoted community members, which is currently being done via the grant and STIP distributions.
Investors should, however, at some point be compensated–but a pure inflation play, without recognizable ARB utility, isn’t the best way to facilitate that goal. Sharing decentralized sequencer revenue with $ARB stakers is much better utility and can be implemented when the time is right. Incentivizing sequencer stakers is real utility, and that’s an example of where the DAO should designate its future incentive allocations.
Plus, the $ARB token will suffer in other ways because of the alluring staking APRs. Who would want to lend $ARB or be a liquidity provider if you can just stake for a better return? If this proposal passes, the DAO should consider ways to prevent an $ARB drain from dapps. This can be addressed, for example, via protocol owned liquidity provision for particular Uniswap pools. As representatives of the Uniswap DAO and delegates in the Arbitrum DAO, we would like to explore this option.
The @SEEDLatam delegation has decided to vote AGAINST this proposal at the Temperature Check.
After reading the entire proposal and all the debate it has generated, we have decided to vote against it for the following reasons:
We’re always down to explore new ways to add utility to Arbitrum’s token, but we simply don’t think that this proposal would achieve that goal. Plus, it needs more detail and a clearer definition of the objectives it seeks to achieve. Lastly, for an experimental proposal, the time and amount involved are quite significant. We also believe we can innovate with more than just staking the ARB token.
Hey guys, thank you for the support and feedback.
As for your first point, this staking experiment would likely happen largely in parallel over large token unlocks for ARB, which will increase the circulating supply significantly. Between February 1st 2024 and March 1st 2025 over 2 billion ARB tokens will unlock and become liquid from the Offchain team and other seed investors (source: ARB | Token Unlocks - Your Unlock Schedule & Tokenomics Data). The current circulating supply is approximately 1.275B. We think that this injection of tokens to the market will far offset any potential concerns around liquidity being impacted by the staking proposal.
As to your second point, in our opinion a year is a sufficient amount of time to examine flows and the impact to ARB caused by this staking mechanism through various market conditions. We're always open to other suggestions!
Thank you for voicing your opinion - we appreciate the feedback!
Something to consider - between February 1st 2024 and March 1st 2025 over 2 billion ARB tokens will unlock and become liquid from the Offchain team and other seed investors (source: https://token.unlocks.app/arbitrum). The current circulating supply is approximately 1.275B.
That represents a massive influx of new tokens that will hit the market, and this should more than offset the draining of liquidity that you mention as a potential concern. Perhaps it makes sense to also examine the amount of 100-175M ARB we're suggesting to allocate towards staking and its effects in context against the backdrop of the large token unlocks, that will be happening while staking is live (should this proposal pass).
Michigan Blockchain Does Not Support this proposal to fund the addition of an ARB staking mechanism. While we believe that the Arbitrum DAO should continue to experiment with various mechanisms to provide utility to $ARB, this proposal in its current design will result in overall negative consequences to the ecosystem and token. There are currently 1.275 billion $ARB tokens in circulation. This proposal, therefore aims to introduce an additional 7.8-13.7% more tokens via a staking module. A minimum of 7.8% APR for users to passively accrue will certainly appeal to nearly all token holders. This will result in the draining of liquidity for $ARB across exchanges, reduce usage as collateral on money markets such as Radiant, and set a precedent for the $ARB token that is not sustainable.
While this opens the door to future developments of $ARB utility via staking, we should be striving to provide opportunities to make $ARB more sustainably integrated with the ecosystem, and this proposal will remove it entirely. We recognize it is important to reward long-term holders of $ARB. This is an intriguing experiment and we believe a similar staking mechanism - with reduced allocation so it does not offer the highest APRs across DeFi - that is paired with a revenue-generating mechanism - such as Protocol-owned-liquidity with Uniswap and Camelot - that can all be monitored and analyzed by the Arbitrum Coalition would set the framework for further sustainable experimentation in $ARB utility.
Michigan Blockchain Does Not Support this proposal to fund the addition of an ARB staking mechanism. While we believe that the Arbitrum DAO should continue to experiment with various mechanisms to provide utility to $ARB, this proposal in its current design will result in overall negative consequences to the ecosystem and token. There are currently 1.275 billion $ARB tokens in circulation. This proposal, therefore aims to introduce an additional 7.8-13.7% more tokens via a staking module. A minimum of 7.8% APR for users to passively accrue will certainly appeal to nearly all token holders. This will result in the draining of liquidity for $ARB across exchanges, reduce usage as collateral on money markets such as Radiant, and set a precedent for the $ARB token that is not sustainable.
While this opens the door to future developments of $ARB utility via staking, we should be striving to provide opportunities to make $ARB more sustainably integrated with the ecosystem, and this proposal will remove it entirely. We recognize it is important to reward long-term holders of $ARB. This is an intriguing experiment and we believe a similar staking mechanism - with reduced allocation so it does not offer the highest APRs across DeFi - that is paired with a revenue-generating mechanism - such as Protocol-owned-liquidity with Uniswap and Camelot - that can all be monitored and analyzed by the Arbitrum Coalition would set the framework for further sustainable experimentation in $ARB utility.
Given this, we will be voting Against this proposal in the temperature check with our 2nd through 5th choices being allocating 100MM, 125MM, 150MM, and 175MM, respectively.
I have thoroughly reviewed the "Activate ARB Staking" proposal and would like to share my thoughts and opinions, hoping to contribute constructively to the ongoing discussion.
1. Commendable Innovation and Community Involvement
I have thoroughly reviewed the "Activate ARB Staking" proposal and would like to share my thoughts and opinions, hoping to contribute constructively to the ongoing discussion.
1. Commendable Innovation and Community Involvement
Firstly, I commend the team for their innovative approach and the effort put into creating a comprehensive proposal that aims to enhance the utility of ARB tokens and further align the interests of token holders with the long-term success of the Arbitrum ecosystem. The inclusion of a robust governance structure and the use of ranked choice voting are particularly noteworthy, as they ensure a democratic and inclusive decision-making process.
2. Duration of the Locking Period
The choice of a one-year locking period appears to be a balanced and thoughtful decision. It provides a meaningful commitment from token holders while avoiding the potential drawbacks of longer lock periods. However, I would appreciate more clarity on how this specific duration was determined and whether shorter or variable lock periods were considered.
3. Regulatory Compliance and Security Concerns
The proposal’s design, which avoids revenue sharing and funds staking rewards from the Treasury, seems to be a prudent approach to addressing potential security concerns and ensuring regulatory compliance. Nonetheless, I believe it is crucial to seek expert legal advice to navigate the complexities of securities laws and mitigate any potential risks associated with token classification.
4. Impact on the Ecosystem and Token Utility
Introducing a staking mechanism has the potential to significantly boost interest in the Arbitrum ecosystem and enhance the utility of ARB tokens. By rewarding long-term holders and aligning incentives, we can foster a more engaged and committed community. However, I urge the community and proposal authors to continuously monitor and assess the impact of these changes to ensure they yield the desired benefits and do not inadvertently create imbalances or vulnerabilities.
While I support the initiative to introduce a staking mechanism and believe it has the potential to bring significant benefits to the Arbitrum ecosystem, it is paramount to proceed with caution, ensuring legal compliance, and maintaining a keen eye on the mechanism's long-term impact. I look forward to continued discussions and am eager to see how this proposal evolves in response to community feedback.
I think you might be right on this too
Wonder why the post was hidden. Sorry about that man
Hi, thank you very much for setting up this proposal.
I have a couple of questions/comments.
Why do you believe the experimental time frame should be 1 year? And what would the follow-up plan would be if this is considered to be successful? In this regard, what would the "success" metrics be?
Hi, thank you very much for setting up this proposal.
I have a couple of questions/comments.
Why do you believe the experimental time frame should be 1 year? And what would the follow-up plan would be if this is considered to be successful? In this regard, what would the "success" metrics be?
I believe that something that is missing in this proposal is to mention the main reason for ARB token to exist at all: It is a governance token that allows its holders to participate in the Arbitrum DAO's on-chain governance protocol. It is not just a financial token meant to earn yield.
Since governance tokens also function as financial products, I generally support providing financial incentives to their holders for retaining them as long as they utilize them for their intended purpose. With this approach, you can effectively compete against the incentives that encourage using ARB for leverage or other financial gains.
In my view, our strategy should not merely involve distributing the DAO funds to ARB holders. Instead, we should leverage such mechanisms to encourage and incentivize active participation in governance
Currently, Arbitrum DAO has a very active governance, primarily because of the vast amount of capital available for funding proposals. However, as the supply of this capital decreases, the incentives to participate in governance will also diminish. I believe that now is the time to introduce long-term proposals and mechanisms that will sustain participation in governance and benefit the holders and governance participants in the long run.
One alternative to this is to establish a mechanism that allows only those users whose ARB is delegated to be part of this staking system. This approach will direct rewards towards long-term holders as opposed to yield farmers who are not aligned with the protocol. I believe that this goal should hold more significance than merely increasing the number of individuals farming the token.
In doing this, a mechanism could be established that promotes decentralization. For instance, by directing more yield rewards to holders who delegate their ARB voting power to active delegates outside of the top 10 or 20 in voting power. These are just a few ideas to consider openly.
I believe that the focus of our discussion should be on determining how to allocate funds in a way that ensures sustained participation in future governance. We should not merely concentrate on a method of funds distribution.
*I am a member of SEED Latam, but this opinion is my own personal view and does not reflect that of the Arbitrum's delegation.
We at Layer3 are in full support of the proposed ARB staking activation. It's evident that thorough consideration has been given to community feedback, especially with decisions such as forgoing the token mint and focusing on treasury funding for staking.
The involvement of the 'Arbitrum Coalition' in monitoring the staking mechanism's impact over a year promises informed refinements in the future.
We at Layer3 are in full support of the proposed ARB staking activation. It's evident that thorough consideration has been given to community feedback, especially with decisions such as forgoing the token mint and focusing on treasury funding for staking.
The involvement of the 'Arbitrum Coalition' in monitoring the staking mechanism's impact over a year promises informed refinements in the future.
The proposal's approach to utilize trial and data-driven insights to optimize ARB staking aligns perfectly with the DAO's innovative spirit. We're excited to see the positive impacts this will bring to the Arbitrum ecosystem.
As someone who believes in the importance of being open to new ideas and experimentation, I find this proposal both intriguing and promising. The planned staking mechanism could offer significant benefits for long-term ARB token holders, creating a positive feedback loop for those involved in Arbitrum.
The innovative nature of this proposal is particularly appealing. It acknowledges the current gaps in knowledge around sustainable staking mechanisms and suggests a structured way to gather the necessary data to address those. The 12-month experimental phase seems a well-thought-out approach to collect specific and relevant data, which will aid in refining the staking model, ultimately leading to a more stable incentive system.
As someone who believes in the importance of being open to new ideas and experimentation, I find this proposal both intriguing and promising. The planned staking mechanism could offer significant benefits for long-term ARB token holders, creating a positive feedback loop for those involved in Arbitrum.
The innovative nature of this proposal is particularly appealing. It acknowledges the current gaps in knowledge around sustainable staking mechanisms and suggests a structured way to gather the necessary data to address those. The 12-month experimental phase seems a well-thought-out approach to collect specific and relevant data, which will aid in refining the staking model, ultimately leading to a more stable incentive system.
I view the involvement of the Arbitrum Coalition as another notable element that brings credence to this venture. I would lean on the expertise of Gauntlet, Blockworks, and Trail of Bits to help me understand the long term ramifications of this change.
All in all, I am eager to see how this initiative unfolds and am prepared to support this measured yet forward-thinking approach. This proposal aligns with the spirit of exploration that is among Arbitrum DAO's best qualities.
The reply here is far from factual and we’re extremely disappointed to see misinformation and malicious targeting of individual projects spread on public governance forums, especially when the reply is not in any way related to the actual proposal that is supposed to be discussed. This proposal is not about Plutus or plsARB - it's about creating an ARB staking mechanism beneficial to everyone.
That said, accusations of this calibre are not a matter we take lightly, so to avoid further confusion and misunderstanding we’ve prepared a response with all the facts below. For a truthful account of what has happened so far with plsARB, we recommend everyone reads the thread linked here.
The reply here is far from factual and we’re extremely disappointed to see misinformation and malicious targeting of individual projects spread on public governance forums, especially when the reply is not in any way related to the actual proposal that is supposed to be discussed. This proposal is not about Plutus or plsARB - it's about creating an ARB staking mechanism beneficial to everyone.
That said, accusations of this calibre are not a matter we take lightly, so to avoid further confusion and misunderstanding we’ve prepared a response with all the facts below. For a truthful account of what has happened so far with plsARB, we recommend everyone reads the thread linked here.
To add more context for those interested, the below is a long-form response to a previous forum post that was targeting plsARB and Plutus. That post has long since been deleted for misinformation and false claims, but our original reply below is still relevant since the topics introduced are very similar. The quotations are text from the original forum post and the replies below them largely address all the accusations in the reply above.
This is the only reply we will give related to plsARB. plsARB has nothing to do with this proposal, and we encourage everyone to focus on the proposal at hand instead.
“To illustrate, Plutus has locked up various tokens such as $DPX and $JONES. The precise method of generating revenue from this arrangement remains unclear. Plutus is granting users rewards in the form of $PLS tokens to incentivize deposits. Once a user has contributed to a Plutus token, the conversion is permanent. The sole exit route involves selling the wrapped token on a DEX. These wrapped tokens, on average, are trading at less than 60 cents on the dollar.”
We are extremely clear and upfront about how plsAssets function in our docs. plsARB functions exactly the same as any other plsAsset. The ratio between an asset and a plsAsset varies, predominantly according to the user’s collective demand for the yield of the underlying asset.
“When Arbitrum introduced its token, Plutus swiftly seized the opportunity. The network encountered difficulties handling the surge of users seeking to claim tokens simultaneously, prompting Plutus to establish its own external app page for users to claim through.”
We had an external app page setup for claiming prior to the airdrop that had been prepared for launch over the weeks leading up to the airdrop. It was not created as a reaction to the network surge. This page was created as a courtesy for Plutus users who were interested in converting to plsARB, as a reaction to the surge and people being unable to claim through Arbitrums native airdrop claim page our page was disseminated on Twitter.
“Additionally, Plutus introduced its wrapped version of $ARB, namely $plsARB. Details about plsARB remain scarce, including how its value will accrue and how the Plutus team will utilize user voting power in governance, among other aspects.”
We have clearly stated in our Discord that we are preparing a proposal that will introduce native value accrual to the ARB token and thus directly benefit the entire Arbitrum ecosystem, plsARB and all ARB token holders. In addition, sequencer fee distribution has been long talked about as a potential value accrual mechanism for the ARB token, even being discussed before the token itself was released. We’ve also made it abundantly clear that the voting power of all assets will be transferred to bPLS holders. Until then we will vote in the best interest of Plutus. Once bPLS governance goes live users will have the ability to put forth a proposal that disbands or changes the mechanics around plsARB.
“In the course of the airdrop claiming process, Plutus enabled users to “stake” their ARB tokens for immediate conversion to plsARB. No warnings or disclaimers were provided about the irreversible nature of this process (although the site has been updated since, there are several screenshots captured during the original airdrop that prove it, I will allow the community to validate these claims too).”
Users had the option to only “Claim” their airdrop as well as the option to claim and convert to plsARB with ample disclaimers - with even more added after taking in initial feedback. These were two distinctly different functions as can be seen in the image below. Key to note that 7.5M ARB were added after the additional disclaimers were added.
“Users were enticed with appealing rewards for converting their tokens, without any indication that this would result in irreversible locking. This manoeuvre allowed Plutus to lock more than 10 million $ARB tokens. Plutus has not taken steps to introduce any form of community voting on Arbitrum proposals.
The fact that converting in to plsAssets is irreversible is detailed both in our docs and on the plsARB Convert UI, as seen in the images below.
“Consequently, Plutus retains full control over the allocation of the 12 million ARB tokens. It’s worth noting that Plutus has ‘used’ 45% of their DAO airdrop, predominantly to compensate the team.”
This is patently false - all the 10 million ARB that have been converted to plsARB are in a smart contract, and will be max-locked for ARB staking or another similar mechanism once it’s live. This mechanism is identical to any other plsAsset.
As for the DAO airdrop, Plutus has not used 45% of the DAO airdrop to compensate the team. Plutus has used 18% to compensate the team, with the majority of the DAO airdrop going to incentivize platform use. Most recently Plutus used 300K ARB to buy back plsARB from the official plsARB/ARB LP to distribute to lockers. This is all confirmable on-chain.
“Presently, Plutus started liquidity for plsARB, but the token is trading at a 65% discount compared to ARB. The team has decreased incentives for plsARB holders and has continually offered new assurances about making users whole. Users have incurred substantial losses while the Plutus team has amassed voting power. The team has yet to clarify its internal governance process. Users have no say in how Plutus votes with tokens that aren’t theres.”
The reward structure was clearly laid out prior to plsARB being introduced in launch materials. Plutus does not - and has never guaranteed - that plsAssets will trade at a 1:1 peg. This has been always readily available in our documentation.
Blockworks Research supports adding an ARB staking mechanism funding the trial to the tune of 1% of the treasury. We believe this will create a worthwhile supply sink and source of demand for the token. We do have two questions:
Blockworks Research supports adding an ARB staking mechanism funding the trial to the tune of 1% of the treasury. We believe this will create a worthwhile supply sink and source of demand for the token. We do have two questions:
While we objectively support the proposal without prior knowledge of the plsARB situation, we do believe it pertinent for the team to address the comment above.
After reading the proposal, I'd probably have to agree with others that I'm not sure I fully understand how the lock combats inflation by funding the project through minting more ARB. It will eventually catchup. I'd also add I'd be against effectively using the treasury funds to pseudo-access the minted funds before March 15th, 2024.
I'm not sure I'd support the proposal in it's current form, as I think this is creating 'yield' through temporary supply-side tricks instead of creating a true yield-bearing asset through organic use within the ecosystem. Using the treasury over minting coins would be a more appealing option of the two if I had to choose, but this brings up the issue of how to maximize the value of the funds we have due to opportunity cost.
After reading the proposal, I'd probably have to agree with others that I'm not sure I fully understand how the lock combats inflation by funding the project through minting more ARB. It will eventually catchup. I'd also add I'd be against effectively using the treasury funds to pseudo-access the minted funds before March 15th, 2024.
I'm not sure I'd support the proposal in it's current form, as I think this is creating 'yield' through temporary supply-side tricks instead of creating a true yield-bearing asset through organic use within the ecosystem. Using the treasury over minting coins would be a more appealing option of the two if I had to choose, but this brings up the issue of how to maximize the value of the funds we have due to opportunity cost.
The question I think to ask is if incentivizing ARB holders to lock their ARB is going to provide value to the network over other methods of growth - grants to attract developers, payments to groups who are actively help Arbitrum succeed, etc. As this is essentially what a proposal like this is doing - paying people to not sell their tokens for a year.
Just because a function can be called doesn't mean it has to be called. Arbitrum has a lot of ways to utilize within the ecosystem. GMX, Premia, Silo, etc.
Think the inflation just through the grant process in 2023-24 will be sufficient in terms of what stakeholders have an appetite for. But as a first step, maybe preparing a pitch with some quantitative metrics and like-for-like comparable numbers to other protocols that have successfully established a voting escrow model with irregular inflation, what percent of outstanding issuance is locked, any other projects that have a mint function they regularly call, how successful those projects have been, etc. The governance call L2BEAT runs now has a good mix of diverse attendees, so you should be able to get solid feedback on that call.
The below response reflects the views of L2BEAT’s governance team, composed of @krst and @Sinkas, and it’s based on the combined research, fact-checking and ideation of the two.
Having read the proposal, as well as the entire discussion under it, we have some questions to ask as well as some concerns to raise before fully forming an opinion on whether or not such a proposal would be useful at this time. More specifically:
Hey guys,
Thank you for the thoughtful feedback - much appreciated!
Hey,
Plutus does not have the power to hide any posts under this discussion (or any discussion for that matter). If your post was removed, it was by a moderator on this forum and likely because you broke the rules of the forum or were spreading blatant misinformation.
I think the proposal isn’t so bad after all
Below is some feedback from the Uniswap DAO’s Arbitrum governance team, composed of @juanbug and @AbdullahUmar:
Vote (Ranked Choice Voting):
Although the premise of this proposal is that it will create long-term ARB token holders, this activity is entirely incentivized by inflation and should therefore be discounted significantly–this is simply how all incentive programs should be viewed, especially this staking initiative. What makes an ecosystem thrive is the quality of the dapps. That’s why we were in favor of the STIP proposal. Driving users to use dapps is a more effective way to distribute treasury funds, as opposed to just paying token holders. Even though the hope is that a handful of the new ARB holders become long-term investors and/or Arbitrum ecosystem participants, stickiness is very difficult to measure. Instead, more sticky demographics should be rewarded, like builders and devoted community members, which is currently being done via the grant and STIP distributions.
Investors should, however, at some point be compensated–but a pure inflation play, without recognizable ARB utility, isn’t the best way to facilitate that goal. Sharing decentralized sequencer revenue with $ARB stakers is much better utility and can be implemented when the time is right. Incentivizing sequencer stakers is real utility, and that’s an example of where the DAO should designate its future incentive allocations.
Plus, the $ARB token will suffer in other ways because of the alluring staking APRs. Who would want to lend $ARB or be a liquidity provider if you can just stake for a better return? If this proposal passes, the DAO should consider ways to prevent an $ARB drain from dapps. This can be addressed, for example, via protocol owned liquidity provision for particular Uniswap pools. As representatives of the Uniswap DAO and delegates in the Arbitrum DAO, we would like to explore this option.
The @SEEDLatam delegation has decided to vote AGAINST this proposal at the Temperature Check.
After reading the entire proposal and all the debate it has generated, we have decided to vote against it for the following reasons:
We’re always down to explore new ways to add utility to Arbitrum’s token, but we simply don’t think that this proposal would achieve that goal. Plus, it needs more detail and a clearer definition of the objectives it seeks to achieve. Lastly, for an experimental proposal, the time and amount involved are quite significant. We also believe we can innovate with more than just staking the ARB token.
Hey guys, thank you for the support and feedback.
As for your first point, this staking experiment would likely happen largely in parallel over large token unlocks for ARB, which will increase the circulating supply significantly. Between February 1st 2024 and March 1st 2025 over 2 billion ARB tokens will unlock and become liquid from the Offchain team and other seed investors (source: ARB | Token Unlocks - Your Unlock Schedule & Tokenomics Data). The current circulating supply is approximately 1.275B. We think that this injection of tokens to the market will far offset any potential concerns around liquidity being impacted by the staking proposal.
As to your second point, in our opinion a year is a sufficient amount of time to examine flows and the impact to ARB caused by this staking mechanism through various market conditions. We're always open to other suggestions!
Thank you for voicing your opinion - we appreciate the feedback!
Something to consider - between February 1st 2024 and March 1st 2025 over 2 billion ARB tokens will unlock and become liquid from the Offchain team and other seed investors (source: https://token.unlocks.app/arbitrum). The current circulating supply is approximately 1.275B.
That represents a massive influx of new tokens that will hit the market, and this should more than offset the draining of liquidity that you mention as a potential concern. Perhaps it makes sense to also examine the amount of 100-175M ARB we're suggesting to allocate towards staking and its effects in context against the backdrop of the large token unlocks, that will be happening while staking is live (should this proposal pass).
Michigan Blockchain Does Not Support this proposal to fund the addition of an ARB staking mechanism. While we believe that the Arbitrum DAO should continue to experiment with various mechanisms to provide utility to $ARB, this proposal in its current design will result in overall negative consequences to the ecosystem and token. There are currently 1.275 billion $ARB tokens in circulation. This proposal, therefore aims to introduce an additional 7.8-13.7% more tokens via a staking module. A minimum of 7.8% APR for users to passively accrue will certainly appeal to nearly all token holders. This will result in the draining of liquidity for $ARB across exchanges, reduce usage as collateral on money markets such as Radiant, and set a precedent for the $ARB token that is not sustainable.
While this opens the door to future developments of $ARB utility via staking, we should be striving to provide opportunities to make $ARB more sustainably integrated with the ecosystem, and this proposal will remove it entirely. We recognize it is important to reward long-term holders of $ARB. This is an intriguing experiment and we believe a similar staking mechanism - with reduced allocation so it does not offer the highest APRs across DeFi - that is paired with a revenue-generating mechanism - such as Protocol-owned-liquidity with Uniswap and Camelot - that can all be monitored and analyzed by the Arbitrum Coalition would set the framework for further sustainable experimentation in $ARB utility.
Michigan Blockchain Does Not Support this proposal to fund the addition of an ARB staking mechanism. While we believe that the Arbitrum DAO should continue to experiment with various mechanisms to provide utility to $ARB, this proposal in its current design will result in overall negative consequences to the ecosystem and token. There are currently 1.275 billion $ARB tokens in circulation. This proposal, therefore aims to introduce an additional 7.8-13.7% more tokens via a staking module. A minimum of 7.8% APR for users to passively accrue will certainly appeal to nearly all token holders. This will result in the draining of liquidity for $ARB across exchanges, reduce usage as collateral on money markets such as Radiant, and set a precedent for the $ARB token that is not sustainable.
While this opens the door to future developments of $ARB utility via staking, we should be striving to provide opportunities to make $ARB more sustainably integrated with the ecosystem, and this proposal will remove it entirely. We recognize it is important to reward long-term holders of $ARB. This is an intriguing experiment and we believe a similar staking mechanism - with reduced allocation so it does not offer the highest APRs across DeFi - that is paired with a revenue-generating mechanism - such as Protocol-owned-liquidity with Uniswap and Camelot - that can all be monitored and analyzed by the Arbitrum Coalition would set the framework for further sustainable experimentation in $ARB utility.
Given this, we will be voting Against this proposal in the temperature check with our 2nd through 5th choices being allocating 100MM, 125MM, 150MM, and 175MM, respectively.
I have thoroughly reviewed the "Activate ARB Staking" proposal and would like to share my thoughts and opinions, hoping to contribute constructively to the ongoing discussion.
1. Commendable Innovation and Community Involvement
I have thoroughly reviewed the "Activate ARB Staking" proposal and would like to share my thoughts and opinions, hoping to contribute constructively to the ongoing discussion.
1. Commendable Innovation and Community Involvement
Firstly, I commend the team for their innovative approach and the effort put into creating a comprehensive proposal that aims to enhance the utility of ARB tokens and further align the interests of token holders with the long-term success of the Arbitrum ecosystem. The inclusion of a robust governance structure and the use of ranked choice voting are particularly noteworthy, as they ensure a democratic and inclusive decision-making process.
2. Duration of the Locking Period
The choice of a one-year locking period appears to be a balanced and thoughtful decision. It provides a meaningful commitment from token holders while avoiding the potential drawbacks of longer lock periods. However, I would appreciate more clarity on how this specific duration was determined and whether shorter or variable lock periods were considered.
3. Regulatory Compliance and Security Concerns
The proposal’s design, which avoids revenue sharing and funds staking rewards from the Treasury, seems to be a prudent approach to addressing potential security concerns and ensuring regulatory compliance. Nonetheless, I believe it is crucial to seek expert legal advice to navigate the complexities of securities laws and mitigate any potential risks associated with token classification.
4. Impact on the Ecosystem and Token Utility
Introducing a staking mechanism has the potential to significantly boost interest in the Arbitrum ecosystem and enhance the utility of ARB tokens. By rewarding long-term holders and aligning incentives, we can foster a more engaged and committed community. However, I urge the community and proposal authors to continuously monitor and assess the impact of these changes to ensure they yield the desired benefits and do not inadvertently create imbalances or vulnerabilities.
While I support the initiative to introduce a staking mechanism and believe it has the potential to bring significant benefits to the Arbitrum ecosystem, it is paramount to proceed with caution, ensuring legal compliance, and maintaining a keen eye on the mechanism's long-term impact. I look forward to continued discussions and am eager to see how this proposal evolves in response to community feedback.
I think you might be right on this too
Wonder why the post was hidden. Sorry about that man
Hi, thank you very much for setting up this proposal.
I have a couple of questions/comments.
Why do you believe the experimental time frame should be 1 year? And what would the follow-up plan would be if this is considered to be successful? In this regard, what would the "success" metrics be?
Hi, thank you very much for setting up this proposal.
I have a couple of questions/comments.
Why do you believe the experimental time frame should be 1 year? And what would the follow-up plan would be if this is considered to be successful? In this regard, what would the "success" metrics be?
I believe that something that is missing in this proposal is to mention the main reason for ARB token to exist at all: It is a governance token that allows its holders to participate in the Arbitrum DAO's on-chain governance protocol. It is not just a financial token meant to earn yield.
Since governance tokens also function as financial products, I generally support providing financial incentives to their holders for retaining them as long as they utilize them for their intended purpose. With this approach, you can effectively compete against the incentives that encourage using ARB for leverage or other financial gains.
In my view, our strategy should not merely involve distributing the DAO funds to ARB holders. Instead, we should leverage such mechanisms to encourage and incentivize active participation in governance
Currently, Arbitrum DAO has a very active governance, primarily because of the vast amount of capital available for funding proposals. However, as the supply of this capital decreases, the incentives to participate in governance will also diminish. I believe that now is the time to introduce long-term proposals and mechanisms that will sustain participation in governance and benefit the holders and governance participants in the long run.
One alternative to this is to establish a mechanism that allows only those users whose ARB is delegated to be part of this staking system. This approach will direct rewards towards long-term holders as opposed to yield farmers who are not aligned with the protocol. I believe that this goal should hold more significance than merely increasing the number of individuals farming the token.
In doing this, a mechanism could be established that promotes decentralization. For instance, by directing more yield rewards to holders who delegate their ARB voting power to active delegates outside of the top 10 or 20 in voting power. These are just a few ideas to consider openly.
I believe that the focus of our discussion should be on determining how to allocate funds in a way that ensures sustained participation in future governance. We should not merely concentrate on a method of funds distribution.
*I am a member of SEED Latam, but this opinion is my own personal view and does not reflect that of the Arbitrum's delegation.
We at Layer3 are in full support of the proposed ARB staking activation. It's evident that thorough consideration has been given to community feedback, especially with decisions such as forgoing the token mint and focusing on treasury funding for staking.
The involvement of the 'Arbitrum Coalition' in monitoring the staking mechanism's impact over a year promises informed refinements in the future.
We at Layer3 are in full support of the proposed ARB staking activation. It's evident that thorough consideration has been given to community feedback, especially with decisions such as forgoing the token mint and focusing on treasury funding for staking.
The involvement of the 'Arbitrum Coalition' in monitoring the staking mechanism's impact over a year promises informed refinements in the future.
The proposal's approach to utilize trial and data-driven insights to optimize ARB staking aligns perfectly with the DAO's innovative spirit. We're excited to see the positive impacts this will bring to the Arbitrum ecosystem.
As someone who believes in the importance of being open to new ideas and experimentation, I find this proposal both intriguing and promising. The planned staking mechanism could offer significant benefits for long-term ARB token holders, creating a positive feedback loop for those involved in Arbitrum.
The innovative nature of this proposal is particularly appealing. It acknowledges the current gaps in knowledge around sustainable staking mechanisms and suggests a structured way to gather the necessary data to address those. The 12-month experimental phase seems a well-thought-out approach to collect specific and relevant data, which will aid in refining the staking model, ultimately leading to a more stable incentive system.
As someone who believes in the importance of being open to new ideas and experimentation, I find this proposal both intriguing and promising. The planned staking mechanism could offer significant benefits for long-term ARB token holders, creating a positive feedback loop for those involved in Arbitrum.
The innovative nature of this proposal is particularly appealing. It acknowledges the current gaps in knowledge around sustainable staking mechanisms and suggests a structured way to gather the necessary data to address those. The 12-month experimental phase seems a well-thought-out approach to collect specific and relevant data, which will aid in refining the staking model, ultimately leading to a more stable incentive system.
I view the involvement of the Arbitrum Coalition as another notable element that brings credence to this venture. I would lean on the expertise of Gauntlet, Blockworks, and Trail of Bits to help me understand the long term ramifications of this change.
All in all, I am eager to see how this initiative unfolds and am prepared to support this measured yet forward-thinking approach. This proposal aligns with the spirit of exploration that is among Arbitrum DAO's best qualities.
The reply here is far from factual and we’re extremely disappointed to see misinformation and malicious targeting of individual projects spread on public governance forums, especially when the reply is not in any way related to the actual proposal that is supposed to be discussed. This proposal is not about Plutus or plsARB - it's about creating an ARB staking mechanism beneficial to everyone.
That said, accusations of this calibre are not a matter we take lightly, so to avoid further confusion and misunderstanding we’ve prepared a response with all the facts below. For a truthful account of what has happened so far with plsARB, we recommend everyone reads the thread linked here.
The reply here is far from factual and we’re extremely disappointed to see misinformation and malicious targeting of individual projects spread on public governance forums, especially when the reply is not in any way related to the actual proposal that is supposed to be discussed. This proposal is not about Plutus or plsARB - it's about creating an ARB staking mechanism beneficial to everyone.
That said, accusations of this calibre are not a matter we take lightly, so to avoid further confusion and misunderstanding we’ve prepared a response with all the facts below. For a truthful account of what has happened so far with plsARB, we recommend everyone reads the thread linked here.
To add more context for those interested, the below is a long-form response to a previous forum post that was targeting plsARB and Plutus. That post has long since been deleted for misinformation and false claims, but our original reply below is still relevant since the topics introduced are very similar. The quotations are text from the original forum post and the replies below them largely address all the accusations in the reply above.
This is the only reply we will give related to plsARB. plsARB has nothing to do with this proposal, and we encourage everyone to focus on the proposal at hand instead.
“To illustrate, Plutus has locked up various tokens such as $DPX and $JONES. The precise method of generating revenue from this arrangement remains unclear. Plutus is granting users rewards in the form of $PLS tokens to incentivize deposits. Once a user has contributed to a Plutus token, the conversion is permanent. The sole exit route involves selling the wrapped token on a DEX. These wrapped tokens, on average, are trading at less than 60 cents on the dollar.”
We are extremely clear and upfront about how plsAssets function in our docs. plsARB functions exactly the same as any other plsAsset. The ratio between an asset and a plsAsset varies, predominantly according to the user’s collective demand for the yield of the underlying asset.
“When Arbitrum introduced its token, Plutus swiftly seized the opportunity. The network encountered difficulties handling the surge of users seeking to claim tokens simultaneously, prompting Plutus to establish its own external app page for users to claim through.”
We had an external app page setup for claiming prior to the airdrop that had been prepared for launch over the weeks leading up to the airdrop. It was not created as a reaction to the network surge. This page was created as a courtesy for Plutus users who were interested in converting to plsARB, as a reaction to the surge and people being unable to claim through Arbitrums native airdrop claim page our page was disseminated on Twitter.
“Additionally, Plutus introduced its wrapped version of $ARB, namely $plsARB. Details about plsARB remain scarce, including how its value will accrue and how the Plutus team will utilize user voting power in governance, among other aspects.”
We have clearly stated in our Discord that we are preparing a proposal that will introduce native value accrual to the ARB token and thus directly benefit the entire Arbitrum ecosystem, plsARB and all ARB token holders. In addition, sequencer fee distribution has been long talked about as a potential value accrual mechanism for the ARB token, even being discussed before the token itself was released. We’ve also made it abundantly clear that the voting power of all assets will be transferred to bPLS holders. Until then we will vote in the best interest of Plutus. Once bPLS governance goes live users will have the ability to put forth a proposal that disbands or changes the mechanics around plsARB.
“In the course of the airdrop claiming process, Plutus enabled users to “stake” their ARB tokens for immediate conversion to plsARB. No warnings or disclaimers were provided about the irreversible nature of this process (although the site has been updated since, there are several screenshots captured during the original airdrop that prove it, I will allow the community to validate these claims too).”
Users had the option to only “Claim” their airdrop as well as the option to claim and convert to plsARB with ample disclaimers - with even more added after taking in initial feedback. These were two distinctly different functions as can be seen in the image below. Key to note that 7.5M ARB were added after the additional disclaimers were added.
“Users were enticed with appealing rewards for converting their tokens, without any indication that this would result in irreversible locking. This manoeuvre allowed Plutus to lock more than 10 million $ARB tokens. Plutus has not taken steps to introduce any form of community voting on Arbitrum proposals.
The fact that converting in to plsAssets is irreversible is detailed both in our docs and on the plsARB Convert UI, as seen in the images below.
“Consequently, Plutus retains full control over the allocation of the 12 million ARB tokens. It’s worth noting that Plutus has ‘used’ 45% of their DAO airdrop, predominantly to compensate the team.”
This is patently false - all the 10 million ARB that have been converted to plsARB are in a smart contract, and will be max-locked for ARB staking or another similar mechanism once it’s live. This mechanism is identical to any other plsAsset.
As for the DAO airdrop, Plutus has not used 45% of the DAO airdrop to compensate the team. Plutus has used 18% to compensate the team, with the majority of the DAO airdrop going to incentivize platform use. Most recently Plutus used 300K ARB to buy back plsARB from the official plsARB/ARB LP to distribute to lockers. This is all confirmable on-chain.
“Presently, Plutus started liquidity for plsARB, but the token is trading at a 65% discount compared to ARB. The team has decreased incentives for plsARB holders and has continually offered new assurances about making users whole. Users have incurred substantial losses while the Plutus team has amassed voting power. The team has yet to clarify its internal governance process. Users have no say in how Plutus votes with tokens that aren’t theres.”
The reward structure was clearly laid out prior to plsARB being introduced in launch materials. Plutus does not - and has never guaranteed - that plsAssets will trade at a 1:1 peg. This has been always readily available in our documentation.
Blockworks Research supports adding an ARB staking mechanism funding the trial to the tune of 1% of the treasury. We believe this will create a worthwhile supply sink and source of demand for the token. We do have two questions:
Blockworks Research supports adding an ARB staking mechanism funding the trial to the tune of 1% of the treasury. We believe this will create a worthwhile supply sink and source of demand for the token. We do have two questions:
While we objectively support the proposal without prior knowledge of the plsARB situation, we do believe it pertinent for the team to address the comment above.
After reading the proposal, I'd probably have to agree with others that I'm not sure I fully understand how the lock combats inflation by funding the project through minting more ARB. It will eventually catchup. I'd also add I'd be against effectively using the treasury funds to pseudo-access the minted funds before March 15th, 2024.
I'm not sure I'd support the proposal in it's current form, as I think this is creating 'yield' through temporary supply-side tricks instead of creating a true yield-bearing asset through organic use within the ecosystem. Using the treasury over minting coins would be a more appealing option of the two if I had to choose, but this brings up the issue of how to maximize the value of the funds we have due to opportunity cost.
After reading the proposal, I'd probably have to agree with others that I'm not sure I fully understand how the lock combats inflation by funding the project through minting more ARB. It will eventually catchup. I'd also add I'd be against effectively using the treasury funds to pseudo-access the minted funds before March 15th, 2024.
I'm not sure I'd support the proposal in it's current form, as I think this is creating 'yield' through temporary supply-side tricks instead of creating a true yield-bearing asset through organic use within the ecosystem. Using the treasury over minting coins would be a more appealing option of the two if I had to choose, but this brings up the issue of how to maximize the value of the funds we have due to opportunity cost.
The question I think to ask is if incentivizing ARB holders to lock their ARB is going to provide value to the network over other methods of growth - grants to attract developers, payments to groups who are actively help Arbitrum succeed, etc. As this is essentially what a proposal like this is doing - paying people to not sell their tokens for a year.
Just because a function can be called doesn't mean it has to be called. Arbitrum has a lot of ways to utilize within the ecosystem. GMX, Premia, Silo, etc.
Think the inflation just through the grant process in 2023-24 will be sufficient in terms of what stakeholders have an appetite for. But as a first step, maybe preparing a pitch with some quantitative metrics and like-for-like comparable numbers to other protocols that have successfully established a voting escrow model with irregular inflation, what percent of outstanding issuance is locked, any other projects that have a mint function they regularly call, how successful those projects have been, etc. The governance call L2BEAT runs now has a good mix of diverse attendees, so you should be able to get solid feedback on that call.
The below response reflects the views of L2BEAT’s governance team, composed of @krst and @Sinkas, and it’s based on the combined research, fact-checking and ideation of the two.
Having read the proposal, as well as the entire discussion under it, we have some questions to ask as well as some concerns to raise before fully forming an opinion on whether or not such a proposal would be useful at this time. More specifically:
Hey guys,
Thank you for the thoughtful feedback - much appreciated!
Hey,
Plutus does not have the power to hide any posts under this discussion (or any discussion for that matter). If your post was removed, it was by a moderator on this forum and likely because you broke the rules of the forum or were spreading blatant misinformation.
I think the proposal isn’t so bad after all
The below response reflects the views of L2BEAT’s governance team, composed of @krst and @Sinkas, and it’s based on the combined research, fact-checking and ideation of the two.
Having read the proposal, as well as the entire discussion under it, we have some questions to ask as well as some concerns to raise before fully forming an opinion on whether or not such a proposal would be useful at this time. More specifically:
It's important to highlight the fact that we want to encourage such proposals. However, we would prefer to start with a pilot version of the staking mechanism, funded from the treasury, to test its effects before making any major decisions regarding token inflation or other sources of funding.
We’d like to invite PlutusDAO to the next Open Governance call taking place on November 22nd at 4pm UTC / 12pm EST so their proposal can be discussed live with other delegates. We are also available each Thursday at 3pm UTC / 11pm EST for Arbitrum L2BEAT Office Hours.
The below response reflects the views of L2BEAT’s governance team, composed of @krst and @Sinkas, and it’s based on the combined research, fact-checking and ideation of the two.
Having read the proposal, as well as the entire discussion under it, we have some questions to ask as well as some concerns to raise before fully forming an opinion on whether or not such a proposal would be useful at this time. More specifically:
It's important to highlight the fact that we want to encourage such proposals. However, we would prefer to start with a pilot version of the staking mechanism, funded from the treasury, to test its effects before making any major decisions regarding token inflation or other sources of funding.
We’d like to invite PlutusDAO to the next Open Governance call taking place on November 22nd at 4pm UTC / 12pm EST so their proposal can be discussed live with other delegates. We are also available each Thursday at 3pm UTC / 11pm EST for Arbitrum L2BEAT Office Hours.
