Arbitrum Staking is facing one of the last proposals to be officially approved. If successful, Arbitrum will be the first Layer 2 platform with a staking program for ARB holders. So what’s interesting about the Arbitrum Staking proposal and where are the opportunities for retail investors for us? Everyone, let’s find out in the article below.
To better understand Arbitrum Staking, people can refer to some of the articles below:
- What is Layer 2? Complete Guide to Layer 2 Solutions
- What is Arbitrum (ARB)? Arbitrum Cryptocurrency Overview
- What is Arbitrum Short-Term Incentives Program (STIP)?
- What is Orbit? Overview of Arbitrum Orbit’s Layer 3 Vision
Plutus DAO Arbitrum Staking Proposal
The driving force behind the Arbitrum Staking proposal
One of the biggest motivations for Plutus DAO to research Arbitrum Staking is that the platform holds a lot of ARB but cannot generate profits from this ARB, the only tool that Plutus can use with ARB. That is joining the DAO. The way Plutus deploys DAO while holding ARB also has many interesting points that I will mention later.
The biggest motivation for Plutus DAO’s Arbitrum Staking proposal is how they can earn more profit from the ARB they hold, thereby having more benefits to share with users besides PLS – in the Liquidity Mining program.
Details of the Arbitrum Staking proposal
Some of the most notable points in the Proposal proposal: Activate ARB Staking include:
- There are 4 proposals with different amounts of ARB included in the Arbitrum Staking program including 100M ARB equivalent to 1% of total tokens, 125M ARB (1.25%), 150M ARB (1.5%), 175M ARB (1.75%) and one object.
- If unstake before maturity, the user will be fined from 0 – 60% depending on the remaining lock time.
Plutus DAO offers a mechanism to calculate the “weight” of staking participants as:
Lock weight = Number of locked ARBs * lock time / 365
For example: JP aka Quang Truong locks 1,000 ARB for a maximum of 365 days.
Lock weight = 1,000 ARB * 365 / 365 = 1,000 ARB
After 182.5 days, the weight of JP aka Quang Truong’s lock was only
Lock weight = 1,000 ARB * 182.5/ 365 = 500 ARB
However, after 182.5 days, if JP aka Quang Truong wants to take profit from ARB, he will be fined according to the following formula:
Penalty % = 60% * Remaining lock time / 365
That means here, JP aka Quang Truong is fined 30% and if he unstakes, he can only withdraw 700 ARB.
Some things worth noting here are:
- The maximum lock period is 365 days.
- Rewards from staking will be shared according to the key weight. The key weight will continuously decrease, thereby reducing the reward, so if you want maximum profit, JP aka Quang Truong must lock continuously for the maximum period of time.
- JP aka Quang Truong can set up many separate stake pools. For example, divide 1,000 ARB into 4 batches, each batch will stake for a different time period.
|
%ARB |
APR – 1% |
APR – 1.25% |
APR – 1.5% |
APR – 1.75% |
|---|---|---|---|---|
|
100 |
7.84 |
9.8 |
11.76 |
13.73 |
|
50 |
15.69 |
19.61 |
23.53 |
27.45 |
|
25 |
31.37 |
39.22 |
47.06 |
54.9 |
|
ten |
78.43 |
98.4 |
117.65 |
137.25 |
To put it simply:
- % ARB: Is the percentage of ARB staking compared to the total supply of ARB in the market.
- APR – 1%: Is the corresponding APR index when users participate in staking ARB.
For example: If the proposal to use 100M ARB equivalent to 1% of the total tokens is approved and selected, then if less than 10% of the ARB amount in the market is staked, the APR the participant will receive will be up to 78.43%. . When the amount of ARB staked exceeds 10% but is lower than 25%, the APR the participant receives is up to 31.37%. Similarly, when the number of ARBs participating in staking is between 25 – 50% and 50 – 100%; Similar to the cases of using 1.25, 1.5 or 1.75% of the total ARB tokens as stake.
What Plutus DAO has done to promote the proposal
In order for its proposal to be strongly promoted, Plutus DAO has a lobbying strategy. Exactly, during the period when Arbitrum deployed the Short-term Incentive Program, there were many projects that needed voting support. Plutus DAO supported many projects in return for those projects when Plutus DAO had proposals, you also need to vote in favor of them.
Where do projects get ARB to vote for Plutus DAO? This comes from the DAO Airdrop that Arbitrum awards to projects that have built and developed on Arbitrum since day one. Some projects have supported Plutus DAO such as Radiant Capital, Camelot, MUX Protocol,…
Plutus DAO describes the benefits
Some of the benefits, or more precisely, Arbitrum Staking brings include:
- Drive interest and attention to Arbitrum and ARB Token.
- ARB Token will actually earn profits.
- Distinguish between ARB and other Layer 2 Altcoins.
- Looking forward to other revenue sharing in the future.
- Rewards for long-term investors.
Arbitrum Staking Roadmap
- Week 36 – 37: Post on the forum, receive feedback from the community.
- Week 43 – 44: Snapshot of forum post.
- Week 45: Snapshot voting.
- Week 45 – 46: On-chain DAO voting on Tally.
- Week 47 onwards: Implementation phase.
At the time of writing, it is week 46 but on-chain DAO voting on Tally has not yet taken place. Some information suggests that an error on Snapshot affected the route.
Personal Review of Arbitrum Staking Proposal
Regarding the Arbitrum Staking proposal, I have many different views, including both negative and positive.
Some negative views
Firstly, the staking operating mechanism that Plutus DAO offers is quite complicated. If we just look at it, we are immediately attracted by the amazing APR numbers such as 137.25%, 117.65%,… numbers that may never be seen with the leading Layer 1s in the market. However, to achieve that number, users must:
- Stake ARB for a maximum period of 365 days.
- Continuously have to increase the time to the maximum because after a period of time lock time is reduced leading to Lock weight is also reduced, thereby leading to a decrease in APR.
If so, then to me this is no different than a stake to die trap while investors need to take profits when the project reaches the desired price.
Especially if this proposal is approved, everyone needs to learn carefully about the rules of the game before playing.
Next, the implementation of Arbitrum Staking does not bring technical benefits to the network, does not promote decentralization of the network, what it is most aimed at is user profit. Obviously, the profit from staking ARB only comes from ARB inflation, not from a business, operation, etc.
From a project perspective, I think that implementing Arbitrum Staking does not bring technical benefits to the network, does not promote decentralization of the network, what it aims for most is just human profit. use. Obviously, the profit from ARB staking only comes from ARB inflation, not from a business, operation, etc. From a project perspective, I think that implementing Arbitrum Staking is not profitable. useful. Will builders and projects not tied to Plutus DAO support this proposal? In the immediate future, there were a few prominent names voting against such as Olimpio – a famous KOL in the Layer 2 industry on Starkne’s DAO, Optimism…. Premia, Gains Network,… and some organizations such as Wintermute.
Final, is a rather negative perspective on my project. From the beginning, I didn’t have a good impression of myself like:
- Plutus DAO, when receiving the DAO Airdrop without going through the community, immediately sells 1/2 to share with the development team.
- Plutus DAO promised to provide liquidity for ARB – plsARB but they “refused” to do so, leaving the community waiting, hoping and then despairing. plsARB is still deeply depeg compared to ARB.
A negative question, is Plutus DAO’s Arbitrum Staking proposal for the community, community-oriented or for Plutus itself, because of the values they are greedy for. Remember that Plutus DAO has not commented on whether ARB staking profits will be shared with plsARB holders. What if they don’t share?
Some positive views
Firstly, in terms of investment this will have a more or less direct impact on Arbitrum price. Because when it launches, the APR will be high and attractive, motivating investors to stake ARB and to get maximum profit, they will probably lock it for the maximum time frame. Or new investors who find the APR attractive will also buy ARB to stake, thereby driving up the price of ARB. Besides, the supply of ARB is shrinking, so the price of AFB can increase further.
As an investor, I think we should carefully observe this proposal to get appropriate feedback.
Next, Plutus DAO is probably the project that will benefit the most from this. Regarding this factor, I have analyzed it in quite detail in the article Arbitrum Ecosystem & First Achievements After Pumping Arbitrum. People can read more to get a more detailed perspective on this incident.
Final, I quite agree with Plutus that Arbitrum Staking will bring a difference compared to other Layer 2 platforms. However, the difference is not inimitable as most Layer 2s still have a lot of tokens but don’t know what to use them for.
Summary
Is Arbitrum Staking for the benefit of everyone or just the benefits and ambitions of Plutus DAO?
