Purple Synthesis

Recently, @PlutusDAO_io has proposed "ARB staking" to improve the utility of $ARB. ~ 90% of voters have voted Yes ✅ And If the proposal pass, Arbitrum DAO treasury will need to fund the staking APY with 1.75% of the total ARB token supply 🎫. This could lead to as much as a 137% staking APY for $ARB . However, is this proposal beneficial for Arbitrum in the long term🤔? Some quick thought on the proposal👇: --------------------------------------------------------- 1️⃣ A TLDR of the proposal: 🔹 Plutus has proposed a staking mechanism aimed at incentivizing long-term holders and adding utility to the ARB token. 🔹 Users can lock up their ARB for up to 365 days, or choose to exit early with a penalty ranging from 0-60%. This penalty gets redistributed to other ARB stakers based on their stake weight, and locking do not affect a staker voting right. 🔹 To bring this to reality, the proposal requests a certain percentage of the total ARB token supply from ARB DAO to fund the staking APY in the next 12 months, which are: 1️⃣ Fund with 1.75% of total ARB supply 2️⃣ Fund with 1.5% 3️⃣ Fund with 1.25%, 4️⃣ Fund with 1%, 5️⃣ No funding at all By the time of writing, ~90% have chosen options 1. 🔹 Option 1 has an estimated staking APR of 137.25% when 10% of ARB is locked and decreases to 13.73% when 100% of ARB is locked. Link to the proposal in the comment session 👇. --------------------------------------------------------- 2️⃣ My tiny brain thoughts: ✅ First, I agree that staking could indeed improve the utility of ARB by being more than a governance token. More than that, staking can lock up a portion of the circulating supply🔒and rewarding lockers with an attractive APY funded by the @arbitrum DAO treasury. ✅ Second, looking beyond, this proposal could even serve as a foundation for future revenue-sharing models, such as sharing sequencer fees or DAO-earned interest, and so forth💰. ❌ However, my primary concern with this proposal is the potential for inflation in the long run, as $ARB from the treasury would be distributed to ARB stakers as rewards, leading to unnecessary selling pressure in the future. ❌ Moreover, the 1.75% of the ARB supply could potentially be put to better use. For example, it could fund another round of incentives to attract more projects and developers, or reward existing projects that have been contributing to Arbitrum's development, Rather than merely paying users to hold their tokens for 12 months. 👇 Given these concerns and the lack of benefits to the ARB ecosystem as a whole, I would disagree with the proposal. Im happy to have your thoughts on this one tho. Feel free to discuss!