The Arbitrum decentralized autonomous organization approved a governance proposal that will enable holders of its ARB token to stake their holdings in exchange for a yield paid out in tokens. This will be funded by the Arbitrum treasury and distributed over 12 months through a smart contract.

The proposal, which was finalized today, originally presented a tiered system for token allocation, with options to allocate 1% (100 million tokens), 1.5% (150 million tokens), or 1.75% (175 million tokens) of the total 10 billion ARB supply as staking rewards.

The majority — more than 66% of the DAO members — voted in favor of the lowest tier of allocating 1% (100 million tokens) toward staking. A minority, 33%, voted against the proposal, highlighting a disagreement within the community regarding the use of treasury funds for staking incentives. 

The annualized percentage yield is estimated between 7.84% and 78.43%, depending on the percentage of the ARB supply that is staked. Notably, this arrangement will earn stakers a token yield from the treasury, unlike other mechanisms where tokens are staked to secure the network or distribute revenue.

One more community review 

The DAO is set to consider a subsequent proposal that will focus on the specifics of the staking implementation. This includes deciding on the technology service provider for the implementation, the associated contracts and the selection of an auditor to ensure the integrity of the process, according to the proposal.

Once the contracts and audits have been completed, there will be a review period of two weeks — during which the community can evaluate the implementations before they are enacted.