Dolomite launches vARB for Arbitrum network

Decentralised finance (DeFi) market Dolomite announced the launch of new token vARB on December 28th.

Standing for ‘vote-enabled ARB’, the new vARB token enables users to borrow  against their ARB deposits while participating in governance voting on the Arbitrum network for the first time.

This is crucial, as a key drawcard for Arbitum (the network ARB tokens are hosted on) is its democratic process.

Arbitrum has become one of the most dominant Ethereum Layer-2 networks, with more than $2.5 billion in total value. TIits ARB governance token launched in March 2023, enabling community members to vote on the future direction of the network. The Arbitrum DAO consequently held its first major vote in October, when ARB token holders voted on which projects should receive an allocation from a 50M ARB grant through the Arbitrum Short Term Incentives Program

Previously, users had to choose between voting on governance matters or engaging in decentralised finance activities. This is because, when ARB is deposited into protocols such as Aave and Compound, it cannot be used for voting.

Dolomite gets around this with the launch of vARB, which can be freely converted to ARB and vice versa. The advantage of vARB is that it allows users to participate in governance while simultaneously using the same asset to engage in lending and borrowing activities.

Once a user converts their ARB to vARB, they can then delegate that vARB for voting in the same way as they would with traditional ARB.

Another main advantage of vARB is that users can amplify the weight of their votes by using it as collateral to borrow additional ARB, which can then be swapped for more vARB. Users can continue along this loop to maximize the weight of their vote by up to five-times the initial amount of ARB they held.

For example, a user owning 100 ARB can now visit Dolomite to convert it to 100 vARB, which can then be used as collateral to borrow up to 400 ARB using the protocol’s Zap feature. The 400 ARB borrowed by the user can then be converted into 400 vARB, and added to their original collateral – giving them 500 vARB tokens now, with 400 ARB of debt. And, because vARB will always mirror ARB values exactly according to Dolomite, there’s no risk of things like negative slippage or  liquidation from asset price movements.

Dolomite put out a press release on the launch, saying:

The launch of ARB was a key milestone for Arbitrum in its evolution towards being a truly decentralized and democratic network, but one challenge for users was that they were forced to choose between voting on governance matters or engaging in decentralized finance activities. The launch of vARB for Arbitrum voting is another great example of the versatility offered by Dolomite’s unique virtual liquidity model and how it enables DeFi users to maximize the benefits of their crypto holdings.”