DeFi Protocol Dolomite Launches vARB, Bringing Dual Functionality To ARB Token Holders
British Virgin Islands,
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December 28, 2023 10:00 AM Eastern Standard Time
Dolomite, the next-generation DeFi lending protocol for efficient capital deployment, has announced the launch of its “vote-enabled ARB”, or vARB token, that users can borrow against their ARB deposits while participating in governance voting on the Arbitrum network.
The vARB token is not a new digital asset, and it cannot be transferred or traded. Rather, it represents a way for ARB deposited as collateral to be simultaneously used for governance voting, but it cannot be lent and borrowed. It differs from regular ARB, which can be lent, borrowed and used as collateral, but not voting. The vARB tokens are effectively held in “isolation mode” and can still be used for governance voting, unlike those locked into Dolomite’s liquidity pools for lending and borrowing.
Arbitrum has become one of the most dominant Ethereum Layer-2 networks, with more than $2.5 billion in total value locked. The protocol launched its ARB governance token 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, and there are many new proposals currently up for consideration.
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 is they are forced to choose between voting on governance matters or engaging in decentralized finance activities. 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.
The 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.
As an example of this strategy, if an individual owns 100 ARB they can 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. As a result, they would then be holding 500 vARB tokens, with 400 ARB of debt. The beauty of it is that the value of vARB will always remain the same as ARB. As such, the collateral rises in the same proportion as the user’s debt. With this strategy, there’s no risk of liquidation from asset price movements.
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.
About Dolomite
Dolomite allows users to unlock dormant capital by smarter borrowing and lending. It enables smarter asset deployment through powerful integrations across the DeFi ecosystem. Dolomite's advanced architecture supports separate borrow positions from a single wallet, each with a distinct risk profile. Its unique design allows for a broad range of yield-bearing assets to be used as collateral, helping users earn rewards while borrowing against these assets.
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