Governance tokens often force users to choose between participation and capital efficiency.

An ARB holder may want to delegate voting power and participate in Arbitrum governance. The same holder may also want to use ARB as collateral to borrow stablecoins, hedge exposure or finance another on-chain strategy.

In a conventional lending market, depositing ARB can interrupt its governance utility. The token moves into a protocol contract, while the user loses the direct ability to delegate the associated votes.

Dolomite solves this problem through vARB.

vARB is the vote-enabled form of ARB inside Dolomite. It allows users to preserve the governance power associated with their ARB while using the asset’s value as collateral in a separately managed Borrow Position.

The integration reflects Dolomite’s broader Dynamic Collateral model. Productive or governance-enabled assets do not need to become functionally inactive simply because they secure debt.

A user can convert ARB into vARB at a one-to-one ratio, delegate the voting power to their own wallet or another address and place part or all of the vARB into a Borrow Position. Votes remain delegated across both the Dolomite Balance and collateralized positions.

vARB is not a new speculative asset. It has no independent market price, cannot be borrowed and cannot be withdrawn as vARB. When a user exits the system, the underlying asset returned is ordinary ARB.

This structure makes vARB useful for advanced Arbitrum participants, but it does not remove borrowing risk. ARB remains volatile, debt continues accruing interest and an unsafe position can be liquidated.

What Is Dolomite?

Dolomite is a multi-chain decentralized money market and portfolio-management protocol.

It combines lending, borrowing, trading and asset-specific integrations through a virtual liquidity system. Users deposit assets into a Dolomite Balance and then decide how those assets should be used.

Deposited tokens do not automatically become collateral. To borrow, the user transfers selected assets into a distinct Borrow Position.

Each Borrow Position has its own:

• Collateral

• Debt

• Interest exposure

• Health Factor

• Liquidation boundary

• Strategy

This structure allows users to separate risk.

A stablecoin loan can remain independent from a more speculative leveraged position. If one Borrow Position becomes unhealthy, liquidation does not automatically affect other positions or unused assets in the Dolomite Balance.

Dolomite also integrates complex assets through specialized vaults. These vaults can preserve functions such as staking, rewards, vesting, delegation and governance voting.

vARB is one example of this architecture.

What Is vARB?

vARB stands for vote-enabled ARB.

It is an internal Dolomite representation of the ARB governance token. It exists so that ARB deposited into Dolomite can continue carrying voting utility.

ARB and vARB represent the same underlying economic asset.

Their oracle values are designed to match, and users can convert between them at a one-to-one ratio through Dolomite.

The distinction concerns functionality.

Ordinary ARB on Dolomite can be supplied to lending markets and borrowed by other users. It can also serve as collateral, but it does not retain direct Arbitrum governance voting through the vARB vault structure.

vARB can serve as collateral and preserve voting power. It cannot be lent for supply interest or borrowed as a debt asset.

This creates a clear trade-off:

• ARB prioritizes lending-market flexibility.

• vARB prioritizes governance utility while remaining usable as collateral.

vARB Is Not a Separate Tradable Token

Users should not treat vARB as an independent asset with its own market thesis.

It exists only within Dolomite.

A legitimate vARB balance cannot be withdrawn to an external wallet as vARB. When users remove the asset from Dolomite, they receive ARB.

Any token using the vARB name outside the official Dolomite system should not automatically be considered part of the integration.

The internal price of vARB follows the ARB oracle price. It is not supposed to develop an independent exchange rate or secondary-market premium.

This design reduces one major source of complexity. Users do not need to assess a separate vARB peg or external liquidity pool before using the asset.

They still depend on the Dolomite vault contracts, oracle system and ARB market price.

Why Vote-Enabled Collateral Matters

Arbitrum governance helps shape the development and resource allocation of the ecosystem.

ARB voting power may be used directly or delegated to representatives who participate in governance discussions and proposals.

Without vote-enabled collateral, users may need to choose between:

• Keeping ARB in a governance-compatible wallet

• Depositing ARB into a lending protocol

The first option preserves voting but leaves the asset unavailable for borrowing. The second unlocks liquidity but may remove the user’s practical governance participation.

vARB combines these functions.

The holder can continue contributing voting power while using ARB value to support a loan. This can be especially relevant for delegates, DAOs, protocol contributors and long-term Arbitrum participants who hold significant ARB balances.

Capital remains economically useful without disconnecting from governance.

How to Convert ARB Into vARB

The process begins by depositing ARB into Dolomite.

The user then opens the ARB and vARB conversion interface from the Dolomite Balance page.

For a first-time conversion, Dolomite creates a dedicated vault for the wallet. This is a one-time setup step that allows the underlying ARB to interact with Arbitrum governance while remaining connected to Dolomite’s internal accounting.

After the vault is created, the user selects an amount of ARB and converts it into vARB at a one-to-one ratio.

The Dolomite Balance then displays the new vARB amount.

There is no special conversion fee documented for moving between ARB and vARB, although normal network transaction costs still apply.

The user can later convert vARB back into ARB or withdraw the underlying ARB from Dolomite.

How vARB Delegation Works

When a vARB vault is created, its voting power is delegated to the user’s own wallet by default.

This means the wallet can represent its own vARB-based voting power without performing an additional delegation step.

Users can also delegate to another address.

The selected delegate might be:

• An active Arbitrum governance representative

• A DAO treasury address

• A specialist delegate

• A community contributor

• Another wallet controlled by the user

Dolomite applies delegation across the full vARB balance associated with the vault.

This includes vARB held in the user’s Dolomite Balance and vARB allocated as collateral across Borrow Positions.

Moving vARB into a loan position therefore does not automatically remove its voting power from the selected delegate.

This is the central benefit of the integration.

Using vARB as Collateral

Once ARB has been converted into vARB, it can be transferred from the Dolomite Balance into a Borrow Position.

The user then selects an available debt asset and borrows against the vARB collateral.

Possible purposes include:

• Borrowing stablecoins without selling ARB

• Financing operating expenses

• Hedging ARB exposure

• Accessing another DeFi position

• Increasing ARB exposure through looping

• Maintaining voting power during temporary liquidity needs

The amount available to borrow depends on the current vARB value, Dolomite’s collateral parameters and the risk characteristics of the chosen debt asset.

The interface displays how each borrowing action changes Position Health.

A user should not treat the maximum permitted loan as a recommended amount. ARB price volatility can quickly reduce collateral value.

Minimum Collateralization and LTV

Dolomite documentation identifies a minimum vARB collateralization ratio of 120%.

This corresponds to a maximum theoretical loan-to-value of approximately 83.33%.

For comparison, ordinary ARB has historically been documented with a slightly less restrictive collateral requirement.

The higher vARB requirement reflects the specialized vault structure and risk treatment of the asset.

These values should be treated as documented parameters rather than permanent guarantees. Governance and risk management may update live market settings.

Borrowers should maintain a significantly wider buffer than the technical minimum.

For example, depositing $10,000 of vARB and borrowing close to $8,333 would leave the position highly sensitive to an ARB decline.

Borrowing $3,000 or $4,000 would provide more room for volatility, interest growth and oracle updates.

Understanding Position Health

Dolomite uses Position Health to represent the safety of a Borrow Position.

A value above 1 means collateral remains sufficient under the applicable liquidation parameters.

A value below 1 makes the position eligible for liquidation.

Position Health can decline when:

• ARB falls in price

• The borrowed asset appreciates

• Interest increases the debt balance

• The user removes collateral

• More debt is added

• Risk parameters change

Delegated votes do not protect the position from liquidation.

Governance utility and collateral safety are separate functions.

A borrower who wants to preserve long-term voting power should maintain enough collateral to reduce the chance that ARB is seized during a market decline.

What Happens During Liquidation?

If a vARB-backed Borrow Position becomes unhealthy, a liquidator can repay debt and seize the required collateral according to Dolomite’s liquidation rules.

The collateral represents underlying ARB value.

Liquidation therefore reduces the amount of ARB associated with the user’s vARB vault and, by extension, the voting power available for delegation.

This creates two losses for a governance-focused holder:

• Financial loss through seized collateral and liquidation penalties

• Reduced influence in Arbitrum governance

The second effect makes conservative borrowing particularly important for delegates and DAOs.

A position should be managed before it reaches the liquidation threshold. The user can add vARB collateral, transfer another permitted asset into the position or repay part of the debt.

vARB and Collateral-Only Mode

vARB is permanently configured as a collateral-only asset.

It can be deposited and used to secure debt, but users cannot borrow vARB from the lending market.

This restriction supports the purpose of the asset.

vARB represents governance-enabled ARB held through a user-specific Dolomite vault. Allowing it to circulate as a borrowed asset would complicate ownership and delegation.

It would also create uncertainty over who should control the voting power: the supplier, borrower or vault.

By preventing vARB borrowing, Dolomite keeps governance attribution tied to the original vault owner.

Users who want to borrow ARB can use the ordinary ARB market where available.

vARB and Isolation Mode

vARB is classified as an Isolation Mode Level 1 asset.

Level 1 is the least restrictive Isolation Mode category. It generally allows the asset to be combined with ordinary non-isolated collateral and debt assets while preventing another Isolation Mode asset from entering the same Borrow Position.

This means a vARB position may support more flexible portfolio construction than a higher-level isolated asset.

However, users cannot combine vARB with another Isolation Mode collateral in the same position.

The rule prevents multiple specialized vault structures from creating conflicting permissions or liquidation mechanics.

A user who wants to borrow against two isolated assets should create separate Borrow Positions.

ARB Versus vARB on Dolomite

The correct choice depends on the intended use.

Ordinary ARB

ARB may be appropriate when the user wants to:

• Earn lending supply interest

• Make ARB available to borrowers

• Borrow ARB

• Use ARB as standard collateral

• Avoid the specialized governance vault

vARB

vARB may be preferable when the user wants to:

• Preserve Arbitrum voting power

• Delegate votes

• Use ARB value as collateral

• Hold governance-enabled ARB in Dolomite

• Build a governance-focused borrowing strategy

The same balance cannot provide ordinary ARB supply yield and vARB governance utility simultaneously.

Converting ARB into vARB removes it from the borrowable supply market. Users give up potential ARB lending interest in exchange for vote-enabled collateral functionality.

Using Zap With vARB

Dolomite’s Zap system can simplify asset conversions inside Borrow Positions.

Users can convert applicable assets into vARB when opening or managing a position. They can also convert vARB into another supported asset, subject to its collateral-only and Isolation Mode restrictions.

A possible looping strategy involves:

1. Deposit vARB as collateral.

2. Borrow an approved asset.

3. Use Zap to convert the borrowed asset into additional vARB.

4. Add the new vARB as collateral.

5. Repeat within the available borrowing limits.

This increases ARB exposure and voting power.

It also introduces leverage.

If ARB rises, the user has a larger economic and governance position. If ARB falls, the collateral declines while debt remains outstanding.

Looping should therefore be treated as a leveraged ARB strategy, not as a free way to increase votes.

Key Benefits of vARB

Governance Utility Remains Active

Users can retain and delegate ARB voting power inside Dolomite.

ARB Can Secure a Loan

The underlying value can support borrowing without an immediate token sale.

Delegation Covers Collateral Positions

vARB votes remain delegated even when the asset is allocated across Borrow Positions.

One-to-One Conversion

ARB and vARB convert at a one-to-one ratio within Dolomite.

No Independent Peg Risk

vARB uses ARB’s oracle value rather than developing a separate market price.

Separate Position Management

Users can isolate vARB-backed debt from other strategies.

Flexible Delegation

Voting power can be directed to the owner’s wallet or another chosen delegate.

Dynamic Collateral Design

The asset retains native utility while serving a lending function.

Main Risks of vARB

ARB Price Risk

A decline in ARB can weaken collateral health.

Liquidation Risk

An unsafe Borrow Position can lose part of its vARB-backed ARB.

Debt-Asset Risk

The borrowed token can appreciate, increasing the value owed.

Interest-Rate Risk

Borrowing costs can rise and gradually reduce Position Health.

Smart Contract Risk

The Dolomite vault, margin system and supporting contracts may contain vulnerabilities.

Oracle Risk

Incorrect ARB pricing can affect collateral values and liquidation.

Governance Concentration

Looping vARB can increase voting influence through borrowed capital, potentially concentrating governance power.

Opportunity Cost

vARB cannot earn ordinary ARB lending supply interest.

Who May Benefit From vARB?

vARB may be useful for long-term ARB holders who want temporary liquidity without selling.

It can also serve:

• Arbitrum delegates

• DAOs holding ARB treasuries

• Governance researchers

• Protocol contributors

• Active DeFi borrowers

• Users hedging ARB positions

• Advanced participants building leveraged governance exposure

The product may be less appropriate for users who only want lending yield on ARB or who cannot monitor collateralized debt.

It is also unsuitable for anyone who might mistake voting power for financial protection. Participating in governance does not reduce market or liquidation risk.

Governance and Financial Responsibility

vARB connects two forms of power: financial leverage and governance influence.

This creates useful flexibility but also raises important questions.

A user can borrow funds while retaining votes. Through looping, the user may even increase ARB exposure and delegated voting power.

This means governance influence can be partially financed through debt.

The mechanism is transparent and collateralized, but users and delegates should understand the economic obligations behind voting balances.

A heavily leveraged voting position may disappear rapidly during a market decline. Long-term governance participation is more resilient when it is supported by conservative debt rather than maximum leverage.

How to Use vARB Responsibly

Begin by converting only the amount of ARB intended for governance-enabled collateral.

Choose the delegate carefully and verify the destination address.

Create a separate Borrow Position rather than combining the strategy with unrelated high-risk debt.

Borrow substantially below the maximum LTV.

Monitor:

• ARB price

• Position Health

• Debt balance

• Borrow APR

• Delegate address

• Active governance proposals

• Current collateral parameters

Keep liquid repayment assets outside the Borrow Position.

If Position Health deteriorates, repay debt or add collateral early. Do not wait until the liquidation threshold.

FAQ

What is vARB on Dolomite?

vARB is the vote-enabled representation of ARB inside Dolomite. It allows users to preserve Arbitrum voting power while using ARB value as collateral.

Is vARB a separate token from ARB?

It is an internal Dolomite representation rather than an independent tradable asset. ARB and vARB convert one-to-one, and withdrawing vARB returns ARB.

Can vARB be borrowed?

No. vARB is permanently configured as a collateral-only asset.

Can vARB earn ARB lending interest?

No. Users give up ordinary ARB supply-lending functionality when converting the balance into vARB.

Can collateralized vARB still vote?

Yes. Voting power associated with vARB in both the Dolomite Balance and Borrow Positions remains delegated.

Can users delegate vARB to another address?

Yes. The full vARB voting balance can be delegated to the user’s own wallet or another selected address.

Can a vARB position be liquidated?

Yes. If Position Health falls below 1, the underlying collateral can be seized to repay debt.

Conclusion

vARB allows ARB holders to combine governance participation with collateralized borrowing.

Users convert ARB into vARB inside Dolomite at a one-to-one ratio. The underlying ARB is held through a dedicated vault, while the user retains the ability to delegate its Arbitrum voting power.

The same vARB can then be placed into a Borrow Position and used to secure debt.

This solves a common capital-efficiency problem. ARB no longer needs to sit outside lending markets simply to remain governance-enabled.

The integration has clear limits.

vARB is not freely tradable or withdrawable as a separate token. It cannot be borrowed or supplied for ordinary ARB lending interest. It operates in Collateral-Only Mode and Isolation Mode Level 1.

Most importantly, vARB remains volatile collateral.

A falling ARB price, rising debt asset or accumulating interest can push the position toward liquidation. Losing collateral also reduces the voting power associated with the vault.

Before converting ARB, decide whether governance utility is more valuable than ordinary lending income. Select a delegate deliberately and confirm that the full vARB balance is directed correctly.

When borrowing, maintain a wide collateral buffer and keep repayment liquidity available. Avoid using the maximum LTV or creating a leveraged voting position without understanding the liquidation path.

Open the verified vARB section in Dolomite, convert a limited ARB balance and review the delegation interface before creating debt. Used conservatively, vARB can make governance capital more productive while preserving the voting utility that gives ARB its role in the Arbitrum ecosystem.