Honestly, I’m pretty agnostic about Ray Palmer staying on Arrow beyond this season. For as long as the writers address and stop the problematic behaviour he has been exhibiting towards Felicity (And, no, having a tragic back story doesn’t excuse the creepiness, OK?).
I think it would actually serve Ray Palmer’s character to have him interacting with other characters. So, he is not primarily judged through Felicity’s attitude towards him, which puts him in direct comparison with Oliver. I think I would enjoy his character more, if he was established as his own character and not just as ‘real man competition for Oliver Queen’.
I would definitely be more supportive of whatever relationship the writers are developing between him and Felicity, if they didn’t make it so that Ray Palmer was Felicity’s rebound, and her reactions to him are about her bitterness over Oliver.
But getting back to your question.
My sense is that the Arrow producers are trying for another spin-off show — with The Atom — but they’re testing the character on Arrow. But I’m not sure it will be as well-received as The Flash. So, I don’t if CW will go for The Atom show.
But I doubt that Ray Palmer will be staying in Arrow for more than this this season.
The Atom is a huge deal in the DC universe, but for as long as he stays in Arrow and its universe, he will never be allowed to have the powers that the comic book Atom has. Because Starling City will always remain closer to reality that Central City (with their meta humans) — that this distinction has been made very clear in different interviews from the producers. A hero that shrink himself to sub-atomic levels doesn’t fit in the reality of the Arrow universe.
And without Ray Palmer’s full potential, and the five years of training that makes Oliver Queen a formidable vigilante, The Atom will always play second fiddle to the Arrow.
I don’t think they’d waste a character like The Atom like that.
So, I think, if the producers really want to flex the full potential of The Atom, they will either move him to The Flash, where he can have the real powers that he has been known for, or spin him off in his own show.
Hope that answered your Ask!