Arbitrum's Native Token ($ARB): A Comprehensive Indicator of Its Functionality, Token Economics, and Future Prospects
Arbitrum is a Layer2 scaling solution that supports smart contracts, with no scalability and privacy limitations. Founded by Offchain Labs in 2021, Arbitrum provides a more sustainable solution to address the fees required to build DApps on Ethereum.
Anyone building smart contracts knows that Ethereum is the most popular and effective platform for building decentralized applications. However, in addition to simple on-chain solutions and upgrades that many believe can address congestion-related issues, some also believe that the capabilities of second-layer solutions can reduce transaction costs.
L2 solutions are a set of solutions built on top of public blockchains aimed at increasing their scalability and efficiency, especially for small transactions or operations. They are often referred to as second-layer network solutions. It uses Optimistic rollup technology to aggregate transaction batches to reduce gas costs. Additionally, as a second-layer network solution, Arbitrum aims to reduce transaction speed and lower gas fees generated by the Ethereum mainnet (Layer 1).
Since Off Chain Labs launched Arbitrum in August 2021, many have been looking forward to the launch of the Arbitrum token. Fortunately, to delight many investors, the Arbitrum Foundation and Offchain Labs announced the airdrop of the Arbitrum governance token. The $ARB airdrop will officially start on March 23, 2023.
Arbitrum Economic Model
Overview of $ARB Supply and Distribution
Many are very interested in the supply and distribution of ARB. It will be distributed through airdrops to the Arbitrum DAO treasury, Offchain Labs, Offchain Labs investors, users of the Arbitrum platform, and DAOs built using Arbitrum L2 technology.
The distribution of Arbitrum ($ARB) is as follows:
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17.53% (17.53 billion tokens) allocated to Offchain Labs investors
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1.13% (1.13 billion tokens) allocated to DAOs in the Arbitrum ecosystem
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11.62% (11.62 billion tokens) distributed through airdrops to users of the Arbitrum platform
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42.78% (42.78 billion tokens) allocated to the Arbitrum DAO treasury
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26.94% (26.94 billion tokens) allocated to the Offchain Labs team, future teams, and advisors
According to the Arbitrum website:
https://docs.arbitrum.foundation/airdrop-eligibility-distribution
12.75% of the $ARB token supply will be airdropped on March 23, 2023, with 11.62% allocated to users and 1.13% allocated to DAOs. The initial supply of $ARB tokens is 10 billion, with a maximum inflation rate of 2% per year.
These token allocations are designed to build a diverse and decentralized network of stakeholders to support a decentralized environment.
Governance Mechanism
With the launch of $ARB, the Arbitrum Foundation announced the introduction of a self-executing DAO governance model for the Arbitrum One and Arbitrum Nova networks.
The $ARB airdrop will be distributed to eligible participants in the Arbitrum ecosystem and will begin claiming on March 23.
As the first L2 solution to introduce self-executing governance, Arbitrum feels this move "paves the way." However, unlike ETH used to pay for Ethereum (and Arbitrum) fees, $ARB tokens are only used for protocol governance.
Arbitrum's DAO governance is self-executing, meaning its votes directly impact and execute on-chain decisions without the need for intermediaries. A voting process of 21-37 days is required before implementing proposals to provide people with enough opportunity to respond to any changes.
The Arbitrum Foundation has also created the Arbitrum Security Council, a multisig composed of 12 "respected community members" who will monitor the chain's security and be able to act quickly upon discovering vulnerabilities. If the DAO determines that the chain no longer needs the Security Council, it can also retire.
As a result, the governance of the token is quite decentralized, allowing for decentralized and rapid decision-making. Additionally, the Arbitrum Foundation claims that with the launch of $ARB, Arbitrum has transitioned into a decentralized autonomous organization (DAO). Therefore, $ARB holders will have the ability to vote on important issues regarding the networks called Arbitrum One and Arbitrum Nova, which enable faster and cheaper transactions on the Ethereum blockchain.
Value Proposition of ARB
Why $ARB? You may ask.
Arbitrum is not the only second-layer solution available for the Ethereum blockchain, but as you may have guessed, it is the best. Solutions like Polygon and Optimism offer some benefits, but they do not match the benefits of Optimistic Rollup and, more importantly, scalability improvements and privacy features.
Developers can use it to execute unchanged EVM contracts and Ethereum transactions on the second layer, leveraging Ethereum's guarantee of accuracy and benefiting from its superior security. The system has become a major player in Ethereum's second-layer scaling options. According to Footprint Analysis data, as of June 2022, it accounted for 50.88% of the total locked value in the second layer.
Impact of Arbitrum's adoption and potential growth on ARB token value
Arbitrum protocol's native token ARB will be listed for trading on major cryptocurrency exchanges in March 23, 2023. As with any new listing, there is much speculation about how the token price will perform.
According to ARB price predictions, the highest expected price is $2.32, and the lowest expected price is $1.35. The price of the ARB token is expected to steadily rise throughout 2023, reaching around $1.10 in March and $2.32 in September. However, there may be fluctuations in the price of the ARB token in the initial months.
Crypto Bulls Club predicts that if user and DAO supply are open simultaneously, the listing price of $ARB will be $0.60. They claim that this prediction is based on a total circulating supply of $1.275 billion ARB tokens.
However, if only user airdrops are open and DAO treasury, advisors, and team tokens are locked, the token supply will be less, leading to a rise in price to around $0.66.
Additionally, it is expected that the token price will have significant growth in 2024, with a maximum price of $7.04 and a minimum price of $5.41. Several factors, including the expanding Arbitrum ecosystem and usage.
As more people start using the Arbitrum system, the ARB price may rise, and demand for it will also increase. As more institutional investors and major cryptocurrency exchanges begin to recognize the potential of the Arbitrum network, its represented value may also rise.
Airdrop Claim Rules and Methods
User Airdrop Eligibility
The Arbitrum airdrop will begin on March 23, 2023, so be sure to mark your calendar.
The amount of airdrop for each user and the eligible users for the airdrop are determined by a set of criteria set by Arbitrum. Eligibility actions for the airdrop typically include:
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Bridging funds to Arbitrum
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Number of transactions on Arbitrum
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Total number of transactions or interactions with smart contracts
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Total transaction value
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Activity on Arbitrum One and Arbitrum Nova.
However, more specifically, these are the eligible actions for earning points on Arbitrum One;
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Bridging funds to Arbitrum One
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Trading in two different months
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Trading in six different months
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Trading in nine months
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Conducting more than four transactions or interacting with more than four different smart contracts
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Conducting more than ten transactions or interacting with more than ten different smart contracts
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Conducting more than 25 transactions or interacting with more than 25 different smart contracts
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Conducting more than 100 transactions or interacting with more than 100 different smart contracts
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Total transaction value exceeding $10,000
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Total transaction value exceeding $50,000
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Total transaction value exceeding $250,000
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Depositing liquid funds exceeding $10,000 in Arbitrum
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Depositing liquid funds exceeding $50,000 in Arbitrum
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Depositing liquid funds exceeding $250,000 in Arbitrum
For Arbitrum Nova, these actions qualify users to earn points:
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Bridging funds to Arbitrum Nova
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Conducting more than three transactions
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Conducting more than five transactions
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Conducting more than ten transactions
Each point earned is equivalent to a certain amount of tokens during the airdrop.
Each criterion is further divided into levels, with higher-level criteria receiving larger airdrops. For example, under the "Time-based transaction volume" requirement, trading in nine different months will qualify you for a larger airdrop than trading in only two different months.
If a wallet address of an airdrop recipient is found to be a witch address during the Hop protocol reward program, it will be placed on the ineligible list.
Other anti-witch rules are as follows:
If all wallet transactions of the airdrop recipient occur within the last 48 hours, one point will be deducted. If the wallet balance of the airdrop recipient is less than 0.005 ETH and the wallet has not interacted with multiple smart contracts, one point will be deducted.
On the official website of the Arbitrum Foundation, users can verify the requirements they have met and the airdrop they have been allocated. If they want to sell their ARB, users can consider centralized exchanges (CEX) as well as numerous DEXs. Multiple CEXs, including Binance, ByBit, OKX, KuCoin, etc., have announced that they will list ARB on the introduction day.
DAO Airdrop Criteria and Distribution
The Protocol Guild composed of Ethereum contributors and DAOs developing applications in the Arbitrum ecosystem will each receive unique allocations. The weight of DAO Token distribution depends on multiple variables, including the length of the project on Arbitrum, its total on-chain asset value, its localness to Arbitrum, and whether it has a real on-chain treasury.
More information will soon be added regarding the individual DAO allocations. Additionally, all investor and team tokens are subject to a 4-year lockup, with initial unlocking after one year, followed by monthly unlocking for three years, although user and DAO airdrops will be available within a few days.
ClaimARB Guide
Step 1: Check if you are eligible for the ARB airdrop
Before claiming ARB, you need to ensure that you are eligible for the airdrop. Check the eligibility listed above and on the official website.
Step 2: Obtain an ARB wallet
To claim ARB, you need to have a wallet that supports ARB. You can use any wallet that supports the ERC-20 standard, such as MyEtherWallet or MetaMask. Make sure you have the private key for that wallet.
Step 3: Follow the airdrop instructions
ARB has not been released yet, but the airdrop rules are prepared for the release. Follow the instructions provided by the project team to claim your ARB.
Step 4: Wait for the airdrop allocation
After submitting the information, wait for the airdrop allocation. The project team will announce the allocation date and method.
Step 5: Verify your ARB
After receiving ARB, verify that you have received the correct amount. You can check your wallet balance or use a blockchain explorer to view the transaction history.
That's the entire process! Congratulations, you have successfully claimed your ARB airdrop.
Conclusion
In summary, understanding token economics is crucial when investing and participating in the DeFi ecosystem. As emphasized in this article, the ARB token provides an exciting opportunity for those seeking to invest in promising new blockchain technology. Its unique features, such as low gas fees, fast transaction times, and interoperability with other blockchains, also make it an attractive choice for users.
However, it is important to note that investing in any cryptocurrency involves risks and should be approached with caution. Understanding the underlying technology and project goals is crucial before investing.
Looking ahead, there is great potential for the value of the ARB token, as it is related to the rapidly growing Arbitrum network. As more users and projects adopt Arbitrum, demand for the ARB token may increase, driving its value up.
Overall, the emergence of the ARB token and the Arbitrum network marks an exciting milestone for the DeFi ecosystem. Its unique features and growth potential make it an investment opportunity worth looking forward to for investors seeking to participate in the decentralized financial world. As the DeFi space continues to evolve, let's look forward to how Arbitrum and similar projects will shape the future of finance.
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