Get out your red vests. The blockchain ArbitrumEthereum’s second-layer network, popular with investors. So much so that many have become infatuated with its associated token: the ARB. Nevertheless, dark clouds may be gathering on the horizon as impressive quantities of tokens prepare to be released into the wild. Will they be sold en masse to the market? Analysis.
Ethereum Layers 2 on the rise
Arbitrum and its neighbor Optimism are both second-layer networks (or layer 2) of Ethereum. In simple terms, the purpose of these blockchains is to assist the parent blockchain in processing transactions. As we saw in the previous bull run, when the Ethereum blockchain is overwhelmed by demand, transaction fees can rise to staggering amounts, making it impossible for the average user to use its services. You’d end up with more fees than you’d send.
To overcome this difficulty, many second-layer networks networks built « on top » of the Ethereum network. These networks make it possible to drastically reduce costs and accelerate transactions without compromising Ethereum’s security. The Arbitrum network is one of these. And the enthusiasm for these alternative solutions has not waned, despite the bear market.
Since 2021, the Arbitrum has climbed the ladder to reach the 3e position of blockchains in terms of monthly volumes with 2.7 billion dollarsjust behind the Binance Chain and Ethereum, of course.
>> The crypto ecosystem is rocking, surf the markets with Vertex Protocol (affiliate link) >>
Arbitrum ARB token avalanche in sight?
Nevertheless, one event expected in a few months’ time could eventually cause the price of these precious ARB tokens to plummet. On March 16, 2024, the Arbitrum network is set to release no less than 1.11 billion tokens ARB. As a reminder, the total quantity of tokens is set, according to the data from Coinmarketcap, at 10 billion. In addition, there are 1.275 billion tokens available today. In fact, this release should mathematically almost double the quantity of ARB tokens in circulation.
On the other hand, this first release (unlock should be the first of many. Every 4 weeks thereafter, for a period of 4 years, ARB tokens will be progressively released and, in the event of holders selling, put back on the market.
These tokens, which are currently « frozen », are mainly held by private investors and the project teams. The question is whether the latter intend to resell their cryptocurrencies en masse or not. And how well will the market anticipate this event? It’s a safe bet that many of them believe strongly in the project, having been present at its inception. We can also assume that, on the eve of the of Bitcoin’s halving and a potential bull run, it’s not a bad idea to hold on to your tokens a little longer. Nevertheless, business is business, as they say, and some might be tempted to take profits.
In the meantime, these questions of market anticipation aside, one thing is certain: the technology continues to evolve at breakneck speed. The Ethereum network, supported by second-layer solutions such as Arbitrum, continues to be democratized, backed by an army of programmers. There is even talk of the arrival of third-layer solutions, making it possible to see the emergence of « appchainsblockchains dedicated to very specific applications.
No reason to fall behind the financial giants: Web3-style Bitcoin and crypto trading is just a click away, with Vertex Protocol (affiliate link) >>