While Arbitrum ARB’s governance token has been in a steady downturn since the airdrop at the end of March, its ecosystem is showing healthy growth.
A recent report from Nansen shows that Arbitrum’s activity improved after the airdrop, stabilizing “at a higher level” than before the airdrop. Daily active users, gas fees, and transaction counts have been at consistently higher levels since April 2023.
The gap between the number of active users on Arbitrum and Optimism widened after the Aribtrum airdrop, moving closer to Ethereum.
Trading volume on Arbitrum-based decentralized exchanges paints a similar picture, showing an evident increase in volume after the airdrop.
Furthermore, Nansen’s report shows that the recipients of the ARB airdrop only accounted for about 5% of the activity on the blockchain and that Arbitrum has attracted many more new users after the airdrop.
Potential catalysts for ARB rally
Additionally, an upcoming Ethereum upgrade in the second half of 2023, dubbed Cancun-Deneb (Dencun), will include EIP-4844 (proto-Danksharding), which will lower transaction fees on Arbitrum, increasing the value proposition of blockchain.
Additionally, the Arbitrum Foundation recently disclosed aggregated data from its sequencer, a portion of the Layer 2 fees users pay to publish the data on Ethereum.
The foundation has decided to pass on the proceeds from the sequencer, totaling 3,352 Ether (ETH), or $5.4 million, to the Arbitrum DAO, with the ETH to be managed by ARB holders.
Total:
Arbitrum DAO has accumulated ~3,352 ETH in revenue,
The sequencer will receive a refund of ~5954 ETH, which is the cost of posting all the data to the Ethereum network.How exciting is that?
— Referee (,) (@arbitrum) May 10, 2023
A revenue stream for the DAO, a decentralized autonomous organization, can potentially generate returns for ARB holders if the community votes to direct holder rewards. It remains to be seen how the funds will be managed by the foundation and the DAO.
“Smart money” has ARB
Nansen’s data shows that the “smart money” and funds that ARB accumulated after the airdrop have yet to be sold, which is encouraging. The on-chain analytics firm labels the Ethereum addresses of high-volume, profitable traders as “smart money.”
The funding rate for ARB’s perpetual swap contracts turned negative like the rest of the crypto market after the Securities and Exchange Commission (SEC) filed lawsuits against the industry’s largest exchanges, Binance and Coinbase, according to data from CoinGlass.
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Financing fees are paid by dealers for short or long-term perpetual swaps of an asset depending on its demand. If the demand for short orders is higher, it is considered more expensive, so traders on the short side pay for the long ones.
Currently, funding rates are close to zero, suggesting that futures traders are ARB neutral.
The ARB/USD pair has observed a downward trend since the token’s launch in March. The compression of the channel shows the possibility of a falling wedge pattern, which has a tendency to break out.
However, if ARB breaks below the support line of the wedge pattern around $0.90, the move to the downside can quickly amplify.
On the ETH scale, ARB broke below the May low of 0.00057 ETH after SEC lawsuits. At press time, the token was trading at 0.00056 ETH.
Technically, ARB shows the possibility of a negative trend reversal. However, Dencun’s upcoming Ethereum update and decisions made by the Arbitrum Foundation in directing revenue from L2 accumulation will ultimately dictate ARB’s price action.
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This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
