Offchain Labs, the developer of the Arbitrum ecosystem, announced the launch of its own ARB token, part of the offering of which will go to active platform users through an airdrop – a distribution of tokens by developers. The excitement around the distribution and start of token trading arose after the example of a successful experience with its own asset in the project’s main competitor – Optimism, and the demand for the token was formed even before its listing on exchanges, writes RBC Crypto.
The ARB token will be released on March 23, and users who have been actively using products in the Arbitrum ecosystem for a year will be eligible for the distribution. The project itself is a so-called second-tier blockchain for Ethereum, allowing to make transfer processing on the network faster and cheaper. To understand: if in Ethereum on the basic level on average about 14 transactions per second, Arbitrum allows to increase their number to 40 thousand with multiples of lower commissions.
Offchain Labs is founded by Princeton University professor Steven Goldfeder and two of his graduate students. The company raised $120 million in 2021 from Lightspeed Ventures and several prominent cryptocurrency venture capital funds at a valuation of $1.2 billion. Ethereum scaling projects have formed an entire industry around them, with Optimism and Polygon being Arbitrum’s main competitors in this market. Polygon Labs, the company behind the latter, has received $450 million in venture capital funding, and its token under the ticker symbol MATIC is one of CoinMarketCap’s top 10 market capitalizations.
Paradigm and Andreessen Horowitz funds invested in Optimism in March 2022 and the project is valued at $1.65 billion. In June of the same year, its developers issued an OP token, similarly organizing its distribution through airdrop and further access to leading cryptocurrency exchanges.
Demand prior to the start of trading
As part of the token offering, the company will create the Arbitrum Foundation and an associated decentralized autonomous organization (DAO) to manage and develop the Arbitrum ecosystem. ARB token holders will be able to vote on DAO proposals, and, as conceived by the developers, the governance process will be self-executing, meaning token holders’ votes can directly affect changes to Arbitrum’s software code.
Among similar projects, it was Arbitrum that delayed token launch the longest, though active “drophunters” (those who participate in cryptoproject testing expecting to receive tokens in the future) were sure that a project of such scale will surely repeat the experience of its closest competitors. Arbitrum’s meteoric rise in less than two years has made it one of the most popular second-tier blockchains on Ethereum, with a market share of more than 55%. According to DefiLlama, the total value locked (TVL) in Arbitrum is $1.6 billion, almost twice as much as Optimism.
Optimism’s own token with the ticker OP is capitalized at more than $780 million, and its price has risen 2.5 times since the beginning of the year. Future investors are likely to expect a similar financial return from ARB. Leading cryptocurrency exchanges, including Binance, have announced the token’s listing. Some of them have already started trading ARB futures and similar derivatives, with trading volumes already running into millions of dollars, though ARB itself will not be directly linked to them and will be listed on exchanges as an independent asset.
Thematic channels in Telegram and Discord are already trading over-the-counter (OTC) tokens that do not yet exist, with offers from those who are guaranteed to receive them as part of the distribution. An OTC group member told Cointelegraph that the average ARB price in the over-the-counter market is $0.5, and buyers expect to see token exchange rates of at least $1 at the start of trading on exchanges.
Speaking to Fortune reporters, Goldfeder said the idea of further decentralizing Arbitrum was at the forefront of the token’s launch, not just the lust for profit and “token for token’s sake.” According to him, ARB will only be needed to give holders voting rights in the DAO. Ethereum will still be used to pay for transactions on the network. Transferring control to a decentralized organization, Goldfeder envisioned, would allow Offchain Labs to focus more on attracting developers and new users.
Who gets the tokens
Token giveaways help create a network effect and the initial liquidity of tokens in the marketplace. One recent example of projects with a sensational airdrop was the NFT marketplace Blur, which quickly wrested market share and users from its largest competitor, OpenSea. An elaborate campaign with token distribution and attracting new traders played an important role in this.
Offchain Labs worked with analytics company Nansen to identify ARB recipients and filter out multiple attempts at scamming and other manipulation by applicants. The amount of tokens received was influenced by the number of transactions in the ecosystem, the set of applications used on the Arbitrum blockchain, the timing of participation, and other factors. The blockchain’s transparency as a public registry of each user action allows a set of their activity to be fully verified.
ARB will have a total turnover of 10 billion units. The Arbitrum community will control 56% of the existing tokens: 11.5% of the offering is allocated for distribution through the AIRROP, another 1.1% will be received by existing DAOs in the Arbitrum ecosystem. The remaining community tokens will go to a treasury controlled by a new DAO from the Arbitrum Foundation.
Another 44% of ARB will go to investors and Offchain Labs employees. According to Goldfeder, these tokens will be subject to lock-in periods and vesting schedules for various rights. The share of ARB reserved for insiders is higher than similar projects. In the case of Optimism, investors and developers got 36% of OP tokens.
“The technology was developed first. Based on our roadmap, now is the right time,” Goldfeder explains when asked by Coindesk about the delayed launch of its own token.
According to him, Arbitrum has reached certain technical milestones that its main competitor has not yet reached.