News - Is a new Arbitrum hype emerging?

By Mike Hesp

Is a new Arbitrum hype emerging?

Ethereum's most popular scaling solution Arbitrum is picking up steam again. The reason: a $50 million funding program and the activation of staking.

The Arbitrum (ARB) price has been virtually unstoppable in recent weeks. Within two weeks, the layer 2 solution cryptocurrency climbed from $0.84 to more than $1.10, and the price looks set to rise further. This was caused by the recently launched "Short Term Incentive Program." This is an Arbitrum Foundation funding program that distributes approximately 50 million ARB tokens to 29 selected projects in the ecosystem.

These, in turn, can create user incentives and provide new inflows. But how high can the price go? Are we currently at the beginning of an "Arbitrum season"? That and more below.

The initiative is already having a clear effect, even before the tokens are paid out. In anticipation of the impending economic stimulus, many users are already flocking to platforms within the Arbitrum network. A good example is the decentralized crypto exchange GMX, which has increased its total locked value by nearly 20 percent in the past 30 days. With 12 million ARB tokens, the DEX is responsible for most of this increase. A decision by ArbitrumDAO will likely further fuel the hype surrounding the ecosystem in the coming weeks and possibly usher in a new "Arbitrum season."

List of Arbitrum STIP receivers with quantities

Source: Messari

Arbitrum is goin to add staking

After a vote in the Arbitrum governance forum one thing is certain: ARB will have a staking opportunity within the next 12 months. During this period, holders of this cryptocurrency can expect returns ranging from 7.8% to an impressive 78%, depending on the total number of tokens that are staked. To take advantage of this, they must lock in their ARB tokens for a full year in a corresponding smart contract.

For the ecosystem, this represents another significant capital injection of millions of dollars. On the other hand, it is very likely that the innovative DeFi-protocols of Arbitrum will develop new applications around ARB, resulting in additional revenues. This would potentially lead to a growth of liquid staking tokens, similar to what happened recently on Ethereum.

The financing of all this is covered by the generous treasury of the Arbitrum DAO. This DAO not only holds a substantial reserve of 3.54 billion ARB tokens, but also 70 million U.S. dollars that flowed back to the organization in late September because many users did not use their ARB airdrop. This alone provides sufficient funding to pay for more than 60 percent of the campaign.

To some within the crypto community, however, this sounds less favorable than it does to most ARB holders. The initiative is considered a "limited pot of money to discourage selling," as noted by crypto-influencer Cobie on X. This is in contrast to networks such as Ethereum, Solana or Cardano, where cessation serves a technical purpose, such as securing the network via validators. At Arbitrum, the seemingly infinite treasure of the Arbitrum DAO makes this whole initiative possible.

Arbitrum to the moon?

The earlier failed vote showed that the DAO functions in part as a gathering place for complacent individuals. In that situation, the leadership gave themselves 750 million tokens, despite the fact that 80 percent of the community voted against it. However, the recent vote regarding staking should bother them less this time as they benefit themselves. It does not matter where the spark comes from; for ARB investors, all that matters is that the fire is lit.

The excitement around staking and the dApp funding program should give the project sufficient momentum in the coming weeks. Recently, Arbitrum also announced the completion of a major milestone: Arbitrum Orbit. This means that developers can now launch layer 3 networks for the first time on Arbitrum, which effectively amounts to layer 2 chains of layer 2 chains. In addition, there is Stylus, a developer initiative that allows programmers to write smart contracts in Rust, C and C++. This is predicted to further increase the popularity of the blockchain ecosystem.

As for the performance of the ARB token, anything seems possible at this time. Some observers point out that Solana (SOL) recently rose 80 percent without a significant increase in on-chain activity. In ARB's case, however, the fact is in its favor that it is the fourth largest blockchain in terms of Total Value Locked (TVL) and is home to some of the most popular DeFi applications. Moreover, insiders and team members will not be able to sell tokens until next year. So in theory, there would be no general pressure from insolvent investors, similar to the case of Solana, up to the Bitcoin halving. This lays a solid foundation for a strong price trend.

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