Despite the consistent downturn of the Arbitrum governance token ARB since its airdrop in March, its ecosystem shows healthy growth. A recent report by Nansen reveals that the activity on Arbitrum improved after the airdrop, stabilizing at a higher level than before. The daily active users, gas fees, and transaction count have maintained higher levels since April 2023. The number of active users on Arbitrum and Optimism widened after the Aribtrum airdrop, closing in on Ethereum. The trading volume on Arbitrum-based decentralized exchanges also showed a rise in volume after the airdrop. The report shows that ARB airdrop recipients only accounted for around 5% of the activity on the blockchain, and Arbitrum has attracted considerably more new users after the airdrop.

Revenue Source for the DAO

The Arbitrum Foundation recently revealed accumulated data from its sequencer, a part of the layer-2 fees paid by users for posting data onto Ethereum. The foundation has decided to pass on the sequencer’s earnings, totaling 3,352 Ether (ETH), or $5.4 million, to the Arbitrum DAO, and the ETH will be managed by ARB holders. A revenue source for the DAO can potentially create yields for ARB holders if the community votes to direct the rewards to holders. It remains to be seen how the funds will be managed by the foundation and the DAO.

Smart Money

Nansen’s data shows that the “smart money” and funds that accumulated ARB after the airdrop still haven’t sold, which is encouraging. The on-chain analytics firm tags Ethereum addresses of high-volume and profitable traders as “smart money.”

Future Update

An upcoming update on Ethereum in the second half of 2023, dubbed as Cancun-Deneb (Dencun), will include EIP-4844 (proto-Danksharding), which will reduce the transaction fees on Arbitrum, increasing the blockchain’s value proposition.

Technical Analysis

The funding rate for ARB perpetual swap contracts turned negative after the Securities and Exchange Commission (SEC) brought lawsuits against the industry’s largest exchanges, Binance and Coinbase, per CoinGlass data. Currently, the funding rates are near zero, suggesting that futures traders are neutral on ARB. 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 descending wedge pattern, which has a tendency to break to the upside. However, if ARB breaks below the support line of the wedge pattern around $0.90, the move to the downside can amplify quickly. On the ETH scale, ARB broke below May’s low of 0.00057 ETH after the SEC’s lawsuits. At the time of publication, the token was trading at 0.00056 ETH. Technically, ARB shows the possibility of a negative trend reversal. Nevertheless, the upcoming Dencun update on Ethereum and decisions taken by the Arbitrum Foundation in directing revenue from the L2 rollup will ultimately dictate ARB’s price action.

Analysis

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