Arbitrum, the largest Level-2 blockchain on Ethereum, is getting its own token after a long period of waiting by the cryptocurrency community. As the Arbitrum Foundation announced, ARB as it is called will be distributed to community members on Thursday, March 23.
According to the Arbitrum Foundation, the ARB marks Arbitrum’s official transition to a decentralized autonomous organization (DAO). This means that ARB holders will be able to vote on key decisions made by Arbitrum One and Arbitrum Nova, the two networks that allow users to transact on the Ethereum blockchain with faster speeds and lower fees.
“Arbitrum DAO will have the power to control key decisions at the core protocol level, from how to upgrade the chain’s technology to how to use the revenue from the chain to support the ecosystem,” the Arbitrum Foundation said in a statement.
Although the Arbitrum Foundation plans to grant a relatively high number of tokens to investors and key contributors (44%), Arbitrum’s creator, Offchain Labs, argues that ARB will make the Arbitrum ecosystem more decentralized than other scaling chains.
“To me, the most exciting part is the decentralization, the fact that Offchain Labs will no longer have any control over the future of this chain,” Offchain Labs CEO Steven Goldfeder told CoinDesk, adding: “We will be a service provider and if the DAO asks us to create software, we will do so.”
What is ARB?
Arbitrum worked with Nansen, the cryptocurrency analytics company, to “capture” the activity of its users during February in order to determine who is eligible to receive ARB tokens. The key criteria taken into account were how many transactions each person made, how many applications they used and how long they have been using the blockchain. Arbitrum One and Arbitrum Nitro were among the factors used to determine eligibility.
Arbitrum users will be able to check their airdrop eligibility and claim tokens by going to gov.arbitrum.foundation. Users are encouraged to be cautious when claiming their tokens, as scammers often use the opportunity of airdrops to fish for individuals through fake websites and other methods.
The total circulation of ARB will reach 10 billion.
The Arbitrum community will control 56% of these tokens – airdrop will allocate 11.5% of the total supply to eligible Arbitrum users and 1.1% to DAOs operating in the Arbitrum ecosystem. The remaining community tokens will go into a fund controlled by the newly created Arbitrum DAO, which will allow ARB holders to vote on how the funds are disbursed.
The remaining 44% of ARB’s circulation will go to investors and employees of Offchain Labs – the development company that built Arbitrum. The CEO, Goldfeder, noted that these tokens will be subject to lock-up periods and vesting schedules, although the percentage of ARB reserved for individuals is somewhat high compared to similar projects.
Unlike Ethereum’s ETH, which is used to pay fees on Ethereum (and Arbitrum), ARB will only be used for protocol governance. The Arbitrum DAO governance process will be self-executing, meaning that votes can be used to directly change the Arbitrum base code.
Changes to the code will be subject to a time delay, but a 12-person security board run by the Arbitrum DAO will have the ability to make faster bug fixes.
The introduction of ARB is scheduled to coincide with the release of Arbitrum Obit, which will allow third-party applications and protocols to create new Level-3 blockchains based on Arbitrum’s low-charging infrastructure.
Why now?
Arbitrum has $3.69 billion locked up in Ethereum’s aggregation network, Aribtrum One, making it a clear market leader. As one of the largest cryptocurrency projects that remained without its own token, the expectation for an Arbitrum token has been a community requirement since the network went live in 2021.
Arbitrum’s main competitor in the Ethereum scaling space, Optimism, released its OP token almost a year ago when it made its own transition to DAO governance.
How they work
Both Arbitrum One and Optimism are so-called “Optimistic” aggregation networks. They’re blockchains that run alongside Ethereum, aggregate large groups of transactions and then write those transactions en masse to the Ethereum ledger, slicing up the fees one would have to pay to execute those transactions individually.
As for why Arbitrum took longer to launch its own governance token, Goldfeder pointed out:
“The technology came first. And based on our technical roadmap, now was the right time.”
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