Who can accurately determine the true value of the most successful LAYER2 solution on Ethereum? Should it be worth for 10%, 25%, or even 50% of the overall ETH market cap? Thats why it's not appropriate to compare projects in the new era of rollups by merely comparing graphs, unlocks, and searching for patterns. Such an approach doesn't allow for a long-term vision of the project. Evaluating the Arbitrum token's economy can only be done within the context of current on-chain activity and team/Foundation actions that we can observe. And the answer is 4 out of 5 stars.
The following are some raw facts that will be used to draw conclusions later:
- In the current realities of 2023, the Token Allocation was not designed optimally and could lead to a lack of trust from users due to a large total allocation for investors and the team(obvious nowadays). (pic. 1)
- The counter-argument to the point above is the significant revenue model difference between Arbitrum and other projects that allocate a significant percentage to their team and investors. Arbitrum has been generating revenue for a long time, regardless of the token. Most projects don't generate any profit and only incur losses. (pic.2)
- To ensure ecosystem sustainability, a good solution in token economy was to distribute the ARB token to other projects within the Arbitrum ecosystem, maintaining motivation among participants. (DAOs in Arbitrum Ecosystem)
- After the DAO was launched, a scandal erupted over the first governance vote, related to the already spent 700 million ARB tokens(more here). The community proposed returning these tokens to the treasury. Still, the whales, pursuing their interests and not wanting to conflict with the Foundation, rejected the proposal (here is some amusing stats from Flipsyde Crypto that show how many more people voted for the proposal, but their voting power wasn't enough compared to major players). This problem is related to the general issue of the DAO concept and the distribution of voting power, but it was a definite reputational blow for Arbitrum.
- Due to these various factors and the team's lack of full transparency, there is a possibility that this token may be more susceptible to manipulation than others (just remember Solana, for ex.)
In conclusion, it is important to note that this is just the beginning of the Rollup wars, and with the acquisition of new data, it is important to update tokenomics analysis. Arbitrum will do everything in its power to maintain its leadership among Layer 2 solutions on Ethereum, as profit here is synonymous with liquidity, and the war will be fought over it. Therefore, with a large reserve of both tokens and money, the team will undoubtedly not let the ARB token fall out of buyers' interest.
It will be personally interesting to observe the behavior of money within the Arbitrum ecosystem during a possible future recession, another "black swan" event, and a potential market falling. This will be the period when I will delve even deeper into all Layer 2 solutions, as that's where the most interesting things will happen. Show Less
