The Arbitrum airdrop!

After a very, very long wait (10 months after the $OP airdrop, but who’s counting?), $ARB is delivering the goods! 

We’ve been banging the drum for a long time, with our first coverage in March 2022 detailing how to qualify for the $ARB airdrops (you’re welcome).

Psst! There are three more covered in that report that haven’t dropped yet.

And now, $ARB is here! 

Qualifying participants will receive between 625 and 10,250 $ARB (depending on how many tasks they participated in), making this one of the biggest recent airdrops. 

Today, we’re going to answer the key questions on everyone’s mind: 

1. What is the token worth?
2. What are we going to do with our airdrop?
3. If we didn’t have the airdrop, would we buy $ARB?

Let’s dive in! 

TLDR

• Arbitrum is launching its token $ARB on March 23, with the average airdrop estimated to be worth around $3,200.
• As soon as the token goes live, Arbitrum’s governance will become fully decentralised.
• Alongside the airdrop, Arbitrum Orbit was announced. This will allow anyone to launch a layer 3 blockchain, build on top of Arbitrum using its code base, and benefit from Ethereum’s security.
• We believe $ARB’s fair value is $1.70 (50% higher than its competitor, Optimism’s $OP). 
• Our price target for $ARB is $6.70. We expect it to reach this price within two years.
• To find out whether we’re buying, selling, or holding, read on!

 

Christmas has come early

You open up Twitter one morning, and this is what you see: 

Wen? Now. 🧑‍🚀💙🧡 pic.twitter.com/CysJ9nPP3Z

— Arbitrum (💙,🧡) (@arbitrum) March 16, 2023

Beautiful, isn’t it?

For those lucky enough to qualify, the average airdrop was 1,895 tokens – expected to be worth around $3,200! 

You can check your eligibility here.

If you made it, congratulations! Read on to find out how much we think your stake is worth.If you didn’t qualify, worry not! Below, we share whether we’ll be buying at launch, and at what price. There may just be an early opportunity…

$ARB airdrop details

On March 23, 12.75% of $ARB’s total supply will be airdropped to 625,143 early users (many of which come from the Cryptonary community)! 

The snapshot (when the data is collected) which decides who gets $ARB and who doesn’t, was taken on February 6, 2023. Points were allocated to actions such as bridging, transaction volume, months transacted in, and more.

The full breakdown, and how much $ARB each action is worth, can be found here.  

If you got in, you’ve got six months to claim! 

So, what do we think about the token? 

Before we get into prices, let’s take a top-down look at Arbitrum, then delve into $ARB’s use cases.

Arbitrum is an Ethereum layer 2 (L2) scaling solution. Unlike Ethereum that only has a 15 transaction per second (TPS) capability, Arbitrum is able to process up to 40,000 TPS. By far, it has managed to attract the most capital in the L2 world.

This airdrop isn’t just to make the community happy. The token has been designed for a clear purpose. 

Decentralisation

As soon as the token goes live, holders will be able to vote on governance decisions.

Having influence over the growing Arbitrum ecosystem gives $ARB instant value. But that’s not all, the announcement had another highlight. The chain has two new features, namely…

Arbitrum Orbit#

Orbit will allow developers to launch their own fully customisable layer 3 blockchains (L3s) in the Arbitrum ecosystem.

You can think of a layer 3 as a layer 2, for layer 2s.

In other words, it’s another layer of scaling. Protocols can launch a blockchain using Arbitrum’s tech stack, and benefit from Ethereum’s security, while having their own governance and token.

Oh, and Arbitrum Stylus will be supported on the L3s. What does this mean?

Arbitrum Stylus

With Arbitrum Stylus, developers (devs) can code with multiple programming languages, rather than just Solidity (the language Ethereum uses).

Devs can write entire smart contracts in any supported language, write contracts in different languages that can talk to each other, and even have different parts of the same contract written in different languages.

The potential of this is incredible.

It opens the doors for developers and protocols from every blockchain and coding language to easily join Arbitrum. This is a first in crypto.

The initial version will support Rust, C, and C++ languages, with more expected in the future.

That’s great, but what’s $ARB worth now?

Let’s start with tokenomics. 

The token will have an initial circulating supply of 1.25B, a total supply of 10B, and 2% per year inflation on top of that.

$ETH will still be used to pay fees, with $ARB purely for governance.

See the split of the total supply below:

Whilst airdrop tokens are instantly unlocked on March 23, team and investor tokens are subject to a four-year vesting period (tokens are unlocked throughout that time), with a one-year cliff before any release, then monthly unlocks.

This means the airdropped tokens will be the only tokens live for the first year (no additional selling pressure!).

In all, $ARB’s tokenomics look much better than $OP’s.

The full unlock of all airdropped tokens at once will prevent continued selling pressure. Compare this to $OP’s tiny 5% initial airdrop, and huge 14% in the future.

As the DAO (Decentralised Autonomous Organisation) is fully decentralised, the huge treasury allocation is subject to governance votes. This means token holders decide what is done with the fund, so it will be used for the benefit of the protocol. This is considerably more transparent than $OP’s “ecosystem fund”.

Fair value at launch

So $ARB has better tokenomics than $OP. But what about the bigger picture? Who will win the layer 2 race?

At Cryptonary, we have believed that Arbitrum will be the winner for some time.

The $ARB launch and news around Arbitrum Orbit and Stylus, further prove this.

Not to mention the statistics…

• Total Value Locked
  • Arbitrum: $3.85B
  • Optimism: $2.04B

• Fees (30 days)
  • Arbitrum: $3.67M
  • Optimism: $2.43M

• Daily Active Users
  • Arbitrum: 100.81K
  • Optimism: 45.28K

Given the state of competition between Optimism and Arbitrum, the fair value for the $ARB token is certainly higher than $OP.

With that in mind, we believe $ARB’s fully diluted value (FDV the total value when all tokens are released) will settle equal to, or higher than, $OP’s.

If their prices match up perfectly, that puts the $ARB token price at $1.15 at launch. However, given Arbitrum’s more advanced position it will likely trade much higher.

Future value prediction

In the future, Arbitrum can certainly compete with BNB Chain. In our opinion, its ecosystem is already better.

With that in mind, over the next two years, we expect Arbitrum to equal BNB Chain’s current FDV, which sits at $67B.

That would equal an $ARB price of $6.70.

Cryptonary’s take: Are we buying?

We’re extremely pleased this airdrop is finally happening. It’s been a long time coming.

When it comes to $ARB’s value post-launch on March 23, we expect much volatility as buyers and sellers battle to find a fair price. We predict it will trade at at least 50% higher than $OP, giving it a price of $1.70.

It wouldn’t be surprising if the price settled lower than our prediction, to begin with. Although we don’t think it’s likely, many people will have been given massive amounts of money and will want to book at least some profits.

But how will we act on launch? 

As you can tell, we’re bullish on $ARB. However, airdrops are strange beasts and prices can be extremely unpredictable.

How we act will depend on the price when it’s launched. Considering our fair value is $1.70, if $ARB’s price is:

• Under $0.80 = we’re buying.
• Under $2.15 = we’re holding.
• Over $2.15 = we’re selling 25%.
• Over $4.30 = we’re selling 25%.

The rest we’ll hold, as Arbitrum is fundamentally sound, and it’s risk-free thanks to the airdrop.

If you’re eligible for the airdrop, and your allocation represents a large amount of money for you, you should consider taking profits on launch. Especially if the price is around fair value.

Action points

• Check whether you’re eligible for the $ARB airdrop here.
• See how far away the launch is on this block countdown (as it launches at the Ethereum block 16890400).
• Check out our layer 2 airdrop report, and complete the actions for StarkNet and ZK Sync, as well as the tokenless protocols listed!
• If you want more airdrops, check out our DeFi derivatives, infrastructure and cross-chain communications reports.
• Join our Telegram and stay up to date with our latest reports – this certainly isn’t the last you’ve heard of the layer 2 war!