Last Updated on April 10, 2023 by Bitfinsider
For the Ethereum blockchain, Arbitrum is a layer-2 scaling solution that aims to increase its scalability and lower network transaction costs. It makes use of an optimistic rollup design that enables it to group together several transactions and process them off-chain, lightening the load on the Ethereum network.
This is accomplished by Arbitrum employing a system of Ethereum network smart contracts to validate the transactions. These smart contracts are in charge of making sure that transactions are valid and upholding the system’s integrity. By employing this method, Arbitrum can speed up transaction processing and cut costs, making it a viable substitute for the clogged Ethereum network.
The fact that Arbitrum is completely compatible with Ethereum is one of its main advantages. This implies that programmers can create Ethereum-based decentralized applications (dApps) and use Arbitrum to boost their performance without having to change their source code. Additionally, a variety of Ethereum-based tokens are supported by Arbitrum, making it simple for users to move their assets between the two networks.
Offchain Labs, a 2019-founded blockchain research and development business, created Arbitrum. Since its mainnet introduction in August 2021, it has garnered popularity among users and developers trying to boost the efficiency of their Ethereum-based applications.
Arbitrum gained further popularity in the news this month when the Arbitrum Foundation said that a community-polled vote was just to validate a decision that had already been made, which led to outrage in the ARB community over the weekend regarding a proposal to fund the foundation with 750 million ARB tokens, or nearly $1 billion.
After the layer-2 protocol’s governance token was airdropped a few days ago, there was a disagreement.
The 750 million tokens would be used to pay for “Special Grants, reimbursing applicable service providers and covering ongoing administrative and operational costs of The Arbitrum Foundation,” according to the AIP-1 proposal on Arbitrum’s DAO. At the time of writing, more than 70% of the tokens used in the vote had been cast against the proposal:
The foundation clarified in a forum post on April 2 that AIP-1 was a ratification, not a proposal, in response to criticism from community members. Some of the tokens had already been sold for stablecoins, it was added. In other words, its allocations and billionaire budget would not be governed by an on-chain governance system.
In the last few days, around 50 million ARB tokens have been transferred into the blockchain. According to the foundation, 10 million tokens were converted to fiat currency for operational expenses, and 40 million tokens were provided as a loan to an experienced party in the financial markets industry.
The symbolic first attempt at governance, according to the Arbitrum Foundation, failed because of communication issues and decisions that were “clearly not articulated correctly,” stating: “One of the mistakes in the drafting of AIP-1 was a failure to note at the outset that this proposal was intended to act as a ratification of the initial setup of both the Arbitrum DAO and the Foundation that has been created to serve the DAO. The point of AIP-1 was to inform the community of all of the decisions that were made in advance.”
Data from the layer-2 analytics website L2Beat shows that the Ethereum layer 2 market share is held by the blockchain of Arbitrum to the extent of 65%. On March 23, its native governance token’s widely anticipated debut and airdrop took happened, and hundreds of thousands of qualified users and DAOs claimed ARB. The airdrop claim portal crashed shortly after launch due to high user demand.
Price of Arbitrum After Community Backlash
Due to the incident, the price of ARB dropped during the weekend by around 18.49%. As numerous terrified investors resort to selling, the volume is in the red. As the ARB price records lower highs, the descending trendline continues to take shape. The price is currently testing the Arbitrum demand zone and exhibiting flimsy indicators of a price reversal. The RSI is in the area below average, indicating a seller-dominated market. For Arbitrum, an RSI in the 40s suggests a bearish market.
At the time of writing, the price of Arbitrum is $1.2319 as per data on CoinMarketCap. If you are interested in trading ARB, we recommend the Scallop Exchange due to the ease of accessibility, regular promotions and availability of help channels to support your trading journey.
How to Buy or Trade ARB on Scallop Exchange
You can buy or trade ARB on Scallop. As Scallop frequently holds campaigns and events, you should check out its official Telegram group here to see if you can participate and win rewards as you trade.
On Scallop, you can trade ARB as a spot pair (ARB/USDT) in 3 simple steps:
- Sign up and register an account on Scallop
- Buy USDT via Scallop One-click Buy (Follow the step-by-step guide from step 1 to 6)
- Trade ARB/USDT at Scallop Spot
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