Arbitrum To Airdrop Long-Awaited ARB Token On March 23
Layer 2 Network To Decentralize And Add Support For Layer 3 Blockchains
By: Aleksandar Gilbert •Breaking News
Arbitrum’s founding team will relinquish control of the Layer 2 blockchain next week with an airdrop that will distribute billions of newly minted governance tokens among users, a decentralized autonomous organization (DAO), investors, and the team that built the protocol.
The launch of Arbitrum’s ARB token on March 23 is one of the most anticipated in recent memory.
Tokens on the Arbitrum blockchain outperformed the broader crypto market Wednesday.
GMX, a perpetuals protocol and Arbitrum’s largest application by user deposits, rallied more than 11%, according to data from CoinGecko. Camelot DEX’s GRAIL jumped 16%, and options protocol JONES surged 20%.
GMX Price. Source: Coingecko
Layer 2 blockchains, or rollups, are central to Ethereum’s plans to scale and accommodate billions of users. Several billion-dollar startups have jumped into the arena, but Arbitrum has emerged as the clear leader, with a 55% market share and a transaction count that topped Ethereum’s on two consecutive days last month.
Transactions on Arbitrum Leapfrog Ethereum
Lower Fees Propel Layer 2 Blockchain Past Ethereum For First TimeThe Defiant
Arbitrum parent company Offchain Labs also said it would allow for the permissionless development of “Layer 3” blockchains on top of Arbitrum. In an interview with The Defiant, Offchain CEO Steven Goldfeder said the pair of announcements are “tied at the hip.”
“In one announcement, we’re giving over the ecosystem and control of the chains and their technology to Ethereum,” Goldfeder said. “And in the second announcement, we’re going a step further.”
Of the total supply of 10B ARB tokens, 56% will go to a DAO-controlled foundation. The Arbitrum DAO itself will be run collectively by token holders. Current and future employees of Offchain Labs, Arbitrum’s parent company, will receive a quarter of the tokens. Investors will receive 19%.
Users who meet certain criteria will be airdropped 11.5% of the supply, and DAOs – almost all of them within the Arbitrum ecosystem — will receive the remaining 1.1%.
The week-long delay between the token’s announcement and the airdrop is intended to give people time to come forward as potential delegates within the Arbitrum DAO. As people claim their tokens, they will have the option to immediately delegate their voting rights.
Offchain Labs partnered with crypto data platform Nansen to determine token eligibility and to ferret out accounts whose behavior was indicative of airdrop farming, the practice of faking organic use of DeFi platforms to position oneself for a potential airdrop. Crypto airdrops typically reward early and active users.
“The [Arbitrum] DAO is not only going to control the direction of these two chains and their technology, it’s actually going to control the direction of the underlying technology as well,” Goldfeder said, referring to Arbitrum One and Arbitrum Nova. The former is Offchain Labs’ all-purpose blockchain; the latter is purpose-built for gaming and other applications that require lower fees, something it achieves at the expense of decentralization.
DAO votes will self-execute, a departure from the decision-to-implementation process of most DAOs.
“In other projects’ cases, the DAO votes, and then some people who control the multisig are expected to go ahead and do what the DAO said,” Goldfeder said. “But there’s no actual glue to that process.”
The DAO will also control the Arbitrum Foundation, which will receive fees generated by transactions on Arbitrum in addition to over half the ARB supply. Arbitrum’s transaction fees will continue to be paid in ETH post-airdrop, according to Goldfeder.
While the development of Layer 3 blockchains on top of Arbitrum will be permissionless, the use of Arbitrum technology to create competing Layer 2 blockchains will be at the discretion of the DAO, Goldfeder said.
Coinbase recently announced it would build its own rollup, Base, using technology from Optimism, currently a distant second in the Layer 2 race. The largest crypto exchange in the U.S. also said it would contribute manpower to the team working on Optimism, as well as a percentage of Base transaction fees to an Optimism-run grants program.
Optimism Forges 'Superchain' to Challenge Arbitrum for Supremacy in Layer 2 Market
Optimism Wins Over Coinbase as It Gains Ground on ArbitrumThe Defiant
Goldfeder said Thursday’s Layer 3 announcement was not a reaction to Optimism’s partnership with Coinbase.
“We’ve been planning a Layer 3 strategy for quite a long time now,” he said.
A 12-member committee will have emergency powers in the event a critical, time-sensitive bug is found in the software. At least nine will be required to sign off on any changes.
Although Offchain Labs will cede control of Arbitrum, it expects to continue to have a role in the ecosystem as a service provider.
“The DAO might say, ‘We want to build feature X on Arbitrum.’ And you know, we’ve obviously built a lot of capabilities in-house,” Goldfeder said. “And I imagine that other very capable teams will also come forth and want to contribute to the technology of the Arbitrum ecosystem.”