Written by: Mary Liu, BitpushNews
One of the most anticipated events in the crypto community, the Arbitrum airdrop, is finally here. The Arbitrum Foundation announced that it will airdrop ARB governance tokens to its community members on March 23 and launch its layer 3 development tool, Arbitrum Orbit, bringing Arbitrum one step closer to full decentralization.
According to the announcement, with the introduction of ARB, Arbitrum will transform into a self-executing decentralized autonomous organization (DAO), allowing ARB holders to vote on key decisions governing Arbitrum One and Arbitrum Nova (designed for Web3 games and social media applications). The Arbitrum DAO will control key decisions at the core protocol level, including technology upgrades and revenue distribution for ecosystem support.
Arbitrum’s founding team, Offchain Labs, emphasized that the ARB token will make the Arbitrum ecosystem more decentralized than other extension chains.
Why is it so anticipated?
Aribtrum has suddenly risen to become one of the most popular layer 2 blockchains on Ethereum in less than two years.
In the hotly contested Layer 2 blockchain or rollups space, Arbitrum has emerged as a leader with a 55% market share, surpassing Ethereum in transaction volume for two consecutive days last month. Other star projects include Optimism, Polygon, zkSync, and StarkNet.
According to DeFiLlama, Arbitrum has $1.6 billion in total locked value on the chain, nearly double that of its competitor Optimism, another second-layer blockchain that also aims to make Ethereum transactions faster and cheaper. Optimism has launched its own token, OP, which currently has a market cap of about $750 million.
What is an ARB and how do I claim it?
Arbitrum has partnered with crypto analytics firm Nansen to determine eligibility for ARB tokens based on user activity. Eligible users can claim tokens by visiting the Arbitrum official website. The team has also released a document on which users are eligible. The following are the key points:
The airdrop will take place on March 23, and users can check if they are eligible at https://t.co/RbHMJwfJL6.
A points system will determine how many tokens each user will receive, with each user needing at least three points to qualify.
The score is capped at 15, and some of these actions include bridging funds to Arbitrum One, making trades, and more.
The maximum allocation a single address can receive is 10,200 tokens.
ARB tokens will be used for governance purposes, with an initial supply cap of 10 billion.
Of this, 11.62% (1.162 billion tokens) will be used for airdrops, and 1.13% will go to DAOs that help build applications on Arbitrum.
Eligible users will be awarded a certain number of points for their on-chain activities, and how many airdrops they can receive will depend on this.
The maximum amount of ARB tokens that a single wallet can receive is 10,200.
The snapshot date is February 6, 2023.
The token is a governance token that will constitute a self-executing DAO where proposals voted through will be executed directly on-chain.
All investor and team tokens have a 4-year lockup period. The first unlock will occur after one year, and tokens will be unlocked monthly thereafter.
Layer 3 developer tool Arbitrum Orbit launched
In addition to the airdrop announcement, Arbitrum also released a development kit for those interested in building layer 3 solutions on top of Arbitrum: Arbitrum Orbit will allow anyone to launch their own L3 on top of the Arbitrum codebase.
Arbitrum uses optimistic rollups to batch transactions onto the layer 1 Ethereum blockchain. Layer 3 networks built on Arbitrum will use similar rollups to batch transactions to Arbitrum, which will then be rolled up into Ethereum, which will allow for increased transaction processing at a relatively low cost.
Developers building such layer 3 networks are granted a perpetual license to use and change the Arbitrum source code at will, and developers can create application-specific chains or general-purpose chains on top of Arbitrum.
This is a bit different from the approach of competitor Layer 2 Optimism, which does not focus on Layer 3 networks, but encourages the creation of many Layer 2 networks based on its code stack that can be linked to each other. Coinbase's Base is one of its first supporters. That is, Arbitrum is open to supporting Layer 2 networks using its code. The Arbitrum DAO will be able to vote on whether to support other Layer 2 chains that use Arbitrum to settle to Ethereum. If these chains choose to accept Arbitrum's constitution, they will be called "governance" chains.
A standout feature is that ARB tokens will not be used to pay any fees on the Arbitrum chain, which will still be paid in ETH.
Offchain Labs CEO Steven Goldfeder said the Layer 3 announcement was not a reaction to Optimism’s partnership with Coinbase: “We’ve been planning our Layer 3 strategy for a long time.”
On-chain governance
Prior to Thursday’s announcement, Offchain Labs was the only entity responsible for making changes or adjustments to the scaling technology.
With the launch of the ARB token, however, Goldfeder and his team will hand over those controls to the community. Those controls also come with the added responsibility that once the DAO executes a vote, the code will be updated simultaneously.
Typically, most DAOs let governance token holders vote on proposals, and then the project’s core team executes the results by changing the network code. The difference with Offchain Labs’ DAO is that the codebase automatically changes based on the final results, which means the DAO can directly control the network.
Still, being a self-executing DAO carries some risks. If a malicious actor is able to change the code through a voting process, it will also automatically apply to the code, as was the case with the Beanstalk project, where a hacker used a flash loan to obtain enough tokens to approve a vote to transfer $182 million of funds to their own wallets.
Goldfeder said a 12-member safety committee would have emergency powers if serious, urgent bugs were found in the software, and at least nine people would need to sign off to implement any changes.
Although Offchain Labs will give up control of Arbitrum, it hopes to continue to play a role in the ecosystem as a service provider. "The community will have the ability to decide the future of the technology and how it wants to be licensed," Goldfeder said in an interview with Fortune Crypto. "One thing is clear, that is, in the Arbitrum ecosystem, openness, free use, and free modification are in the best interest of the community and in the best interest of everyone. I think this will inspire a lot of innovation."