Arbitrum Season Approaches: Which Projects Offer Notable Return Opportunities?
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Arbitrum Season Approaches: Which Projects Offer Notable Return Opportunities?
If buying pressure does not increase significantly, unlock restrictions and/or additional token issuances could hinder the price performance of $ARB.
Navigating Web3 tides with focused insightsWritten by: THOR HARTVIGSEN
Compiled by: TechFlow
A significant portion of Arbitrum's total value locked (TVL) revolves around trading protocols, leveraging the underlying technology to offer low fees and fast transaction processing. Approximately 32% of Arbitrum’s TVL is located in GMX, making it the dominant platform on the L2.
Uniswap's volume distribution shows that the mainnet attracts the majority of fund flows. However, Arbitrum stands out positively as the rollup handling the highest transaction volume.
Given the general surge in volume and activity, it could be said that Arbitrum’s season of prosperity has arrived—at least for now.
In terms of fee generation, Arbitrum has surpassed its peers after a fierce three-way race for dominance. Despite low fees, the L2 has generated substantial revenue. A closer look reveals that Arbitrum appears to be the only rollup with a clear upward trend in daily fees.
Arbitrum Token Performance
From a price perspective, the Arbitrum token has followed an upward trajectory similar to other tokens in the market. Over the past three weeks, we have seen a clear double bottom and a breakout of market structure with a base around $0.76.
When comparing with other L1s and L2s, it is evident that Arbitrum remains relatively cheap in terms of actual market cap (as opposed to fully diluted valuation). However, notably, Arbitrum has the lowest market cap to fully diluted value ratio among all projects shown in the chart below. Currently, about 13% of the total supply is in circulation, which is fairly common in today’s crypto landscape. If buying pressure does not significantly increase, unlock schedules and/or additional token emissions could hinder $ARB’s price performance.
Is the Arbitrum Foundation Selling?
Despite outperforming its L2 peers, some argue that recent buyers are merely absorbing sell pressure caused by the Arbitrum Foundation and well-known market maker Wintermute. Dump Watcher reported in a brief tweet on Monday, presenting several interesting points supporting this view.
Since its launch earlier this year, the ARB token has declined approximately 60% from its all-time high of $1.80.
Arbitrum Staking
At the end of last month, the Arbitrum DAO proposed introducing single-sided Arbitrum staking. The staking contract would be funded by a certain percentage of the total supply, with the exact amount subject to discussion.
The percentages and corresponding annual percentage rate (APR) ranges are as follows:
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1.75% of total supply (13.73% to 137.25%);
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1.50% of total supply (11.76% to 117.65%);
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1.25% of total supply (9.80% to 98.04%);
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1.00% of total supply (7.84% to 78.43%);
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0.00% — no funding allocated for staking.
As of yesterday, the snapshot passed, with approximately 66% voting in favor of the 1.00% funding option.
Why was this proposal introduced?
Beyond incentivizing holding, the motivation appears to be increasing interest in the Arbitrum ecosystem and its native token over other L2s, while rewarding long-term investors. By utilizing unclaimed airdrops worth approximately $69 million, they can avoid drawing too many tokens directly from reserves. Activating staking will further enable composability around yield-bearing ARB tokens (e.g., liquid staked ARB), and mark the first step toward future mechanisms for different forms of revenue sharing.
What impact will this have on price action?
Following the official announcement, we can expect a price spike as many users seek to capitalize on the opportunity to earn yield by locking up their tokens. Inflationary staking typically benefits short-term price action but may eventually lead to selling pressure and dilution for non-stakers in the long run.
Incentives and Yield Opportunities
Thanks to the generosity of the Arbitrum Foundation, many projects funded with ARB tokens have made full use of them, offering various incentives to maintain community engagement and grow their user base.
We’ll highlight some of the most attractive opportunities currently available among the funded projects.
GMX
On November 8, GMX announced the launch of its 12 million ARB token distribution program. Rewards can currently be earned by providing liquidity to various GM pools on the V2 platform. Additional incentives will be offered over a 12-week period for migrating GLP to GM and for trading on the exchange. Token incentives are adjusted weekly and published on their Notion page.
An additional 2 million ARB tokens will be allocated as grant rewards for developers and protocols building on GMX V2, further promoting growth within the Arbitrum ecosystem. The GMX team will provide three tiers of grants to support this initiative:
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Small Grants – budgets up to $10,000;
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Open Grants – budgets up to $100,000;
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Request for Proposals (RFP) – no set budget (case-by-case basis);
PENDLE
According to the team’s announcement on Medium two days ago, liquidity providers on the Pendle platform will now be eligible for additional ARB rewards on top of their existing yields. Note that ARB rewards can actually be boosted through vePENDLE. The allocation of reward tokens will be determined weekly by Pendle governance participants.
In addition to liquidity provision incentives, traders now qualify for ARB fee discounts. A total of 26,500 ARB per week will be used for these discounts (amounts may be adjusted after a few weeks).
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75% fee discount on buying/selling PT and YT, and entering/exiting LP positions;
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ARB will cover 75% of fees paid on any trade;
Once the weekly rewards are exhausted, users must wait until the reward pool is replenished.
An interactive dashboard specifically designed for this program will launch on Pendle’s website in approximately one week (November 16). The dashboard will include all relevant metrics related to the Arbitrum Season event.
Radiant
Approximately 72% of Radiant’s strategic reserve of 2.8 million ARB tokens will be distributed via airdrop to depositors who lock their dLP for 6–12 months, between block #147753665 and the next snapshot, expected within the next 30–90 days. Rewards are based on TVL milestones proposed by Radiant.
Interactions with dLP on protocols such as Magpie and PlutusDAO will also be eligible for rewards, although final allocations will be determined by each respective protocol. Eligibility for these rewards will end before January 31, 2024.
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Thor Hartvigsen
