Arbitrum’s Token Quickly Approaching, What Does That Mean?

Arbitrum has announced the launch of its native governance token called ARB, which is set to be airdropped to eligible wallets on March 23 [1]. As analysts scramble to put a price on the new layer-2 token, they are using Optimism’s OP token as a starting point for estimating ARB’s valuation [1]. Both layer-2 networks have a similar technology stack that uses optimistic rollups [1].

Optimism’s current market capitalization is roughly $839 million, with each token priced at $2.63, and its circulating supply is 314.8 million [1]. On the other hand, ARB’s circulating supply following the airdrop will be approximately 1.275 billion, with a total supply of 10 billion tokens [1]. If the ARB token hits the same valuation as OP, the price of ARB would be $0.65 after dividing OP’s current market cap by the number of ARB tokens that will be distributed [1].

Aside from circulating supply, analysts are also using the project’s fully diluted valuation (FDV) to estimate ARB’s price [1]. The FDV of OP tokens is $11.45 billion, given that the total supply is 4.29 billion tokens [1]. If the ARB token trades at a similar FDV as Optimism, its price will be around $1.15 [1]. Arbitrum is expected to play an important role in the world of decentralized finance (DeFi), so analysts are also looking at the ecosystem’s total value locked (TVL) to measure ARB’s valuation.

The TVL represents the total deposits into a network’s DeFi protocols and serves as an indicator of an ecosystem’s liquidity. Currently, Arbitrum boasts a TVL of roughly $1.77 billion, which is the fourth-largest TVL in the market [1]. By measuring the TVL ratio between two relevant projects, such as Arbitrum and Optimism, analysts have estimated ARB’s price at $1.16, based on market cap, and $2.07, based on FDV [1].

According to these estimations, the price of ARB can range from $0.64 to $2.07. The majority of early Arbitrum users have been allocated 625 ARB tokens, corresponding to an approximate total airdrop value of between $400 and $1,250 [1]. The highest allocation per address is 10,250 ARB tokens, where roughly 4,400 wallets could receive anywhere between $6,500 and $20,600 in tokens [1]. Overall, it is still uncertain how much ARB will be worth once it hits eligible wallets on March 23, but analysts have provided estimates based on various factors such as Optimism’s OP token and Arbitrum’s TVL and FDV. ARB is Arbitrum’s native governance token, and holders will be able to vote and propose any changes to the platform [3].

Pie chart showing market share of various blockchain networks.

                                      The total DeFi TVL of various networks. Source: DeFi Llama.

The ARB token is being airdropped to eligible wallets, with 11.5% of the total supply going to Arbitrum users and 1.1% to DAOs that operate in the Arbitrum ecosystem [1]. Similar to Optimism, Arbitrum uses optimistic rollups as part of its technology stack [1][3]. If the ARB token hits the same valuation as OP, its price would be around $0.65, while if it trades at a similar FDV as Optimism, the price of the ARB token will be around $1.15 [1]. Additionally, based on the TVL ratio between Arbitrum and Optimism, analysts have estimated ARB’s price at $1.16 based on market cap and $2.07 based on FDV [1]. However, these are only estimations, and the actual price of ARB will depend on various factors, such as market demand and adoption within the DeFi ecosystem.

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