Arbitrum One and Nova operate in bridged ETH, which users bring from Ethereum L1 to Arbitrum. There are little differences in the ETH itself, but all the differences in the transaction costs, swap fees, and generally usability of Arbitrum versus Ethereum mainnet. While not a direct gas token, the ARB token represents the tokenized, distributed ownership of the Arbitrum blockchain.
The Arbitrum Foundation officially announced the much-anticipated Arbitrum token, ARB, in March 2023, with an airdrop on March 23. The introduction of the ARB token signifies Arbitrum's transition into a DAO, with token holders governing both Arbitrum One and Arbitrum Nova. Furthermore, the foundation unveiled an L3 developer toolkit called Orbit, which is expected to resemble Optimism's OP stack and its vision for a flourishing ecosystem of 'Superchains.'
Initial Launch
ARB's total supply will amount to 10 billion tokens, with 1.15 billion allocated for the airdrop targeting users who bridged to Arbitrum. An extra 110 million tokens (12.75%) will be airdropped to DAOs that contributed to Arbitrum's ecosystem growth prior to the token launch, akin to Optimism's approach.
Overall, ~55% of the supply is designated for the community, while the remaining portion is reserved for investors and team members. This makes the present distribution of the ARB token largely concentrated amongst investors and team members. Arbitrum has stated that it “instructed” team members not to vote with their tokens but rather delegate to community members instead. This would, in theory, help distribute control over protocol upgrades and changes to the community.
Source: Offchain Labs
Supply Schedule
The 45% of ARB tokens designated for early investors and Offchain Labs team members is subject to a four-year lockup. The first unlock occurs after one year, followed by subsequent monthly unlocks for the remainder of the final three years.
It is worth noting that the first of these unlocks is a significant amount of tokens, equal to over $1 billion worth of ARB, that will be available for the first time in March 2024. The total amount, 1.11 billion ARB tokens, will kick off the monthly unlocks that are expected to have an average annual emission of 16.77% for the next 3 years but top out at an established 2% inflation rate after 10 billion tokens is reached, ARB’s current maximum supply.
Currently, only the initial 1.275 billion tokens is actually circulating. ARB’s fully diluted valuation is $21.3 billion, far more than its current market capitalization of $2.7 billion. Thus, the March 2024 unlock will nearly double the amount of circulating tokens immediately. This is a significant risk for retail investors, as an immediate supply shock as significant as this one could have drastic ramifications on the price-per-ARB.
- dApps (via airdrop) - immediately vested
- Users (via airdrop) - immediately vested
- Investors, Team, & Advisors - 4 year unlock, 1st unlock next year
- DAO Treasury - immediately unlocked but not circulating (to be allocated later)
