Arbitrum gains 10% – Will $7.6M in token unlocks stall ARB’s rally?

After a prolonged downtrend, Arbitrum [ARB] recently broke out of a bearish channel. The altcoin jumped to a two-week high of $0.085 before slightly retracing. 

At press time, ARB was trading around  $0.083 after rising by 10% on the daily charts. Over the same period, the altcoin’s volume jumped 118% to $105 million, indicating strong market participation. 

Arbitrum rebounds on Robinhood chain fee split

ARB’s rebound was fueled by positive market news. Arbitrum developer Steven Goldfeder announced that 10% of fees collected on Robinhood Chain and other Arbitrum L2s will be directed to the Arbitrum ecosystem.

He also added that  8% goes to the tokenholder-controlled treasury and 2% for development. Finally, 100% of fees collected on Arbitrum One will go to the Arbitrum treasury. This tokenomics approach is designed to counter the market inflation that has been weighing heavily on Arbitrum’s native token, ARB. 

Are Robinhood Chain’s fees enough to offset market dilution?

Since going live, Robinhood Chain has experienced massive growth, reaching record-breaking usage levels. 

For starters, Robinhood’s DEX trading volume surged to a record high of $560 million on the 8th of July. This volume was driven by over 140K new addresses, suggesting extensive demand. 

As trading volume climbed, chain fees and revenue surged. DefiLlama data shows App Fees reached $2.36 million on the 8th of July and $2.12 million on the 9th of July.

For Arbitrum, rising fees offer a lifeline as the team seeks to offset market inflation. Arbitrum remains extremely inflationary due to its monthly unlocks.

In fact, this July, 92.63 million ARB worth approximately $7.6 million will enter circulation after unlocks. With the team promising to spend Robinhood-generated funds on the ecosystem, those funds could at least reduce pressure.

However, it means the Robinhood chain must generate $8 million monthly for Arbitrum and invest it back. For now, that remains far-fetched, especially in the short term, and the inflationary threat remains for ARB.

Can ARB’s current momentum hold?

Arbitrum rebounded strongly, as demand for the asset recovered, with buyers incentivized by positive ecosystem developments.

As a result, the altcoin’s Relative Strength Index climbed to 54 as of writing, edging into bullish territory. This signaled a strong buyer comeback, further strengthening upside momentum.

Historically, strong market demand has preceded better price performance. Therefore, if the Robinhood-driven narrative holds the market, Arbitrum is likely to make further gains, eyeing the $0.09 resistance level.

However, if the promised ecosystem investment fails to absorb the pressure, the momentum will fade, with ARB possibly falling to $0.072.

Final Summary

• 10% of fees collected on Robinhood Chain and other Arbitrum L2s will go to the Arbitrum ecosystem.
• ARB surged 10%, hitting a two-week high of $0.085, amid renewed market demand.