Arbitrum whales panic, will other ARB holders jump on the bandwagon?
- ARB token price declined as whales began selling their holdings.
- The Arbitrum DAO introduced incentives to revive network growth and trader interest.
Once a dominant player in the layer 2 token arena, the Arbitrum[ARB] token recently found itself overshadowed by emerging competitors in the crypto space.
Realistic or not, here’s ARB’s market cap in BTC’s terms
Whales sell at a loss
As the price of ARB has declined, many whales started to lose interest in the ARB token. Notably, a significant whale recently initiated a massive sell-off of 3.8 million ARB tokens. These tokens were valued at $3.21 million, in exchange for ETH on the Binance platform.
This move resulted in a substantial loss of approximately $1.3 million for the whale. Intriguingly, the same whale previously withdrew a staggering 17.62 million ARB tokens in early April. The average withdrawal price during these transactions was $1.19. At press time, the whale retained a balance of 13.78 million ARB tokens, valued at $11.5 million.
— Lookonchain (@lookonchain) September 11, 2023
The repercussions of dwindling interest from whales were evident considering ARB’s market price, which stood at $0.836. Furthermore, both the network’s growth rate and transaction velocity witnessed a decline over the past month, signaling potential challenges for ARB.
Trader sentiment aligned with this shifting landscape, as short positions on ARB tokens began to outnumber long positions. Data sourced from Coinlass underscored this shift, with short positions comprising a significant 55% of the total, compared to just 45% for long positions.
Improved governance on the cards
In response to these challenges, the Arbitrum governance structure took proactive measures to breathe new life into the protocol. The Incentives Working Group recently introduced a comprehensive proposal for the Arbitrum DAO, outlining a one-time program aimed at distributing up to 75 million ARB tokens to active Arbitrum protocols.
This initiative seeks to provide vital support for short-term community requirements while ensuring the transparent allocation of DAO-owned ARB tokens for incentivization purposes. Importantly, grantees participating in this program are mandated to provide regular reports on grant performance, promoting transparency and accountability within the ecosystem.
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The proposed framework prioritizes equitable and effective distribution of incentives, underpinned by criteria collectively endorsed by the community. The key objectives encompass stimulating network growth, facilitating experimentation with incentive grants, exploring novel grant and developer support models, and systematically gathering data to assess the efficacy of distributed grants.
At the time of drafting, an encouraging 64.15% of votes expressed support for the proposal.