Arbitrum has also released a development kit for those interested in building layer 3 solutions on top of Arbitrum: Arbitrum Orbit.
Written by: Mary Liu
One of the most anticipated events in the crypto community - the Arbitrum AirDrop- is finally here. The Arbitrum Foundation has announced that it will AirDrop ARB governance tokens to its community members on March 23 and launch its layer 3 development tool, Arbitrum Orbit, bringing Arbitrum one step closer to full decentralization.
According to the announcement, with the introduction of ARB, Arbitrum will transform into a self-executing decentralized autonomous organization (DAO), allowing ARB holders to manage Arbitrum One and Arbitrum Nova (designed for Web3 games and social media applications) vote on key decisions. The Arbitrum DAO will control key decisions at the core protocol level, including technology upgrades and revenue distribution for ecosystem support.
Offchain Labs, the founding team of Arbitrum, emphasized that the ARB token will make the Arbitrum ecosystem more decentralized than other extension chains.
Why is it highly anticipated?
Aribtrum has exploded onto the scene in less than two years as one of the most popular layer 2 blockchains on Ethereum.
In the highly competitive layer 2 blockchain or rollups track, Arbitrum has become the leader with a 55% market share, and its transaction volume surpassed Ethereum for two consecutive days last month. Other star projects include Optimism, Polygon, zkSync and StarkNet et al.
According to DeFiLlama, the total value locked on Arbitrum's chain is $1.6 billion, almost double that of its competitor Optimism, another second-layer blockchain that also aims to make ethereum transactions faster and cheaper. Low. Optimism has launched its own token, OP, which currently has a market cap of around $750 million.
What is an ARB and how do I apply for it?
Arbitrum has partnered with crypto analytics firm Nansen to determine eligibility for ARB tokens based on user activity. Eligible users can claim their tokens by visiting the official Arbitrum website, and the team has also released documentation on which users are eligible. Here are the key points:
- The AirDrop will take place on March 23rd, and users can check their eligibility at https://t.co/RbHMJwfJL6.
- A points system will determine how many tokens each user will receive, with each user needing at least three points to qualify.
- Scores are capped at 15, and some of these actions include bridging funds to Arbitrum One, making trades, and more.
- The maximum allocation a single address can receive is 10,200 tokens.
- ARB tokens will be used for governance purposes with an initial supply cap of 10 billion.
- Of this, 11.62% (1.162 billion tokens) will go to the AirDrop and 1.13% will go to the DAO that helps build applications on Arbitrum.
- Qualified users will be awarded a certain number of points for their on-chain activities, and how many AirDrop they can receive will also depend on this.
- A single wallet can receive up to 10,200 ARB tokens.
- The snapshot date is February 6, 2023.
- The token is a governance token that will constitute a self-executing DAO, where voted proposals will be executed directly on-chain.
- All investor and team tokens have a 4-year Vesting period. The first unlock will happen after one year, after which tokens will be unlocked monthly.
Layer 3 developer tool Arbitrum Orbit launches
In addition to the AirDrop announcement, Arbitrum released a development kit for those interested in building layer 3 solutions on top of Arbitrum: Arbitrum Orbit, which will allow anyone to start their own L3 on top of the Arbitrum codebase.
Arbitrum uses optimistic rollups to batch transactions onto the layer 1 Ethereum blockchain. A layer 3 network built on Arbitrum would use a similar Rollup to batch transactions to Arbitrum and then Rollup them into Ethereum, which would allow increased transaction throughput at relatively low cost.
Developers building such layer 3 networks are granted a perpetual license to use and change the Arbitrum source code at will, and developers can create application-specific or general-purpose chains on top of Arbitrum.
This is a bit of a different approach from competitor Layer 2 Optimism, which doesn't focus on layer 3 networks, but instead encourages the creation of many layer 2 networks based on its code stack that can be linked with each other, Coinbase's Base being one of its first supporters . That said, Arbitrum is open to using its code to support Layer 2 networking. The Arbitrum DAO will be able to vote on whether to support other layer 2 chains using Arbitrum for settlement to Ethereum. If these chains choose to accept Arbitrum's constitution, they will be called "governance" chains.
One standout feature is that ARB tokens will not be used to pay any fees on the Arbitrum chain, on-chain fees will still be paid in ETH .
Offchain Labs CEO Steven Goldfeder said the Layer 3 announcement was not a reaction to Optimism's partnership with Coinbase: "We've been planning our Layer 3 strategy for a long time."
On-chain governance
Prior to Thursday’s announcement, Offchain Labs was the only entity responsible for making changes or adjustments to the scaling technology.
But with the launch of the ARB token, Goldfeder and his team will hand those controls over to the community. These controls also come with the added responsibility that once the DAO executes a vote, the code will be updated at the same time.
Typically, most DAOs have governance token holders vote on proposals, and the project's core team enforces the results by making changes to the network code. The difference with Offchain Labs setting up a DAO is that the codebase is automatically changed based on the end result, which means the DAO has direct control over the network.
Still, there are some risks to being a self-enforcing DAO. If a malicious actor is able to change the code through a voting process, it will automatically be applied to the code as well, as was the case with the Beanstalk project, where hackers used Flash Loan to obtain enough tokens to pass a vote approving the transfer of $182 million in funds to in your wallet.
A 12-member safety committee would have emergency powers if serious, urgent bugs were found in the software, Goldfeder said, requiring at least nine sign-offs to implement any changes.
Although Offchain Labs will relinquish control of Arbitrum, it hopes to continue to play a role in the ecosystem as a service provider. In an interview with Fortune Crypto, Goldfeder said: "The community will have the ability to decide the future of the technology and how it wants to be licensed. One thing is clear, that is, in the Arbitrum ecosystem, it is in the best interest of the community to be open, free to use, and free to modify. It’s in everyone’s best interest. I think it’s going to spark a lot of innovation.”
