What has been occupying your crypto news feed today? I know answers may vary, but most of you must have seen the headline that Arbitrum is planning to airdrop tokens to qualified users next week. This event marked an important transition for Arbitrum, and I want to talk a little bit about it today. Before we delve into the nitty-gritty of the hottest event today, let me provide a little background on what Arbitrum exactly is.
Arbitrum is essentially an Ethereum layer-two (L2) scaling protocol that is designed to facilitate more transaction volume on the blockchain network at a lower cost. Think of it as an extension to Etheruem that’s enabled by smart contracts built on-chain. Arbitrum is a rollup solution, which means it rolls up or bundles a large number of transaction data, moves it off chain for processing tasks, then submit the collections of highly compressed transaction data to the main chain. Rollups can be further divided into two categories, which are ZK rollups and optimistic rollups. Optimistic rollups assume that all the transactions in a rollup are valid, and give everyone on the network a certain amount of time, usually a week, to contest fraudulent transactions. On the contrary, ZK rollups use a complex piece of cryptography called Zero-Knowledge proof to determine that a transaction is valid using only minimal information about that transaction. In the case of optimistic rollups, it usually takes about a week before users can withdraw funds. While with ZK rollups, users can withdraw funds in a much shorter period of time. However, it is far more technically challenging to implement and integrate ZK rollups versus optimistic rollups.
OK, that’s it for background introduction. I will bore you no more with the technical details. So, why is this topic worth discussing? Well, Arbitrum is currently the leader in the L2 ecosystem, occupying an astonishing 54%~ share of the market and boasting a $3.38 billion total value locked at its peak. On certain occasions, Arbitrum has even surpassed Ethereum in the volume of transactions processed.
By transitioning to a DAO structure, and issuing governance tokens, Arbitrum is making a great leap forward in becoming a fully decentralized financial system that is controlled by the community. Offchain Labs, the company that created it, will no longer have any control over the future of this chain. ARB holders will now be able to vote on key decisions governing Arbitrum One and Arbitrum Nova at a core protocol level, on topics ranging from technology upgrade to chain revenue allocation. With a chain of this scale and influence, it is very exciting to see that Arbitrum will no longer rely on an intermediary to carry out on-chain decisions. Early users and active users of Arbitrum, who will be rewarded governance tokens, will now have a say in important decisions. Arbitrum is leading the way as the first L2 to launch self-executing governance, and its airdrop is expected to be one of the largest in history.
The airdrop will take place on March 23, 2023. The $ARB token, with an initial supply cap of 10 billion, will serve governance purposes and will constitute a self-executing DAO where the proposal that are voted in will be executed directly on-chain. There is a point system that will dictate how many tokens each user will get, with everyone needing a minimum of three points to qualify. For more details on qualification, click below. Arbitrum — Check your airdrop eligibility to govern Arbitrum
Tokens will be distributed as following：
Sources: CoinDesk, CryptoPotato, PRnewswir and Blockworks