Arbitrum (ARB) Surges Nearly 10% In The Past 24 Hours, Here’s Why

Arbitrum (ARB), one of the recently launched Ethereum-based Layer 2 scaling solutions, has seen a surge in its price by almost 10% in the past 24 hours. The surge comes when the global crypto market seems to be in an upward trend. However, the Arbiturm spike can be tied to a different factor.

The recent increase in ARB’s value can be linked to the protocol’s announcement about how it plans to manage the fees generated on its platform.

In the Twitter announcement posted earlier today, the Arbitrum team noted it is “the only rollup that sends all surplus revenue generated by transaction fees to their respective DAO. It is time for the DAO to collect the funds so far.”

Notably, the Arbitrum protocol allows users to transact on the platform with reduced transaction fees and faster speeds than the Ethereum network. The protocol requires users to pay a fee when transacting on the network. 

The fee paid is split into two sections, including Layer 1 (L1) fees for covering transactions on Ethereum and L2 fees for Arbitrum fees. As per the protocol’s mechanism, surplus tokens are generated by the fees and are accumulated before being sent to the DAO.

The DAO revenue mechanism on Arbitrum now enables token holders to reap the rewards of accumulated surplus fees. When the organization collects the tokens, members of the Arbitrum community DAO will receive their share of the fees. This substantial increase in benefits has contributed to the current surge in the token’s value and the value of becoming its long-term holder.

It is worth noting that the distribution of rewards resulting from this development will benefit members of the Arbitrum community DAO, which could lead to a significant increase in demand for ARB as users aim to capitalize on the opportunity to earn rewards.

Following the DAO revenue mechanism announcement, the price of ARB has recorded a bullish uptick, up by 8.7%, with a trading price of $1.19 at the time of writing. The assets have also seen a surge in its market cap, surging by over $100 million in the past 24 hours.

Despite the surge, Arbitrum has fallen from its previous rank of #32 among the global crypto market to ranking #38. However, according to the activity in its trading volume, the token might soon be quick to reclaim its spot.

CoinMarketCap data shows Arbitrum’s trading volume hasn’t moved much in the past 24 hours. Instead, it has only continued to range between $300 million and $400 million, indicating a possible accumulation. 

Notably, the DAO revenue mechanism incentivizes platform users to hold ARB tokens, and it could increase the demand for ARB. This, in turn, will benefit the protocol and its users as it increases the network’s value and liquidity.

Featured image from iStock, Chart from TradingView