- Arbitrum's token has dropped by over 21% from its all-time high.
- The developers issued a clarification about the recent DAO clarification.
Arbitrum price has moved sideways in the past few days as concerns about the recent airdrop and insider activity continue. After peaking at $1.5710 on March 24, the ARB token crashed to a low of $1.09. On Wednesday, the token was trading at $1.25, giving it a market cap of more than $1.5 billion.
Arbitrum DAO controversy
In March, the biggest story in the crypto industry was Arbitrum’s airdrop. As I wrote here, this was a big deal considering that Arbitrum is one of the biggest players in the blockchain industry. It has been used to accelerate some of the biggest dApps in the industry like Aave and Uniswap.
At the same time, it is a major player in the NFT industry. Data compiled by CryptoSlam shows that the volume of Arbitrum NFTs traded in March was over $10 million. The network is also widely used in other industries like gaming and the metaverse.
Arbitrum’s Airdrop came a few days after the developers announced the launch of a Decentralized Autonomous Organization (DAO) that will govern the network. A DAO is seen as an ideal way of ensuring that platforms are not controlled by an individual.
However, there was controversy about the actions of insiders. As I wrote in my first article on the ARB token, insiders use airdrops as a way of cashing out. This explains why tokens tend to rise and then pull back quickly after that.
In this case, some watchers accused insiders of distributing funds to the foundation without a community vote. The developers allocated 7.5% of the token supply to the DAO. In a response, they noted that this was a smaller figure than other networks like Polygon, Starknet Foundation, Optimism, and Avalanche. They added:
“Arbitrum is unique in that it is the only one among its peers in which the vast majority of the community tokens are currently controlled by the DAO on-chain. And also uniquely, The Arbitrum Foundation is the only one that even asked for the community’s ratification of these decisions.”
ARB price prediction
So, in light of this, is Arbitrum a good token to invest in? The reality is that most tokens have some centralization in them. This explains why Vitalik Buterin still has a major say in how Ethereum operates.
Therefore, in my view, I believe that ARB is a good investment because of its strong and growing market share in the blockchain industry. In fact, it is one of the top players seeing inflows and elevated developer activity.
As such, while ARB price will have some volatility in the near term, I suspect that it will bounce back in the coming months.
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