- After a strong first half, Arbitrum protocol and ARB token face growth stagnancy amid market changes.
- Decline in ARB holders, network growth and velocity could impact the token in the future.
After dominating the first half of 2023, the Arbitrum[ARB] protocol and its native token ARB faced a noticeable slowdown in growth. This shift in trajectory can be attributed to a combination of factors, including the entry of new players into the market and the resurgence of older competitors.
Realistic or not, here’s ARB’s market cap in BTC’s terms
Things slow down
As per data from Token Terminal, the number of OP holders experienced a considerable uptick, but the same cannot be said for ARB. This disparity might have introduced certain challenges to ARB in the future. The relatively stagnant ARB token holder base could potentially impact the token’s overall value and hinder the expansion of its ecosystem.
Source: token terminal
A closer inspection of ARB’s network growth highlighted a decline over the past week. This decline indicated a potential reduction in the number of new addresses showing interest in the token, which could signal a waning enthusiasm among investors and users.
Moreover, the decreasing velocity of the ARB token signified a decrease in trading frequency. Such a trend could have implications for ARB’s market dynamics and might even have an impact on its appeal to traders and investors.
Source: Santiment
Shifting the focus to the protocol level, recent data showcased a concerning trend. The revenue generated by the Arbitrum protocol in the last month experienced a sharp decline of 22.7%. This decline in revenue was accompanied by a marginal 1.2% drop in overall activity within the protocol.
These figures collectively raise questions about the overall health and sustainability of the Arbitrum protocol in the face of growing challenges.
Source: token terminal
Rarible X NFT coming soon?
Despite these challenges, there remains a glimmer of hope on the horizon. The Arbitrum governance framework saw the emergence of novel proposals that could potentially reinvigorate the platform’s ecosystem, particularly in the NFT space.
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Addressing the NFT ecosystem, the Rari Foundation stepped forward with a proposal aimed at injecting fresh energy into the ecosystem. This proposal entailed the integration of Arbitrum One with the open-source Rarible Protocol. This integration would provide powerful tools for NFT applications, potentially boosting engagement and activity within the Arbitrum ecosystem.
At press time, 97.83% of the votes were in favor of this proposal.
Source: Snapshot