$ARB Airdrop - Selling the News
Analyzing the recent price performance of Arbitrum ecosystem tokens around the $ARB airdrop, it appears that the much-anticipated alt-season following the airdrop didn not materialize. Instead, we saw a sell-the-news event and the front-running of this narrative.
For this analysis, we've created an equally weighted basket of Arbitrum ecosystem tokens, consisting of the most important native tokens such as $GMX, $MAGIC, $GNS, $RDPX, $RDNT, $GRAIL, $CAP, $PLS, and $VSTA.
This approach allows us to better assess the overall impact of the $ARB airdrop on the ecosystem.
In the days leading up to the $ARB airdrop, traders seemed to have front-run the Arbitrum airdrop by buying related ecosystem tokens. This coincided with ongoing rumors of an airdrop, increased hype on Twitter, and a sudden spike in Polymarket activity, likely by insiders who knew about it in advance.
Between the airdrop announcement and the launch of $ARB, many speculated that the airdrop would spark an alt-season for Arbitrum ecosystem tokens, with new inflows of money driving up their value. However, this thesis was seemingly front-run, as the price surge occurred mainly during this period.
On the day the airdrop happened which marked the launch of the $ARB token, the prices of ecosystem tokens began to decline, suggesting a classic “sell the news” event. The airdrop did not create new wealth. Instead, it caused a shift in liquidity from ecosystem tokens to either $ARB or stablecoins as people sold their allocations.
Some argue that incentives will boost user activity and liquidity on Arbitrum, similar to what happened with Optimism with $OP Grants. However, these are two different situations as Optimism's incentives were significantly larger than Arbitrum's. While $OP's governance fund accounts for 5.4% of the total supply, $ARB is just 1.1%, with most of it concentrated on top protocols such as $GMX and $MAGIC.
Despite the impact of the $ARB airdrop on ecosystem tokens, Arbitrum's fundamental metrics remain strong.
The network has broken records in on-chain activity, with daily active addresses hitting an ATH of over 600k and daily active transactions reaching 2.7M, surpassing Ethereum by almost three times.
Total claims are at 87% with most unclaimed wallets having lower allocations, indicating that most of the airdrop supply has been distributed to users. Since the largest holders have already claimed, sell pressure has likely diminished as they've had multiple days to sell.
In conclusion, the $ARB airdrop appears to have been a liquidity sink for the Arbitrum ecosystem tokens, with traders potentially front-running the event, only to sell the news when the airdrop happened.
Despite this, Arbitrum's fundamentals remain strong, showcasing impressive on-chain activity and user engagement. With most of the airdrop claims completed and selling pressure likely reduced, the focus now should shift towards the continued growth and development of the Arbitrum Ecosystem.