Arbitrum (ARB), one of the recently launched Ethereum-based Layer 2 scaling solutions, has seen a price increase of almost 10% in the past 24 hours. The surge comes as the global crypto market appears to be on an upward trend. However, the Arbiturm spike can be linked to another factor.
The recent rise in the value of ARB can be linked to that of the protocol announcement about how it plans to manage the fees generated on its platform.
Arbitrum Update on DAO Earnings
In the Twitter announcement posted earlier today, the Arbitrum team noted that this is “the only combination that sends all excess revenue generated by transaction fees to their respective DAO. It’s time for the DAO to raise the funds so far.
Notably, the Arbitrum protocol allows users to transact on the platform with lower 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 trades on Ethereum and L2 fees for Arbitrum fees. According to the protocol’s mechanism, excess tokens are generated by the fees and collected before being sent to the DAO.
The DAO Income Mechanism on Arbitrum now allows token holders to reap the benefits of accumulated excess fees. When the organization collects the tokens, members of the Arbitrum DAO community receive their share of the fees. This substantial increase in benefits has contributed to the current rise in the value of the token and the value of becoming the long-term holder.
It is worth noting that the reward distribution 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 seek to capitalize on the opportunity to receive rewards to earn.
ARB Up Nearly 10%
Following the announcement of the DAO Income Mechanism, ARB’s price has shown a bullish rebound, up 8.7%, with a trading price of $1.19 at the time of writing. The assets have also seen an increase in market capitalization, rising more than $100 million in the past 24 hours.
Despite the surge, Arbitrum has dropped from its previous position of #32 in the global crypto market to position #38. However, depending on the activity in its trading volume, the token could quickly regain its place soon.
CoinMarketCap data shows that Arbitrum’s trading volume has not changed much in the past 24 hours. Instead, it has only stayed between $300 million and $400 million, indicating potential accumulation.
In particular, the DAO revenue mechanism incentivizes platform users to hold ARB tokens, and it could increase demand for ARB. This in turn will benefit the protocol and its users as it increases the value and liquidity of the network.
Featured image from iStock, chart from TradingView
