Arbitrum Tokenomics and the Layer 2 Blockchain Advantage

Arbitrum's unique tokenomics are designed to incentivize users to participate in the network and secure the blockchain.

The token, ARB, is used to pay for gas fees on the Arbitrum network, which are significantly lower than those on the Ethereum mainnet.

By using a proof-of-stake (PoS) consensus algorithm, Arbitrum is able to achieve faster transaction times and lower fees compared to traditional proof-of-work (PoW) blockchains.

ARB tokens are also used to vote on proposals for the development of the Arbitrum network, giving holders a say in the direction of the project.

Discover more: Manta Network Tokenomics

Token Distribution is a crucial aspect of Arbitrum's tokenomics. It's based on a four-year vesting schedule with monthly unlocks, starting from March 23, 2023, to March 23, 2027.

The Team and Advisors, as well as Investors, have a one-year cliff period from March 23, 2023, to March 23, 2024, before their tokens can be unlocked. This cliff period is a key part of the vesting schedule.

The Arbitrum DAO Treasury will be fully unlocked on March 23, 2023, with its distribution schedule to be determined by governance decisions. This is a significant event that will impact the token distribution.

Both user and DAO airdrops are set to be fully unlocked on March 23, 2023. This means that all tokens will be distributed by this date.

The initial token release is imminent as the cliff period concludes for the Team and Advisors, as well as the Investors. This could potentially exert sell-side pressure on the price of ARB.

Layer 2 Blockchain is a secondary framework built on top of an existing blockchain system, primarily designed to address scalability, speed, and transaction costs without compromising security.

The primary aim of Layer 2 solutions is to solve the major challenges faced by the base layer, which is the existing blockchain system.

Layer 2 solutions are built to enhance the functionality of the base layer, making it more efficient and user-friendly.

By leveraging Layer 2 solutions, users can enjoy faster transaction processing, lower fees, and improved overall performance.

This is achieved without compromising the security of the base layer, ensuring that the integrity of the blockchain remains intact.

Arbitrum is a Layer 2 scaling solution for Ethereum that aims to enhance the Ethereum experience for developers and users.

ARB is the native token of the Arbitrum network, which is a Layer 2 scaling solution for Ethereum.

Arbitrum handles transactions off the main Ethereum chain (Layer 1) and processes them on its own network (Layer 2).

It then periodically submits transaction data back to the Ethereum mainnet.

The circulating supply of SPA is calculated by adding up the total supply on Ethereum, Arbitrum, and wSPA on Ethereum, then subtracting wSPA locked on the Arbitrum bridge, SPA balance held by major wallets, and SPA locked in the SPA Staking Protocol.

This calculation is quite complex, but it gives you an idea of how many SPA tokens are actually in circulation. For example, the SPA circulating supply sheet, which is currently in beta, can help you view the circulating supply breakdown for the token.

The SPA buyback process involves buying back SPA from the open markets using 50% of the auto-yield and 100% of the fees, and storing it in the address 0xA61a0719e9714c95345e89a2f1C83Fae6f5745ef on Arbitrum One.

Circulating Supply is a crucial metric for understanding the health of a project like SPA. It's calculated by adding up the total supply of SPA on Ethereum, Arbitrum, and wSPA on Ethereum.

The total supply of SPA on Ethereum is a key component of the Circulating Supply calculation. This includes all SPA tokens held in user wallets.

The total supply of SPA on Arbitrum is also factored into the calculation. This is the sum of all SPA tokens held on the Arbitrum network.

wSPA, a wrapped version of SPA, is also included in the calculation. The total supply of wSPA on Ethereum is added to the mix.

However, not all wSPA is available for circulation. Some is locked on the Arbitrum bridge, which is subtracted from the total.

Major wallets also hold a significant amount of SPA, which is deducted from the Circulating Supply calculation. These wallets are major holders of SPA tokens.

Finally, SPA locked in the SPA Staking Protocol is also subtracted from the Circulating Supply. This ensures that tokens locked in the staking protocol are not counted as part of the circulating supply.

The SPA buyback is a process where the foundation uses 50% of the auto-yield and 100% of the fees to buy back SPA from the open markets.

The bought-back SPA is stored in a specific wallet address: 0xA61a0719e9714c95345e89a2f1C83Fae6f5745ef on Arbitrum One.

The foundation has been actively involved in the buyback process, using their funds to make initial markets and for protocol development.

In 2022, the foundation burnt a significant amount of SPA, specifically 375 million tokens, to further decentralize the protocol.

This includes 250 million tokens burnt in May and 125 million tokens burnt in September.