The recent surge in the cryptocurrency market, driven by institutional interest, has not only boosted major cryptocurrencies but also brought renewed optimism to the popular layer-2 (L2) rollup token, Arbitrum [ARB].
As the fourth-largest blockchain and the leading L2 solution by total value locked (TVL), Arbitrum is poised for further growth in the evolving landscape of blockchain technology.
Rising Interest and Arbitrum Token Adoption
Arbitrum gained more than 5% in value following the recent market rally, providing a much-needed respite from the regulatory concerns that had previously weighed it down.
Since its widely publicized AirDrop event in March, the token has gained significant attention, witnessing a steady increase in daily active wallets and new wallet creation.
Notably, an influential Twitter user who analyzes crypto trends closely has been tracking the rising number of addresses holding ARB tokens.
Despite the growing adoption, a notable trend has been the stagnation in transaction fees paid on the Arbitrum network and, consequently, the protocol revenue. This trend aligns with the fact that ARB primarily functions as a governance token.
However, the Twitter user pointed out the significance of the dip in Arbitrum transaction fees, shedding light on the upcoming Ethereum Improvement Proposal (EIP)-4488.
EIP-4488, proposed by Ethereum co-founder Vitalik Buterin, aims to reduce the cost of uploading off-chain data from L2 rollups to the Ethereum base layer while maintaining robust security measures.
Although L2 rollups have effectively addressed Ethereum's scalability challenges, the high cost of uploading L2 data on the base layer remains a hindrance.
The implementation of EIP-4488 is expected to slash this fee by 80%, reducing gas fees for end users. The upgrade is slated for a full production launch by the end of 2023.
Market Recovery and Growing Liquidity
The recent market rally has also had a positive impact on Arbitrum's liquidity. Over the past week, its total value locked (TVL) surged by more than 8%, reaching an impressive $2.72 billion.
This substantial TVL cements Arbitrum's position as the fourth-largest blockchain and the leading L2 solution in terms of TVL. [pc]
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