Next March, a juicy announcement is set to create hefty ripples in the crypto waters. Following information provided by Token Unlocks, the Ethereum layer 2 scaling solution, Arbitrum, plans to unfreeze more than $1 billion worth of its ARB tokens. This anticipated move marks the commencement of a four-year period characterized by staggered token releases.
On the slated date, March 16, an estimated 1.11 billion ARB tokens, valued at $1.24 billion, will be “cliff unlocked”. This colossal figure represents a majority share of 87% of the digital currency’s overall circulating supply of 1.275 billion. While these numbers seem staggering, don’t forget we still have over 5 billion ARB tokens out there, tucked securely under lock and key.
The term ‘cliff unlock’ refers to the method through which locked-down cryptocurrencies are freed up. Designed to prevent a massive sell-off by early investors or project team members, this approach unfreezes a certain percentage of tokens at the end of a predefined period. Following this, tokens are released at a linear rate.
So, what does all this mean for Arbitrum’s future? The subsequent months after March 16 will see the protocol steadily releasing a set number of tokens every four weeks for a span of four years. This practice of releasing frozen tokens injects liquidity into the system.
However, stirring the pot of enthusiasm is a mild undercurrent of uncertainty. While token release schemes are vital to free up liquidity, they have often been linked to bearish forecasts for the currency’s value. Findings from analytics firm The Tie, illustrate that unlock events, which represent over 100% of the average daily trading volume, tend to subtly tip the scales and apply downward pressure on the token’s price.
The truth, as it always does, lies somewhere in between. As the crypto community awaits Arbitrum’s ‘cliff unlock’ with bated breath, one thing is certain: an interesting ride lies ahead for ARB holders. These pivotal milestones could make or break the future value of the ARB token, with the true extent of the impact only to be revealed in the fullness of time. As of the moment, an ARB is worth $1.12, albeit on a 4% decrease for the month, courtesy of data from TradingView. One thing this underscores is the dynamism, unpredictability and sheer thrill of the crypto cosmos. Buckle up, folks – it’s sure to be a rollercoaster ride.