Arbitrum and the Dawn of a New Era: Exploring Ethereum’s Cancun Upgrade and the Future of $ARB

Exploring Ethereum's Cancun Upgrade and the Future of Arbitrum ($ARB)

BTX Research has written a comprehensive analysis of Arbitrum, listing the noteworthy projects in the Arbitrum ecosystem. They also analyzed the impact of the upcoming Cancun upgrade on Arb, as well as compared data with competitors in the L2 space. By using the Mcap/TVL ratio as an indicator, they estimated potential token releases and token prices during the Cancun upgrade period.

Rollup and Danksharding may remain as Ethereum’s only trustless scaling solutions in the foreseeable future, greatly benefiting the development of the entire Layer2 Rollup ecosystem. Notably, Arbitrum has also gained prominence in the Layer2 landscape. Since the beginning of this year, we have observed a steady growth trend in Arbitrum’s TVL, which has increased from $978.92 million to $2.198 billion, a growth rate of 125%. When comparing Arbitrum’s data to the entire Layer2 rollup ecosystem, it maintains a leading position in both the number of protocols and TVL, with a market share of 66.3%, far ahead of the second-ranked Optimism with 25.6% market share.

Another key on-chain metric to consider is the Mcap/TVL ratio. Currently, Arbitrum’s Mcap/TVL is only 0.68, the lowest among all L2 rollup ecosystems with issued tokens. Since the token was launched, Arbitrum’s on-chain active user data has been superior to Optimism’s. Sometimes, it even surpasses Ethereum and Polygon’s on-chain active user metrics. In the past three months, Arbitrum’s on-chain transaction volume has consistently surpassed Optimism’s, sometimes even approaching Polygon’s transaction volume. Arbitrum ranks second in TPS among the top 10 L2s with a TPS of 31.64. Its transaction volume in the past 30 days has reached 24.76 million, ranking first among L2s.

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Profitability is also a key metric for evaluating projects. In this case, considering the issued L2 tokens, namely Arbitrum and Optimism, the L2 profit comparison chart shows that Arbitrum’s revenue performance is superior to Optimism’s. When Arbitrum was launched in March 2023, its revenue reached a peak of 1506 ETH. At least according to current data, Arbitrum still has the highest revenue among L2s. Arbitrum is currently developing many different types of projects, which will help increase trading volume and revenue on Arbitrum. In addition, the upcoming London upgrade may to some extent promote the development of the Arbitrum ecosystem and amplify the growth of Arbitrum’s trading volume and revenue due to its potential promotion of Layers.

Currently, the only function of the ARB and OP tokens is governance. From a revenue perspective, this only confirms that the Arbitrum protocol and project have some profit potential, but the ARB token has not yet shown any value capture. We currently lack strong valuation models for such governance tokens. Therefore, in this study, we use the Mcap/TVL ratio. We estimate the token price during the upcoming token release and London upgrade period, and expect a potential price range of $1.59 to $11.08 in the future. In addition to our previous whale analysis, which found that the average cost basis of whales was around $1.29 and considering that the typical accumulation range of major holders during the previous price drop was between $1.00 and $1.15, it seems that even with a conservative estimated price of $1.59, major holders still have room for future profits.

Reference: https://medium.com/@BTXResearch/arbitrum-and-the-dawn-of-a-new-era-navigating-ethereums-cancun-upgrade-and-the-future-of-arb-9f9411f3f050

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