3 signs Arbitrum price is poised for a new record high in Q2
Arbitrum (ARB) has emerged as one of the best-performing cryptocurrencies after Ethereum's long-awaited Shanghai upgrade.
Notably, ARB price gained 4.28% to $1.36 on April 13, its highest level in two weeks. This also amounts to 18% gains from its $1.15 low a day ago when the Shanghai upgrade enabled staking withdrawals on Ethereum.
To recap, Arbitrum is an Ethereum layer-2 (L2) scaling solution that aims to reduce network transaction congestion and transaction fees. As a result, the market typically perceives Ethereum's growth as a boon for L2 chains.
Here are three reasons why ARB could continue its bull run in Q2 to retest its record high of $1.60.
Arbitrum generated $2.5 million in profits in March 2023 via sequencing, according to Messari.
Notably, sequencer profits represent the difference in fee revenue generated by the L2 chain and the fee expense paid to the base L1 chain — all calculated in Ethereum's Ether (ETH) token, not ARB.
These profits will eventually go to Arbitrum's community-managed DAO called ArbitrumDAO as it grows to become more decentralized in the future.
Sequencers can create maximal extractable value (MEV) by arranging users' transaction requests — a feature missing from Arbitrum.
However, ArbitrumDAO may end up monetarizing MEV by auctioning off rights to produce blocks once they launch decentralized sequencing, asserts Kunal Goel, a researcher at Messari. This would open up opportunities for ARB as a staking token.
"The DAO will likely enforce ARB staking for sequencers to economically align incentives and to allow for slashing in case of any misbehavior, similar to validators in Proof-of-Stake networks," noted Goel, adding:
Arbitrum has outperformed its top Ethereum L2 rival, Optimism (OP), on
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