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Arbitrum

GRT Soars 13% As The Graph Prepares To Integrate Arbitrum

Published

5 days ago

on


Recent reports reveal that the Graph, a platform used for indexing and querying blockchain data, is in the final stages of migrating to Arbitrum, a popular Ethereum layer-2 protocol. Following this announcement, GRT, the native token of the indexer, is up 13% in four days, per the candlestick arrangement in the daily chart.

The Graph Migrating To Arbitrum

The decision to migrate to Arbitrum follows a vote after a proposal was floated to move the indexer to the layer-2 platform.

The Graph Improvement Proposal received majority support from the community, necessitating the preparation for the eventual shift to Arbitrum, a layer-2 platform using roll-ups. Like any other off-chain solution, Arbitrum enables high transaction processing, increasing scalability.

With better transaction processing capability, transaction costs are lower, allowing high-demand protocols to launch while enjoying high-security levels since all transactions are rolled up and confirmed on the mainnet.

According to the development team, the goal is to enhance scalability, boost transaction processing speeds, and, most critically, reduce the costs of data indexing.

Tegan Kline, the CEO of one of The Graph’s development teams, Edge & Node, said the community chose Arbitrum due to its speed and affordability:

The Graph users have consistently sought solutions to improve gas efficiencies and other aspects of the network. After carefully evaluating available options, the ecosystem chose Arbitrum as the layer-2 scaling solution to provide speed and affordability to protocol developers and network participants.

Cheaper Querying

Although Ethereum has changed its fee bidding model following the implementation of the EIP-1559, transaction costs are still high, discouraging some users and protocols from using the mainnet.

Moreover, as visible by the high network utilization rate, the high demand for the mainnet means users wishing to transact on layer-1 must pay much more to approve their transactions.

On Arbitrum, The Graph holders will also delegate GRT tokens more cheaply. Delegated tokens are staked with Indexers, who index and query data.

Following this transition, Indexers stand to receive more GRT rewards since transacting on Arbitrum is relatively cheaper. According to L2 Fees, a fee tracker, every transfer on Arbitrum costs $0.08, multiples cheaper than Ethereum, which stands at $1.24.

It is yet to be seen how The Graph will capitalize on “data accessibility,” which Steven Goldfeder, the CEO of Offchain Labs, said Arbitrum offers.

However, what’s clear is that The Graph provides a solution for users wishing to query blockchain data more efficiently. Public blockchains such as Ethereum or Bitcoin are designed to store data securely. However, they can make it challenging to retrieve this data reliably.

GRT Price On June 14| Source: GRTUSDT On Binance, TradingView

GRT is trading at $0.10, up 13% from this week’s lows when writing on June 14.

Feature Image From Canva, Chart From TradingView





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Arbitrum

Ethereum network upgrade and uptick in Arbitrum active users could trigger an ARB price reversal

Published

3 days ago

on

June 17, 2023

By


While the Arbitrum governance token ARB has been in a consistent downturn since the airdrop in late March, its ecosystem shows healthy growth.

A recent Nansen report shows that Arbitrum’s activity improved after the airdrop, stabilizing “at a level higher” than before the airdrop. The daily active users, gas fees and transaction count have maintained consistently higher levels since April 2023.

The gap between the number of active users on Arbitrum and Optimism widened after the Aribtrum airdrop, closing in on Ethereum.

Daily active users of Arbitrum, Ethereum and Optimism (past 6 months). Source: Nansen

The trading volume on Arbitrum-based decentralized exchanges paints a similar picture, showing an evident rise in volume after the airdrop.

The trading volume of DEXs on Arbitrum. Source: DefiLlama

Moreover, Nansen’s report shows that ARB airdrop recipients only accounted for around 5% of the activity on the blockchain and that Arbitrum has attracted considerably more new users after the airdrop.

Potential catalysts for ARB upside

Moreover, an upcoming update on Ethereum in the second half of 2023, dubbed as Cancun-Deneb (Dencun), will include EIP-4844 (proto-Danksharding), which will reduce the transaction fees on Arbitrum, increasing the blockchain’s value proposition.

Additionally, the Arbitrum Foundation recently revealed accumulated data from its sequencer, a part of the layer-2 fees paid by users for posting the data onto Ethereum.

The foundation has decided to pass on the sequencer’s earnings, totaling 3,352 Ether (ETH), or $5.4 million, to the Arbitrum DAO, and the ETH will be managed by ARB holders.

A revenue source for the DAO — a decentralized autonomous organization — can potentially create yields for ARB holders if the community votes to direct the rewards to holders. It remains to be seen how the funds will be managed by the foundation and the DAO.

“Smart money” is holding ARB

Nansen’s data shows that the “smart money” and funds that accumulated ARB after the airdrop still haven’t sold, which is encouraging. The on-chain analytics firm tags Ethereum addresses of high-volume and profitable traders as “smart money.”

Funds (purple) and smart wallets (green) are still holding ARB. Source: Nansen

The funding rate for ARB perpetual swap contracts turned negative like the rest of the crypto market after the Securities and Exchange Commission (SEC) brought lawsuits against the industry’s largest exchanges, Binance and Coinbase, per CoinGlass data.

Related: Deposits to zkSync surpass $110M as its DeFi ecosystem explodes

Funding rates are paid by perpetual swap traders for shorting or longing an asset depending on its demand. If the demand for short orders is higher, it is deemed more expensive, so traders on the short side pay longs.

Currently, the funding rates are near zero, suggesting that futures traders are neutral on ARB.

Funding rate across the perpetual swap markets. Source: CoinGlass

The ARB/USD pair has observed a downward trend since the token’s launch in March. The compression of the channel shows the possibility of a descending wedge pattern, which has a tendency to break to the upside.

However, if ARB breaks below the support line of the wedge pattern around $0.90, the move to the downside can amplify quickly.

ARB/USDT daily price chart. Source: TradingView

On the ETH scale, ARB broke below May’s low of 0.00057 ETH after the SEC’s lawsuits. At the time of publication, the token was trading at 0.00056 ETH.

ARB/ETH 4-hour price chart. Source: GeckoTerminal

Technically, ARB shows the possibility of a negative trend reversal. Nevertheless, the upcoming Dencun update on Ethereum and decisions taken by the Arbitrum Foundation in directing revenue from the L2 rollup will ultimately dictate ARB’s price action.