Is Arbitrum a Good Investment?

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Contributor, Benzinga
March 31, 2023

Decided ARB is a good investment? You can buy on Coinbase, Binance or OKX today

Successful investing in the dynamic world of cryptocurrency requires identifying undervalued projects that have a unique value proposition, a thriving community and stellar growth potential. One such opportunity is Arbitrum, a Layer 2 scaling solution for Ethereum that could revolutionize the world of decentralized applications (dApps).

Arbitrum has demonstrated its scalability and efficiency by briefly surpassing Ethereum in daily transactions and providing a solution to Ethereum's high gas fees and slow throughput, making it more scalable, efficient and enjoyable for developers to build dApps. The recent Arbitrum airdrop, distributing over 1 billion tokens to 600,000+ wallet addresses, highlighted the platform's potential and captured the attention of crypto enthusiasts.

As the importance of scalability and efficiency in the crypto industry continues to grow, Arbitrum presents a promising investment opportunity that addresses these issues. This article delves deeper into Arbitrum, examining its strengths and weaknesses and providing insights to help investors determine whether it's a smart investment choice for the future. 

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What is Arbitrum?

Think of Ethereum as a busy highway with limited lanes for traffic. As the number of users and transactions on the highway increase, the traffic gets congested and slow, leading to higher fees and longer wait times.

Layer 2 scaling solutions such as Arbitrum act as alternate routes, providing additional lanes that enable more traffic to move through quickly and seamlessly. These alternate routes are built above the main roadway but remain connected to it, ensuring the same level of security and trust for all users.

From a technical perspective, Arbitrum achieves this goal by processing transactions off-chain, thereby freeing up space on the Ethereum blockchain, making it more efficient and cost-effective for all parties involved. With its high throughput and low transaction fees, Arbitrum has become a popular choice for developers seeking to create dApps on Ethereum.

ARB Price History

Arbitrum started distributing free tokens to over 600,000 users with wallets on March 23, 2023. The purpose of the airdrop is to celebrate Arbitrum's expansion and reward early supporters with governance tokens. More than 1 billion tokens will be given away.

With a market capitalization of around $1.6 billion, ARB is currently ranked among the top 40 cryptocurrencies by market capitalization. In the ETH Layer 2 market, it is the second-largest project after Polygon, which has a market capitalization of $10 billion.

As the market reacts to its presence, it is likely that the price of Arbitrum will experience volatility in the coming months. The introduction of a new token can trigger a range of responses from investors and traders, leading to fluctuations in its value. The price of Arbitrum may be influenced by a variety of factors, including supply and demand, market sentiment and the overall performance of the blockchain industry.

Arbitrum Competition

Despite facing competition from other scaling solutions like Polygon, Optimism and Metis, Arbitrum stands out from the rest because of its impressive user growth and liquidity. As of March 2023, it reigns supreme with a total value locked (TVL) of $2.25 billion — an amount that leaves all other Ethereum Layer 2s in the dust.

Total Value Locked Across Chains

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Source - DeFi Llama

Arbitrum's TVL of $2.25 billion is higher than the combined TVL of Polygon and Optimism, which are ranked as the ninth and 79th largest cryptocurrencies by market capitalization.

TVL is the beating heart of a blockchain protocol, reflecting the amount of valuable assets locked within it. Just as a healthy heart is crucial for overall well-being, a high TVL is crucial for the health and value of a blockchain protocol. It indicates the worth of assets secured by the protocol, reflecting the strength of its infrastructure and its ability to attract users and investors.

Arbitrum's impressive TVL reflects the immense value users and investors place in the protocol and its ability to retain and attract more users. This has established Arbitrum as a significant player in the blockchain space, setting a high standard for competitors to follow.

How to Buy ARB 

Arbiturm can be purchased on major centralized exchanges such as Coinbase, Binance, OKX and Kucoin. It usually only takes a few minutes to sign up, verify your identity and to start trading. ARB can also be purchased on decentralized exchanges such as Uniswap. Please note that gas fees may be high on decentralized exchanges as users claim their airdropped tokens.

  • Coinbase
    Best For:
    Active Crypto Traders
    securely through Coinbase's website

    Sum of median estimated savings and rewards earned, per user in 2021 across multiple Coinbase programs (excluding sweepstakes). This amount includes fee waivers from Coinbase One (excluding the subscription cost), rewards from Coinbase Card, and staking rewards. ³Crypto rewards is an optional Coinbase offer. Upon purchase of USDC, you will be automatically opted in to rewards. If you’d like to opt out or learn more about rewards, you can click here. The rewards rate is subject to change and can vary by region. Customers will be able to see the latest applicable rates directly within their accounts.

  • Binance NON US
    Best For:
    Altcoin Traders
    securely through Binance NON US's website
  • OKX
    Best For:
    Variety of Tokens
    securely through OKX's website
  • KuCoin
    Best For:
    Experimenting Investors
    securely through KuCoin's website

Where to Store ARB Safely

Safeguarding your digital assets against potential threats requires the secure storage of your ARB tokens. Excellent security features are available in -software and hardware wallets that can help achieve this.

Software wallets are digital applications that enable easy access and management of your cryptocurrencies while also providing robust security measures such as encryption and two-factor authentication to ensure the safety of your assets. On the other hand, hardware wallets are physical devices that store your private keys offline, providing maximum security. These wallets are impervious to online threats and are widely considered to be the most dependable approach for storing cryptocurrency.

Best Hardware Wallet: Ledger

For securing your digital assets, Ledger is an industry-leading hardware wallet that provides top-notch security and a user-friendly experience. It is compatible with over 1,800 altcoins, including ARB, as well as cryptocurrencies such as Ethereum (ETH), Dogecoin (DOGE) and Polygon (MATIC).

Ledger offers three wallet options, including the Nano X, Nano S Plus and the latest Stax. With its sleek touchscreen interface, the Stax is a great choice for investors seeking to manage their day-to-day transactions with ease and style. Regardless of the wallet you choose, you can rest assured that your ARB and other digital assets are in safe hands with Ledger's robust security features.

Best Software Wallet: Trust Wallet 

Trust Wallet is a top-tier software wallet that provides a secure solution for trading, storing and collecting a comprehensive range of cryptocurrencies and NFTs. After being acquired by Binance in 2018, Trust Wallet has earned the trust of millions of users worldwide by granting seamless access to over 250,000 crypto assets across 65 blockchains. With its wide range of offerings and exceptional reputation, Trust Wallet is an excellent option for all types of investors seeking a reliable and trustworthy wallet.

Cryptocurrency Market Outlook

Cryptocurrency is a volatile market, with prices fluctuating rapidly because of its highly speculative nature. Investor emotions heavily influence the market, making it unpredictable. Staying informed and monitoring crypto prices and news is crucial for prudent investors. Check out the latest crypto prices in the table below.

Is Arbitrum a Good Investment?

Arbitrum presents a promising investment opportunity in the dynamic world of cryptocurrency. With its impressive scalability, efficiency and popularity, it has the potential to revolutionize the world of dApps.

While the introduction of a new token can trigger fluctuations in its value, its high TVL and flourishing ecosystem position it as a significant player in the Layer 2 sector of the market. However, it is important to note that like all cryptocurrency investments, Arbitrum is highly speculative and extremely risky. Prudent investors should stay informed and actively monitor crypto prices and news.

Disclosure: ²Sum of median estimated savings and rewards earned, per user in 2021 across multiple Coinbase programs (excluding sweepstakes). This amount includes fee waivers from Coinbase One (excluding the subscription cost), rewards from Coinbase Card, and staking rewards. ³Crypto rewards is an optional Coinbase offer. Upon purchase of USDC, you will be automatically opted in to rewards. If you’d like to opt out or learn more about rewards, you can click here. The rewards rate is subject to change and can vary by region. Customers will be able to see the latest applicable rates directly within their accounts
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