After a prolonged downtrend, Arbitrum (ARB) recently broke out of a downward channel. The altcoin jumped to a two-week high of $0.085 before pulling back slightly.
At press time, ARB was trading around $0.083 after rising 10% on the daily charts. During the same period, the altcoin’s volume increased by 118% to $105 million, indicating strong market participation.
Arbitrum rebounds on Robinhood chain fee split
ARBs This recovery was supported by positive market news. Arbitrum developer Steven Goldfeder announced that 10% of fees collected on Robinhood Chain and other Arbitrum L2s will be directed to the Arbitrum ecosystem.
He also added that 8% goes to the token holder-controlled treasury and 2% goes for development. Finally, 100% of the fees collected on Arbitrum One will go to the Arbitrum treasury. This tokenomic approach is designed to counter market inflation, which places a heavy burden on Arbitrum’s native token, ARB.
Are Robinhood Chain’s fees enough to offset market dilution?
Robinhood Chain has grown tremendously since its launch, reaching record-breaking usage levels.
For starters, Robinhood’s DEX trading volume hit a record high of $560 million on July 8. This volume was driven by more than 140,000 new addresses, indicating strong demand.
As trading volume increased, so did the chain’s fees and revenues. DefiLlama data shows App Fees reached $2.36 million on July 8th and $2.12 million on July 9th.
Rising fees provide a lifeline for Arbitrum as the team tries to offset market inflation. Arbitrum remains highly inflationary due to monthly unlocks.
In fact, this July, 92.63 million ARBs worth approximately $7.6 million will enter circulation after the locks are opened. With the team promising to spend Robinhood-generated funds into the ecosystem, these funds could at least ease the pressure.
But that means the Robinhood chain has to generate $8 million in monthly revenue for Arbitrum and invest it back. For now, this is a very remote possibility, especially in the short term, and the inflation threat remains for the ARB.
Can ARB’s current momentum continue?
Arbitrum has enjoyed a strong recovery as demand for the asset rebounds and buyers are encouraged by positive ecosystem developments.
As a result, the altcoin’s Relative Strength Index has risen to 54 as of press time and is moving into bullish territory. This signaled a strong buyer bounce back, further strengthening the upward momentum.
Historically, strong market demand has taken precedence over better price performance. Therefore, if the Robinhood-driven narrative holds the market, Arbitrum is likely to make further gains by tracking the $0.09 resistance level.
However, if the promised ecosystem investment cannot relieve the pressure, momentum will weaken and ARB will likely drop to $0.072.
Final Summary
- 10% of fees collected on Robinhood Chain and other Arbitrum L2s will go to the Arbitrum ecosystem.
- ARB rose 10% to a two-week high of $0.085 on renewed market demand.
