Recently, Arbitrum, One of the leading layer 2 technology suits existing in the Ethereum network experienced a whopping 16,500% increase in its revenue compared to the previous day’s figure.
The reason for this increase was cited to be due to its recent acquisition of LayerZero tokens.
In this article, we will look into the details regarding this massive revenue increase and how it is linked to the LayerZero ZRO debut.
What exactly caused this revenue surge?
The recently launched Airdrop event of the LayerZero (ZRO) token was said to be the leading factor for this massive surge in revenue of the Arbitum network.
The ZRO airdrop organized by the LayerZero network on June 20th was ladled with a lot of pushback from the participants following the network asking them to make a donation of 10 cents in the form of Ethereum or any other stable currencies in order to avail the ZRO token through the Airdrop.
The LayerZero network named this mechanism “Proof-of-donation”. According to this instrument, they were planning to raise about $18.5 million for the protocol guide along with a pledge from LayerZero Foundation for $10 million for a period of four years for the team behind the project.
The disapproval of the participants and the subsequent backlash this move faced was said to be one of the main reasons why the price of the ZRO token dipped to an all-time low of $3.12 within hours of its launch.
Other reasons included the dissatisfaction from the part of users about the inadequate amount of tokens set to be distributed on the first day of the airdrop while others complained about how little amount of coins the participants were given compared to their contribution to the LayerZero network
Now you may be asking what ZRO token’s price decline has anything to do with the revenue surge in the Arbitrum network.
The answer has a lot to do with the way cryptocurrency and blockchain networks function on a larger scale.
Let us look at the relationship between the ZRO token launch and revenue increase in Arbitrum in the section below.
How did the ZRO token affect Arbitrum Revenue?
To talk about one of the things connecting both the ZRO token and Arbitrum it is to be noted that the LayerZero token (ZRO) continues to play an instrumental role in the operation of the Arbitrum network.
Arbitrum is the top Ethereum Layer 3 network as of now measured by its total value locked (TVL).
It is also to be noted that Arbitrum was also functioning as the main coordinating chain for the ZRO Airdrop.
The Proof-of-donation method that LayerZero introduced obliged users to donate to the network to claim their token causing the subsequent price dipping of the ZRO token due to the dissatisfaction from the participants.
The average gas fees on the Arbitrum blockchain network increased as a result. The increase in fees later hit almost 89 cents, up from its typical 1-cent charged as a fee.
As more and more people were required to pay for this surge in fees this caused a large amount of revenue to flow into the Arbitrum network This was the major cause of the skyrocketing revenue in the network.
The single-day profit generated in Arbitrum was close to $3.9 million, which represented a 16,500% increase from the previous revenue collection. It is to be noted that this was however not the only chain effect of the ZRO price dip.
Alongside the jump in the Revenue of Arbitrum, there was also an increase in the trading activity of Xai token, a gaming-oriented Layer 3 network that was developed by the same team behind Arbitrum called Offchain Labs.
We saw the trade of the Xai token averaging over 104 trades per minute in just 24 hours. This marked a 6000% increase in activity for the coin over the past 10 days.
These are some of the details regarding the Arbitrum ZRO token saga that one must keep in mind as a future reference for a case study.
Now let us look at what we can take away from these two events that we can make use of in the future while dealing with blockchain networks.
Final Thoughts
The Arbitrum Revenue surge and LayerZero’s ZRO token debut are two events that showed us how interconnected and interdependent the functioning of blockchain networks usually is.
The dip in the price of one commodity led to the rise in value for another connected service. This interconnectedness is one of the things that make the blockchain network space so complicated and interesting as a field to follow.
