Arbitrum Announces ARB Token Buyback Amid 85% Price Drop
1min read Arbitrum, a prominent layer-2 scaling solution for Ethereum, has announced a strategic buyback plan for its native token, ARB. This move comes as the token has experienced a significant price decline, dropping over 85% from its all-time high. The buyback initiative is led by Offchain Labs, the company backing Arbitrum, and is aimed at reinforcing the ecosystem's commitment and stability.
The buyback plan was announced through a post on X (formerly Twitter) by Offchain Labs. The company emphasized that the initiative reflects the ongoing growth and development of the Arbitrum ecosystem. Technical advancements and strategic decentralized autonomous organization (DAO) initiatives are cited as the primary drivers for the network's progress. Offchain Labs stated that the buyback plan involves adding ARB tokens to their treasury through a strategic purchase plan, ensuring sustainability and alignment with the ecosystem's goals.
This announcement is particularly timely as it coincides with an upcoming token unlock event for Arbitrum. According to data, the network is set to unlock 92.65 million ARB tokens, valued at approximately $30.75 million based on current rates. These tokens represent 2.1% of the total ARB circulating supply. The buyback plan is expected to absorb the anticipated supply shock from this unlock, which historically has driven prices down by as much as 90%.
However, the buyback plan has not been universally praised. Critics, including well-known wallet maxi Yogi, have argued that relying solely on buybacks lacks long-term vision. Yogi compared this strategy to traditional equity markets, where excessive buybacks often signal a slowdown in innovation. He proposed a more diversified approach, suggesting that 30% of the treasury should be allocated to strategic buybacks and over-the-counter (OTC) deals, 30% to liquidity provision to attract institutional players, 20% to a yield-generating treasury for stable dividends, 15% to ecosystem investments, and 5% to a protocol insurance fund. This framework, according to Yogi, would better align incentives and enhance the protocol's long-term sustainability.
Patryk, a researcher, echoed similar sentiments, noting that while structured plans are beneficial, they can be difficult to outline at the start of a buyback initiative. He suggested that Arbitrum remain flexible and deploy funds into strategic areas over time rather than committing to 