Arbitrum is an absolute garbage coin, and I am going to show you in just a few minutes why there is no way I would ever buy this or hold this. This absolutely sucks. I review altcoins, and I have looked at thousands of altcoins over the last 12 years, and I am tired of you all getting ripped off on these garbage coins. So here is a quick explanation of why Arbitrum might look great on the surface until you dig into the details about the actual coin.
A $1.1 Billion Market Cap That Captures $0 in Gas Fees
Arbitrum is a $1.1 billion market cap for a token that captures $0 in gas fees. It is basically a polling mechanism token that does not have real power, because the key parts of the infrastructure are centralized and do not actually rely on the voting to be changed. Yes, if you look at it, Arbitrum does have billions in DeFi TVL. But the Arbitrum token itself, all it is, is a governance trap. It is acting like a stock, but it is not a stock, because you do not have any legal rights. You are holding a token that is just used for polling, which to me is utterly useless, and on top of that they are unlocking 92 million new tokens every single month. As I shared in Crypto Market Caps Are a Distraction. Only ICP Is Real, a big market cap number tells you almost nothing about whether a token actually does anything.
Look at the current Arbitrum price. I already said this absolutely sucked and was trash and not to buy it, not financial advice, back when it was at $0.80. Now it is down to $0.16. You might look at your bag and think, oh, I am holding something that is valuable, but no, it is not. This is not a token that has any realistic chance of making a great return for investors over the long term.
$3 Billion Still Waiting to Dump on You
If you want to start somewhere, start here: there is about $3 billion of Arbitrum still waiting to hit the market that is currently locked up. The token unlocks have been crushing this since day one, with five times as much in circulating supply as there was at launch and a lot more coming out. Do not worry, if you are holding this you will have a chance to get dumped on too. About $15 million goes to insiders every month, and the next unlock is coming in a couple of weeks.
And here is the disgusting reality of this coin. There is around $20,000 a day in revenue. Even if every bit of that went to Arbitrum, the token is still trading at about 150 times the annualized chain revenue, which is absolute garbage from a basic business valuation standpoint. Granted, almost nothing in crypto has any basic business valuation. It is all hype and speculation, besides ICP, and I talk about that on my ICP Crypto channel and in Internet Computer (ICP) Burn and Revenue: Is It Real?. Arbitrum is a garbage valuation, but it gets even worse.
Gas Is Paid in ETH, So Nobody Needs ARB
The gas token used on the Arbitrum network is Ethereum, not Arbitrum. Most people using Arbitrum are using it every day and never buy any Arbitrum at all. How stupid of a setup is that? Okay, it makes sense if you want to get mass adoption. But Arbitrum is also now competing with Base and Robinhood and any other institution that launches its own Layer 2. Arbitrum is already becoming irrelevant, even in its own lane, with Base and Robinhood capturing more and more value, and the token is not even used for gas, so there is no need for almost anybody who uses Arbitrum to ever hold the token. It is nuts. I went into how much Robinhood's own chain changed my thinking in Robinhood Chain Changed How I See the Future of Crypto, and the same reasoning that makes me a weak believer in the base layer in my Ethereum (ETH) review applies double to a Layer 2 token that does not even collect the gas.
The marketing story goes like this: Arbitrum is the number one Ethereum Layer 2, with over a billion in TVL and a bunch of DEX volume. All right, those numbers have some reality to them. The second part is the lie: therefore, Arbitrum must be a great investment. Absolutely false. Arbitrum, so far, has done nothing but dump overall, and I do not see why it would ever go up again outside of financial engineering and people being utterly clueless about how useless the actual token is.
The Governance Token Is a Sham
Unless, of course, you think you are going to have a tiny little vote and make any kind of a difference with your little vote. We have elections coming up in the US. You can hardly get millions and hundreds of millions of people to even vote for free in those elections, and you think holding an Arbitrum token and voting on whatever the development team puts in front of you is going to matter? When Arbitrum first came out, the token holders voted one way, and the development team literally did the exact opposite. The governance token is a big sham. It reminds me of the empty governance pitch I took apart in my Quant (QNT) Crypto Review.
So here is the on-chain reality. Zero gas demand, because you do not even need Arbitrum to use Arbitrum. The fees actually go to the Arbitrum DAO treasury, and then the biggest holders are going to send that money wherever they want to anyway. Your opinion does not matter, even if you buy the token and try to vote with it. It is an absolute, utter waste of time for retail, and retail is just sitting here getting dumped on over and over again.
$500,000 a Day of Buying Just to Stand Still
To absorb $15 million a month in unlocks, you would need about $500,000 of buying pressure every single day, net of sales, just to keep the Arbitrum price where it is. With financial engineering it may not actually play out exactly that way, but in theory you need hundreds of thousands of dollars of new buying every day just to hold price flat. And if you look up the data, the order books show 92% sell-side pressure. Sell orders are dominating. People that have Arbitrum want to get rid of it because they know it is garbage, and they want to sell as high as they can. For that to work, you need new people who are absolutely clueless to come in and buy it from them. Most of the time, that is not going to happen.
Compare It to ICP at the Same Market Cap
Now compare this to something like Internet Computer Protocol, which is at about the same market cap. ICP is a full-stack sovereign cloud running web, database and AI software 100% on chain. My entire business is built directly on ICP. Arbitrum is useless by comparison to that. It is just sending tokens and transactions, and you have Base and Robinhood and other Layer 2s that institutions will probably launch doing the same thing. When you can build your entire business on ICP, the comparison is crazy, and that is why I keep saying, as in ICP Is the Only Real AI Coin in Crypto, that ICP is in a category of its own.
Meanwhile, Arbitrum is not actually decentralized where it matters, because the front ends sit directly on things like Amazon and Cloudflare. This is why holding the governance token does not really matter. You cannot even have real, meaningful governance over most of the system, because the dev team still has to maintain all the centralized stuff, like the website, that the blockchain itself cannot serve. So everything built on Arbitrum ends up effectively centralized. ICP, on the other hand, can serve directly from tamper-proof smart contracts, and I explained in Other Blockchains Need ICP to Stay Cheap why every other chain ends up leaning on exactly that. I am comparing to ICP because, to me, this is the best real crypto out there, and everything else sucks by comparison.
Now, if ICP had a $1 trillion market cap today, I might have a different opinion. But ICP has a billion-dollar market cap for the best tech in crypto, and Arbitrum is about the same for something useless where you do not even pay gas fees when you use it. Meanwhile, on ICP, I burn cycles to pay to host my website. The business model is so vastly superior, there is no competition.
Want an Honest Look at Your Portfolio?
If you want an honest look at your crypto portfolio or project, you can book a call with me, or you can book a personal video review, send me screenshots, and I will send you my opinion on each coin. Spoiler alert: I think everything besides ICP sucks, and I would not bother holding anything else, except I do hold two meme coins, because if I am going to hold something that is trash, at least I am going to market it myself, as I shared in I Sold 1,000 ICP for JERRY on Robinhood.
Stop Being Exit Liquidity
If you are tired of being exit liquidity, tired of just sitting there hoping a coin goes up, and you do actually want to try to make money holding different coins, I use MaxFi. I let my meme coins sit on there and provide liquidity, and if you have coins you like, you can just park them in liquidity and print fees on them. Even if the coins go down, you keep printing fees on them anyway. I am grateful to MaxFi for sponsoring my channel, and it is the best place I have found to provide liquidity.
And if you hold the Arbitrum token and you disagree with everything I said, you can just park your ARB on MaxFi and earn returns on it instead of sitting there hoping the price goes up. MaxFi at least takes the edge off of waiting for the price to move, and maybe you can earn some money on it in the meantime instead of having to exit by selling. You can find all of my coin breakdowns, including the earlier Arbitrum call at $0.80, in my Crypto Reviews playlist. If this was helpful, I hope to see you on jerrybanfield.com.