While Arbitrum’s governance token ARB has been in a consistent downturn since the airdrop in late March, its ecosystem shows healthy growth. 
A recent Nansen report shows that Arbitrum’s activity improved after the airdrop, stabilizing “at a level higher” than before the airdrop. The daily active users, gas fees and transaction count maintained consistent higher levels on the Ethereum rollup since April 2023.
The gap between the number of active users on Arbitrum and Optimism widened after the Aribtrum airdrop, closing in on Ethereum.

The trading volume on Arbitrum-based decentralized exchanges paint a similar picture, showing an evident rise in volume after the airdrop.
Moreover, Nansen’s report showed that only ARB airdrop recipients only accounted for around 5% of the activity on the blockchain and showed that Arbitrum has attracted considerably more new users to Arbitrum after the airdrop.
Potential catalysts for ARB upside
Moreover, an upcoming update on Ethereum in the second half of 2023, dubbed as Cancun-Deneb (Dencun), will include EIP-4844 (Proto-Danksharding), which will reduce the transaction fees on Arbitrum, increasing the blockchain’s value proposition.
Additionally, the Arbitrum Foundation recently revealed accumulated data from its Sequencer, a part of the L2 fees paid by users for posting the data onto Ethereum.
The Foundation has decided to pass on the Sequencer’s earnings, totalling 3,352 ETH or $5.4 million, to the Arbitrum DAO which will be managed by ARB holders.

In total:

The Arbitrum DAO has accumulated ~3,352 ETH in revenue,
The Sequencer will be refunded ~5,954 ETH which is the cost for posting all data to the Ethereum network.

How exciting is that?

— Arbitrum (?,?) (@arbitrum) May 10, 2023

A revenue source for the DAO can potentially create yields for ARB holders if the community votes to direct the rewards holders. It remains to be seen how the funds are managed by the foundation and the DAO.
“Smart money” is holding ARB
Nansen’s data shows that the “smart money” and funds who accumulated ARB after the airdrop still haven’t sold, which is encouraging. The on-chain analytics firm tags Ethereum addresses of high-volume and profitable traders as “smart money.”

The funding rate for ARB perpetual swap contracts turned negative like the rest of the crypto market after the SEC brought lawsuits against the industry’s largest exchanges, Binance and Coinbase, per Coinglass data.
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Funding rates are paid by perpetual swap traders for shorting or longing an asset depending on its demand. If the demand for short orders is higher, it is deemed more expensive, so traders on the short side pay longs.
Currently, the funding rates are near zero, suggesting that futures traders are neutral on ARB.
The ARB/USD pair has observed a downward trend since the token’s launch in March. The compression of the channel shows the possibility of a descending wedge pattern, which has a tendency to break to the upside.
However, if ARB breaks below the support from the support line of the wedge pattern around $0.90, the move to the downside can amplify quickly.
On the ETH scale, ARB broke below May’s low of 0.00057 ETH after the SEC’s lawsuits. The token was last trading at 0.00056 ETH.
Technically, ARB shows the possibility of a negative trend reversal. Nevertheless, the upcoming Dencun update on Ethereum and decisions taken by the Arbitrum foundation in directing revenue from the layer-2 rollup will eventually dictate ARB’s price action.
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