What is the incentive to buy and hold ARB?

Outside of participating in the governance. It is cool, but I cannot imagine risking money in a token that won’t generate revenue in a way or another as the network grows.

Huge PS :

Please exclude law and governments, from the topic. Anyone can create a chain where they don’t care having a token being considered as a security by this or that country and build a superior network : not choosing the best for a chain because of this goes directly against the principle of decentralization and permissionless. In that case one shall just build a faster/cheaper centralized network, as you never know what the law will be tomorrow. It is not a question I ask to lawyer/politician, but to economist/scientist/builders. Thank you.

1 Like

Great question. A fair economic motivation could be the speculation of potential future profits from the token. Unlike other unsustainable projects where you’re provided with an API via artificial staking receiving the same token that’s depreciating in value,I rather be a part of a project whose incentives go beyond pump and bumb with the stress of sell before the project implodes.

Besides, the value of Arbitrum as a technology will remain or increase as long as a decentralized governance is taking the control. This is a point that people often miss: the true potential of this technology is realized only when it’s decentralized. That’s why, besides attracting token holders who speculate with the token value, it’s equally important to engage users who are interested in participating in the governance, thereby contributing value to the ecosystem. This value will stem from a real economy rather than just speculative activities, influencing the value of the token itself. This could even foster incentives for holders to retain their tokens rather than selling them.

1 Like

While it doesn’t much to do directly with law, there is a throughline: promises are very hard to make and keep in a fully decentralized and permissionless manner. This is the promise of crypto networks though in the long run, so you’re right in looking to whatever is built into the rules of the network regardless of the law of the land.

In order to pass revenue to the token and be more than just a smart contract on Ethereum mainnet though, Arbitrum has a long way to go (1). However, speculators can project forward, and imagine the case for why the community will have to move toward a profit-sharing model once it’s possible and competitive to do so. Going off this thought experiment then, the presence of future cashflows is a reason to value the token above pure governance value.

Here’s some further reading that dives into the nuance of this subject:

2 Likes