What Happened on May. 10th | Arbitrum is a very Profitable Business, but unrelated to $ARB token

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Arbitrum announced it will send all surplus revenue generated by transaction fees to DAO. How profitable Arbitrum is, data shows the Layer 2 is a quite profitable business, and the profit margin will be greatly increased after Ethereum's next upgrade, the EIP-4844 / Proto-danksharing.

Layer 2 rollups operation have costs including Layer 1 data publication, L2 operator cost, etc, and the revenue is from users's transaction fees. One KOL, James Ho, calculated Arbitrum's annualized revenue to be over $100 million, and the profit margin is around 30-40%.

The primary expense of Layer 2 is the cost of data posting on Layer 1 Ethereum. EIP-4844, which is intended to cut this cost by 90-95%, will be included in Ethereum's next update. This indicates that Arbitrum's profit will skyrocket.

Arbitrum's primary challenge is not whether substantial fees can be collected; they can and will be very profitable. However, it is unclear how these values would be distributed to $ARB token holders, as the token is currently a pure governance token with no specified utilize such as fee accrual or burning mechanism.

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