Two second-layer Ethereum tokens that investors may want to avoid amid massive unlocks are Arbitrum (ARB) and Starknet (STRK). According to data from TokenUnlocksApp, these two L2s will unlock nearly $100 million worth of tokens in the coming week.
Arbitrum will be unlocking 92.65 million ARB on September 16, valued at $49.17 million, while Starknet will unlock 64 million STRK on September 15, worth $25.52 million. These significant unlocks create selling pressure and may lead to price losses over time as private investors sell their tokens.
There has been ongoing debate and controversy regarding Ethereum’s layer-2 scaling approach. While Ethereum’s creator, Vitalik Buterin, initially envisioned a future based on proof of stake and sharding, the Ethereum core development shifted towards scaling the blockchain in layers after struggles with implementing sharding technology.
Critics argue that Ethereum’s second layers are centralized and parasitic systems that compete against Ethereum with their tokens. Justin Bons, founder and CIO of Europe’s oldest cryptocurrency fund, has criticized Ethereum’s layer-2 scaling model, stating that it is predatory due to the early unlocks of private allocations from venture capitalists.
Investors and traders should closely monitor token unlocks to avoid buying into exit strategies of other players. As the selling pressure increases, these dumps can impact the long-term price performance of these tokens. It is important to remember that investing in cryptocurrencies carries risks and should not be seen as financial advice.