Blockchain company Offchain Labs announced plans to purchase its native ARB tokens. The move comes as ARB trades down more than 85% from its all-time high.
The buyback initiative coincides with an imminent token unlock event. Approximately 92.65 million ARB tokens worth $30.75 million will enter circulation in coming days.
"We're reinforcing our commitment to the ecosystem and strengthening our alignment by adding ARB to our treasury through a strategic purchase plan," Offchain Labs stated in a post on X.
The company assured that purchases would follow predetermined parameters to ensure sustainability. This announcement arrives just before a significant supply increase representing 2.1% of ARB's circulating supply.
Market analysts remain skeptical about the strategy's effectiveness. According to a recent report, 90% of token unlocks typically drive prices downward.
Yogi, a prominent wallet maximalist, criticized the approach as shortsighted. "Pure buybacks alone feel unimaginative and short-sighted—they create scarcity without driving long-term growth or strategic value," he wrote.
He proposed an alternative framework allocating treasury funds across multiple initiatives. His suggestion includes 30% for strategic buybacks, 30% for liquidity provision, 20% for yield generation, 15% for ecosystem investments, and 5% for protocol insurance.
Messari Crypto researcher Patryk voiced similar concerns. He suggested that while structured plans have merit, flexibility remains crucial. "It's just difficult to announce a concrete plan for the funds at the beginning of buybacks, like those that Arbitrum just announced. Remain flexible," he stated.
The buyback announcement comes amid other developments for Arbitrum. ARB recently secured a listing on Robinhood. The token also gained community support for its BoLD governance proposal aimed at enhancing decentralization.
Despite these positive signals, market sentiment remains cautious. "I think now may be a good time to short. Or sell. Or both," Yogi remarked.
According to BeInCrypto data, ARB was trading at $0.33, down almost 9% since Tuesday's market open. The effectiveness of the buyback strategy in reversing this trend remains uncertain.