The native governance token for the blockchain Arbitrum (disclosure: sponsor of Unchained) reached an all-time high Tuesday morning.

ARB climbed to a peak of $1.83, growing nearly 13% in the past 24 hours and about 30% in the past seven days, according to data from CoinGecko. The token has since slid to $1.71 at press time. 

Arbitrum is a layer 2 scaling technology that aims to make Ethereum more efficient by bundling many transactions and posting them on Ethereum’s digital ledger book. Through Arbitrum, users can execute transactions on Ethereum more quickly and cheaply. 

With more than $10 billion in value locked in its smart contracts, Arbitrum is the largest layer 2 rollup, data from L2BEAT shows. 

The ARB token, airdropped to community members in March 2023, is a governance token that enables token holders to vote on protocol upgrades. Its all-time high occurred less than one week after the OP token from rival layer 2 rollup Optimism reached an all-time high. 

The surge in both governance tokens stems from the market’s expectations for Ethereum improvement proposal (EIP) 4844, said Steve Kim, CEO and co-founder of crypto research firm Four Pillars.

The “market expects EIP-4844 to be the catalyst for rollup scalability,” wrote Kim to Unchained on Telegram. “ETH people believe that 4844… can increase the TPS [transaction per second] of rollups and at the same time reduce the gas fee (because after 4844, rollups don’t have to compete against ETH native apps to use ETH blockspace), so it is bullish for L2s in general.”

Ethereum researcher Dankrad Feist and Ethereum co-founder Vitalik Buterin are two of the co-authors of EIP-4844. The EIP will employ proto-danksharding, a concept named after Feist that is designed to increase the total number of transactions Ethereum could process. 

“Danksharding is the full realization of the rollup scaling,” Ethereum Foundation posted on its blog. “Danksharding will bring massive amounts of space on Ethereum for rollups to dump their compressed transaction data. This means Ethereum will be able to support hundreds of individual rollups with ease and make millions of transactions per second a reality.”

Ethereum developers will implement EIP-4844 on Jan. 17, when Dencun, the next major Ethereum upgrade, will go live on testnet Goerli, Ethereum educator Anthony Sassal posted on X.