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Arbitrum: Betting On A Fast Growing Ethereum Chain (ETH-USD)

Unpublished via ozgurdonmaz/iStock Getty Images

Crypto winter continues as investors wrap up 2022. We can only speculate if he has seen a bearish bottom or if he sees a significant drop in token price in 2023.base asset, 1 A network that has seen significant growth in the last few months is Arbitrum.

What is an arbitrum?

The arbitrum is ethereum (ETH-US Dollar) Layer 2 scaling chain that utilizes optimistic rollup.Due to the drawback of his low TPS on Ethereum, Arbitrum and polygon (MATIC-USD) is necessary to truly scale the Ethereum network. Arbitrum can increase transactions per second by batching transactions together and significantly reducing user fees associated with performing activity on the Ethereum blockchain.

Arbitrum’s core developers are off-chain labThe developers envision an optimistic rollup of Arbitrum Main function Scaling Ethereum in a Decentralized Way:

Its design focuses on avoiding introducing centralization or trust assumptions, and is therefore a clear and rigorous final win for the Ethereum ecosystem.

Arbitrum is unique among many Ethereum scaling chains in that it does not have a native token. Arbitrum users and developers will be able to bridge Ethereum or stablecoins to Arbitrum and transact on the secondary chain without paying gas through the native currency of the L2 chain. This goes against networks like Polygon, which uses his MATIC token for gas on secondary chains.

Arbitration network growth

Arbitrum has seen a pretty explosive increase in the number of daily active users. According to Token Terminal, this week’s average he’s over 74,000 DAU. That’s a 25% increase from the previous week’s 59,000 DAU, and an almost 14-fold increase from his 5,000 DAU in the same week a year ago.

Arbitrum DAU (weekly average)

Arbitrum DAU (weekly average) (token terminal)

This increase in user numbers has increased the share of Layer 2 transactions. Stacking transactions on Optimism and Arbitrum with transactions on Ethereum not only yields more ecosystem transactions overall, but a larger share of those transactions are occurring on his Arbitrum. understand.

Layer 2 vs ETH

Layer 2 vs ETH (Dune Analysis/Markov)

With the data still a few weeks away from being final, both Arbitrum and Optimism have seen significant increases in the volume of transactions occurring every three months over the past three months, with the exception of December. However, Arbitrum is growing slightly faster. Arbitrum and Optimism were nearly equal in August with just over 2.4 million transactions each. By the end of November Arbitrum had processed his 8.1 million transactions. This is nearly 2 million more for him than for Optimism.

These transactions represent a fairly diverse set of on-chain interactions. Arbitrum has seen growth in its NFT footprint over the past few weeks. The table below is sorted by buyer.

blockchain NFT sales volume buyer change of buyer
ethereum $432.8 million 112k -18%
Solana (SOL-USD) $57 million 70k -57%
Binance (BNB-USD) $4.4 million 26.2k +80%
Arbitrum $979,000 23.2k +122%
flow (FLOW-USD) $5.2 million 19.7k -15%

Source: CryptoSlam, last 30 days

Arbitrum’s NFT market has generated over 23,000 buyers in the last 30 days. A 122% increase from the previous quarter versus a 25% decline in the overall NFT market. That buyer figure also positions Arbitrum as his fourth-ranked blockchain by unique buyer, behind Ethereum, Solana, and Binance Smartchain. Despite the big move by buyers, Arbitrum’s NFT sales volume is just under $1 million, well below its peers. From the outside, his NFTs in the early days of Arbitrum appear to be aimed at lower-cost buyers. This is a market that Solana has served well in the past.

From a DeFi perspective, Arbitrum is the top 5 chain by raw USD value figures.

Arbitrum TVL

Arbitrum TVL (Defilama)

On November 14th, Arbitrum was the sixth largest chain by TVL. A month later, Arbitrum passed both Polygon and Avalanche (AVAX-USD) totaling $1.1 billion locked at the time of filing.

rank blockchain DeFi protocol TVL 1m TVL change protocol superiority
1 ethereum 612 $24.62 billion -4.90% 26.1%
2 binance 512 $4.46 billion -13.27% 52.9%
3 thoron (TRX-USD) 11 $4.4 billion -1.14% 65.0%
Four Arbitrum 149 $1.1 billion 24.39% 39.6%
Five polygon 347 $1.06 billion -4.09% 24.8%
6 avalanche 277 $847.17 million -11.02% 39.1%
7 optimism (OP-USD) 92 $550 million -11.11% 18.9%
8 phantom (FTM-USD) 269 $463.33 million 9.19% 20.6%
9 Chronos (CRO-USD) 86 $425.07 million -40.18% 44.1%
Ten Solana 91 $290.67 million -16.70% 31.3%

Source: DeFi Rama

Arbitrum has climbed the rankings quickly in dollar-denominated TVL and was one of the fastest growing chains on that metric last month. In dollar terms he is one of two chains that have performed well in the TVL in the last 30 days and ranked in the top 10.


While TVL is a good way to measure a blockchain’s DeFi footprint, there are other metrics to consider when evaluating a chain’s TVL. A healthy DeFi footprint, for example, shows a diversification of TVLs spread across different protocols. Arbitrum’s network has about 150 protocols, but about 40% of his DeFi footprint on Arbitrum comes from a single protocol. Its protocol is GMX (GMX-USD) When expressed concern About that project on BlockChain Reaction.

GMX is one of the hottest crypto projects of the year, acting as an Arbitrum proxy for speculators unable to bet on Aribtrum’s growth through native tokens. I don’t think GMX has any systemic risk to Arbitrum, but some of the increased network usage is due to the protocol potentially having issues with its tokennomics, so keep that in mind. must be


Arbitrum is one of the few bright spots in the broader public blockchain market these days. We have found that Ethereum’s scaling solution is much better from a user growth perspective than some of the higher throughput layer 1 chains that compete more directly with Ethereum. In my view, Arbitrum’s lack of a native token may indicate that the core development team’s goals are somewhat aligned with what proponents of public blockchains as a legitimate utility are seeking. there is. This means you don’t have to build a solid infrastructure and worry about getting “out of numbers” from coins thrown at retail investors.

Of course, given the lack of native tokens, it is not possible to directly “invest” in Arbitrum through Cryptorails. The best way to get in touch with Arbitrum is through an application built directly on Arbitrum or by purchasing Ethereum. The latter is much safer in crypto winters.

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