Arbitrum is one of Ethereum’s many expansion solutions. Simply put, it is an off-chain protocol managed by on-chain contracts, which can achieve high tps and lower-cost smart contract deployment and operation, while taking advantage of Ethereum’s decentralization and security.
The principle of implementing this design is to shard the public chain data and use a method that combines the computing advantages of the off-chain Internet with the advantages of the blockchain to achieve Ethereum's urgent expansion needs while reducing costs. This is a huge advantage over side chains or other alternative L1s.
Project Vision
Gas reduction: further reduce the transaction cost on the chain, which is much lower than other public chains;
Improved TPS: It can accommodate more transactions, improve user experience, and meet more industry needs;
Compatibility: On-chain tools enable better interaction between public chains and technologies.
Arbitrum Team and Financing
Arbitrum One's development team, Offchain Labs, is headquartered in New York. Its founder, Ed Felten, is a professor of computer science at Princeton University and former chief technology officer of the Obama White House. He founded Offchain Labs with two other co-founders in the fall of 2018.
Arbitrum was originally a research project at Princeton in 2014, but he, Steven and Harry Kalodner later spun off the project and eventually formed a company.
From 2019 to 2021, Offchain Labs received a total of US$123.7 million in three rounds of investment.
Offchain Labs completed a $3.7 million seed round of financing led by Pantera Capital in March 2019, a $20 million Series A financing in April 2021, and another $120 million in financing in August of the same year at a valuation of $1.2 billion, led by Lightspeed Venture Partners.
Ecological status
TVL：
Arbitrum currently has a TVL of $1.9 billion, ranking fourth among all L1 or L2, and has a 3.6% TVL share among all networks. The growing TVL is due to the current Dapps developed based on Arbitrum, which have seen a spurt of growth in the past year.
Average daily active users:
Over the past three months, the number of daily active users has maintained a good growth rate.
Arbitrum App Introduction
1.GMX.io
Project Introduction: On-chain decentralized derivatives exchange
GMX is an on-chain derivatives exchange, which is comparable to projects such as DYDX and PERP, but GMX has unique advantages. 30% of the income will be distributed to token holders, the annual income of the protocol exceeds 100 million, and the annualized rate of single-coin staking is high.
2.Treasure DAO
Project Description: Decentralized video game console
Magic is a gaming platform in the Arbitrum ecosystem, similar to Gala, but better. It is called the Web3 Nintendo. In addition to incubating games, it also covers DEX and NFT trading platforms. The recently popular The beacon is one of its works. As a newcomer in the gaming sector, it has great potential in the future.
3.Gains
Project Introduction: Securities, Cryptocurrency, and Foreign Exchange Futures DEX
The biggest feature of Gains is that it supports transactions of various targets, and 32.5% of the income is distributed to token holders.
4.Camelot
Project Introduction: An ecosystem-centric and community-driven DEX
Camelot supports the launch of new protocols on Arbitrum and provides them with tools to launch, guide, and maintain growth liquidity. Supports custom liquidity incentives. By using the Nitro Pools function developed by Camelot DEX, AMM fund pool deployers can customize liquidity incentive parameters including incentive methods, reward tokens, incentive start and end times, etc., to meet the liquidity needs of projects at different stages.
5.Jones DAO
Project Introduction: Jones DAO is a yield, strategy and liquidity protocol for options.
Its vault enables one-click access to institutional-grade options strategies while unlocking the liquidity and capital efficiency of DeFi options through asset tokens backed by yield options.
6.Vela Exchange
Project Introduction: Vela Exchange is a decentralized exchange with advanced perpetual trading capabilities, community-centric incentives, and scalable infrastructure. The recent single-day transaction volume reached $340 million, twice that of GMX.
7.Winr Protocol
Project Introduction: JustBet, a decentralized betting platform, uses Chainlink to verify random numbers to ensure authenticity. The Beta version is now online and needs to be experienced on ARB. The overall product experience is average, but the entire framework has been built.
Winr Protocol itself is a kind of liquidity provider for various decentralized web3 products, similar to GMX. Users can put their assets into the liquidity pool and obtain liquidity incentives for staking and their tokens. The capital pool will be used as the counterparty of gamblers. It is the same principle as DEX. Everyone is a market maker and everyone is a dealer, but the token has not yet been launched.
Summarize
Arbitrum has quickly become the preferred second-layer solution for various DeFi and DeFi derivatives projects, with projects such as GMX demonstrating their success on the Arbitrum network. As a result, more and more people believe that Arbitrum will replace Ethereum as the main venue for low-frequency chain financial transactions, while Ethereum gradually develops in the direction of serving on-chain native financial assets and settlement layers.
In the short and medium term, since ZK technology is still not mature enough, Arbitrum seems to be the best choice for scaling Ethereum. In addition, Arbitrum is highly compatible with Ethereum L1 and supports any EVM language, which provides great convenience for developers. At the same time, it can take advantage of Ethereum's huge developer community resources and reduce Gas fees by more than 90% compared to the Ethereum mainnet, thereby increasing user acceptance of on-chain transactions. All these factors together create a highly inclusive environment that can breed innovative DeFi applications.
In order to meet the needs of high-frequency interactive games and social activities, Arbitrum developed a new chain Nova as a solution, which is separated from its DeFi ecosystem. This is also a good attempt.
While Arbitrum has grown significantly without issuing a token, the launch of the token is critical to Arbitrum’s long-term success. The right incentive program can bring billions of liquidity into the network while growing its user base and attracting developers and building community. The distribution of tokens will also determine L2’s governance and the distribution of power within the long-term ecosystem.
Arbitrum’s future development in the DeFi field is even more worth looking forward to.
