The operational path of Arbitrum and outlook for 2023
Arbitrum has many commendable aspects in its ecological operation.Author: Chloe, Chain Teahouse
Arbitrum is currently the most complete and user-friendly project among all L2s, with an average monthly growth rate of nearly 40% last year, and its trading volume even surpassed Ethereum. There are many commendable aspects in terms of ecological operation, and this article provides a brief overview.
Arbitrum Development Timeline
Two years ago, in January 2021, Offchain Labs launched a batch of DeFi ecosystem demo products on the Arbitrum testnet.
In May 2021, Offchain Labs deployed the Arbitrum One testnet, with over 250 teams applying for access at that time.
In September 2021, Arbitrum officially launched the mainnet Arbitrum One and announced the completion of a $120 million Series B funding round.
In June 2022, the Odyssey project was launched, allowing users to earn airdrop rewards by participating in the Odyssey NFT promotion or using the Arbitrum ecosystem. Optimism also has a similar mechanism.
Due to a large influx of new users leading to increased transaction costs and even downtime, the Odyssey had to be paused. However, this prompted the team to boldly release the Nitro mainnet based on the WASM architecture.
In August 2022, an upgraded version of Nitro was launched, significantly improving efficiency.
After completing the Nitro upgrade, Arbitrum far outpaced OP in terms of trading volume and daily active users, achieving a market share of 52.5%.
Currently, Arbitrum does not have its own governance token, while Optimism's token has achieved double-digit returns since the beginning of 2023, indicating that their operational sequences are completely opposite. Arbitrum prioritized technical upgrades before issuing tokens, conducting airdrops, and establishing an ecological fund.
Arbitrum's DApp Ecosystem
The regular DEX and lending applications on Arbitrum do not have many highlights; the vast majority of people still trade on the Arb versions of Uniswap and Sushiswap. However, most projects in Arbitrum's DeFi ecosystem are centered around GMX.
GMX is a decentralized derivatives trading platform that does not require KYC verification; anyone with an on-chain wallet can participate in trading. It also features a swap function, allows leverage of up to 30 times, supports the Avalanche blockchain, and offers features like oracle pricing with zero spreads that competitors do not have.
Last year, GMX ranked 8th among all protocols/blockchains, with over 120% fee growth, becoming a project that thrived in a bear market.
By the end of last year, there were 58 projects on Arbitrum with over 1,000 user addresses and 39 projects with over 10,000 user addresses.
Currently, the most traded protocols on Arbitrum include Uniswap, Sushiswap, GMX, Hop, TreasureDAO, Galxe, Stargate, and dopex.
The top 3 DApps by TVL are GMX, Uniswap V3, and SushiSwap. Additionally, the gaming project Magic Network (TreasureDAO) aims to build a Nintendo-like platform on web3, providing various underlying services for different games, showcasing the initial form of its ecosystem.
Arbitrum's Outlook for This Year
In October last year, Offchain Labs mentioned in a speech at SmartCon 2022 that Arbitrum's future plans would focus on:
Continuing to reduce costs and improve TPS
Decentralization
Decentralizing management and authorization software upgrades
Decentralizing validators
Decentralizing sequencers
The market expects the following actions from Arbitrum this year:
Restarting the Odyssey project
Issuing tokens, establishing ecological funds, strategic investment funds, etc.
Strengthening the current strong sectors of Arbitrum (DeFi and gaming)
Incubating the ecosystem on Nova (social + gaming)
Current Developer Ecosystem Trends
Electric Capital found that while Ethereum has the most developers, most of the monthly active developers are actually working on other ecosystems.
Developer activity in 2022 was much higher than during the bear market in 2018. Despite being a turbulent year for the crypto space, the industry attracted over 61,000 new developers, setting a historical record.
The proportion of new developers on Ethereum is about 16%, but developers on Solana, NEAR, and Polygon grew by 40% year-on-year. Sui, Aptos, Starknet, Mina, Osmosis, Hedera, Optimism, and Arbitrum are also attracting developers.
It can be seen that developer participation is a "leading indicator of creating on-chain value." Developers will build killer dApps, bringing value to end users, continuously attracting more users, and subsequently attracting more developers, achieving the ultimate goal of a continuous cycle.
Conclusion
Of course, while OP is currently leading, there are still many shortcomings. However, Arbitrum has been operating its core fraud-proof functionality in a complete form for some time. Before zkEVM matures, it will continue to focus on OP, with zk as a supplement.
If all goes well, Arbitrum will continue to lead the L2 market in the future. The only unresolved question is when the tokens will be issued and what the market reaction will be.
