Guest contributor, Karen Shidlo, delves deeper...
One of the most well-known Layer 2 solutions, Arbitrum describes itself as a “network designed to scale Ethereum.” A valuable tool for any company who wishes to build on Ethereum while avoiding high gas fees and slow transaction times, Arbitrum continues to gain traction in 2023, with Opensea enabling creators to list NFTs on the Ethereum roll-up and with data showing it to be the leading player of all Layer 2 networks.
With a wide range of Layer 2 solutions available across the blockchain industry, it is worth examining what makes Arbitrum especially unique and why such big crypto players such as MetaMask and Coinbase are showing their support for it.
Arbitrum One Mainnet and $120 Million Funding Push It Forward
Arbitrum One mainnet, which was officially launched on August 31st, 2021, resulted in a spike in interest by some of the top decentralized finance protocols, including Aave, Curve and Uniswap. This sudden surge was driven by a necessity for increasing throughput and lowering fees for users, and backed with trust due to the $120 million Series B funding round announced around the same time.
Since then, Arbitrum has gone from strength to strength, with continued development on their optimistic rollup enabling much of the transactions on the Ethereum main chain to be completed on the second layer, drastically improving speed and efficiency.
But what makes Arbitrum so unique?
1. A well-developed ecosystem
The number and quality of Ethereum dApps and infrastructure projects associated with Arbitrum are diverse and plentiful, including Sushi, Uniswap, and lots of other well-established companies.
2. Low Fees
Apart from boosting Ethereum’s transactional throughput, it also minimizes transaction fees at the same time - something it can do thanks to its efficient rollup technology, which cuts down fees to a fraction of what we see on Ethereum.
3. High EVM compatibility
Compatible with the EVM at the byte code level, any language that can compile to EVM works out of the box — such as Solidity and Vyper, making it easy to develop on.
4. Dedicated to growth
Unlike many other layer 2 solutions, Arbitrum does not have its own native utility token(yet), and the team behind it continues to reveal their priority in dedication to the growth of the ecosystem. They put developers first, allowing interested people to build on the developer mainnet weeks before opening Arbitrum One to everyone.
The Layer 2 Solution for the Future?
Let’s highlight some of the biggest and latest achievements since the end of 2022, all of which serve to indicate that the future of Arbitrum looks very bright indeed!
In the last 6 months, the daily trading volumes on Abritrum have increased over 1000, from over 107k transactions to an all-time high of 1.1 million transactions which reached the ATH in January this year.
In December 2022, MetaMask announced an upgrade to its ecosystem that enabled the swaps feature on the Layer 2 networks, Optimism, and Arbitrum, including the Portfolio Dapp. MetaMask users can now swap directly from their wallets and use the feature on MetaMask’s Portfolio Dapp.
In February 2023, Coinbase stated:
“We’re making it faster, easier, and cheaper to accessWeb3. Eligible Coinbase customers can now send and receive ETH, DAI and WBTC on Arbitrum.”
The NFT market on Arbitrum has produced over 23k buyers over the last 30 days; up 122% from the prior period against a total NFT market that is down 25%. That buyer figure also puts Arbitrum as the 4th ranked blockchain by unique buyers behind only Ethereum, Solana, and Binance Smart Chain.
As Fiat24 CTO, Nico Buechel says:
“We have been big proponents of Arbitrum since it first launched. We really value the main advantages that it offers both us and our end-users (namely the speed and affordability), and are so excited to see how the L2 has picked up momentum since the end of 2022. We believe in its potential, and that can easily be seen in the latest figures for TVL shares, revealing Arbitrum as the leading playerof all Layer 2 networks.”
While we are still only in Q1 of 2023 and it may be too early to say definitively, Arbitrum shows the most promise as the strongest player to emerge out of the abundant Layer 2 solutions out there.
Let’s keep an eye on it (and especially for a native token too)!
Karen Shidlo is a digital marketing native with seven years of experience in traditional advertising agencies before moving into the Web3 space. Passionate about the power of digital currencies and blockchain technology, she works for Fiat24 in Switzerland to bring seamless peer-to-peer payment experiences to the masses.