Ethereum layer 2, Arbitrum, currently has over $1.5 billion in total value locked (TVL) after reaching highs of $2.6 billion on the 16th of September. The surge has seen it improve by more than 3200% over a single week. The TVL growth was achieved in less than two weeks after launch.
L2beat, a layer 2 analysis company, observed that Arbitum’s TVL hit an all-time high of $1 billion around September 11. This was due to DeFi degens rushing to invest on the network. Within the next two days, the platform hit $1.5 billion before ultimately surpassing the $2.5 billion mark within another few days.
Arbitrum is a product of Off-chain Labs launched following a $120 million seed round. Given the rising costs of transactions on the Ethereum network, most network users are moving to layer 2 scaling solutions and other networks.
Arbitrum currently has the majority of all capital locked in pure layer 2 networks, which excludes networks like Polygon. The closest competition to it is Optimism with approximately $250 million in TVL.
Given Off-chain Labs’ good standing in the Ethereum community, the Arbitrum platform was highly anticipated by network users. Some of the top name Defi platforms have since adopted the network. Some of these include: Bancor, Aave, Synthetix and Uniswap. The high interest is already reflected in the market dominance achieved so quickly, and there are indications it will keep on developing and attracting new users.
The most used platform in the Arbitrum network is its first farming option, Arbinyan. It has more than 95% of all new investments on the platform. The inventors chasing the multi-thousand percentage returns offered for providing liquidity.
Token Rumours
Rumours within the crypto community indicate that Arbitum may be releasing its own native token. The community believes the layer 2 solution would follow the line of the other layer 2 solutions like Dydx that had airdropped native tokens to early users.
However, Off-Chain Labs have since confirmed they are not planning to offer any such native token. Arbitrum clarified on Twitter that they are not launching a native token.
Reminder: there is no Arbitrum token. Anything claiming to be an official Arbitrum token is a scam.
— Arbitrum (@arbitrum) September 11, 2021
The returns on airdropped native tokens have seemed quite handsome for the crypto community. For example, on launching its native token, Dydx gave the platform’s most active users $50,000. Some believe the same would happen for Arbitrum.
That explains why the network’s bullish TVL run slowed down significantly after the declaration that there would be no native token. The protocol lost approximately 50% of its TVL after the announcement.
Despite the loss of some of Arbitrum’s TVL, it has remained strong and has clearly impacted the crypto community. While other platforms like Harmony, Fantom and Solana’s TVL were shrinking, Arbitrum’s TVL was growing.
Whether this is the layer 2 solution we will all be using in a couple of years is still a matter of debate, however it is undeniable that Arbitrum is moving in the right direction and already making a splash.