3 reasons why Arbitrum TVL leads in Ethereum layer 2

by Gordon James

The Arbitrum TVL project is the first of its kind to be developed on Ethereum layer 2. The project was planned and launched in 2018, and is considered more secure than other similar projects which are being built on Layer 1 protocol.

The “tvl crypto” is a cryptocurrency that provides users with an innovative way to trade and store their funds. tvL has been around for quite some time, but recently it has been leading in the Ethereum layer 2 space.

Since its inception, Arbitrum, one of Ethereum’s Layer 2 networks, has gotten a lot of interest from crypto consumers and developers. Arbitrum has provided 41.88 percent of all Layer 2 TVL, totalling $2.25 billion as of Dec. 8, according to Footprint Analytics. Arbitrum has risen to the top of all Layer 2 networks.

3 reasons why Arbitrum TVL leads in Ethereum layer 2Footprint Analytics – TVL Share by Layer 2 data source

Arbitrum’s primary network went live on September 1, 2021, which is a little late in comparison to other Layer 2 networks. Despite this, Arbitrum’s TVL immediately outperformed the competition, surpassing all expectations.

3 reasons why Arbitrum TVL leads in Ethereum layer 2Footprint Analytics – Layer 2 TVL Growth Trending is the source of the data.

What distinguishes Arbitrum from the competition?

The first reason is the low cost of technological transfer.

In the near run, developers choose Arbitrum’s Optimistic rollups solution over the more technically demanding ZK rollups method. However, because of its quicker speed and increased security, ZK rollups’ network may be able to catch up in the long run.

Reason number two is the low cost of gas.

Arbitrum handles 40,000 transaction requests per second, much more than Ethereum’s 15-30, significantly decreasing network congestion, speeding up transactions, and lowering transaction fees. Arbitrum’s transaction cost is 1.8 Gwei, compared to Ethereum’s 64 Gwei, approximately 36 times that of Arbitrum, according to external statistics.

The third reason is a more open ecology.

Many people may wonder why the Optimistic network, which employs the same Optimistic rollups approach as Arbitrum, isn’t as good. More than 400 DeFi projects were onboarded before Arbitrum’s public debut, and dozens of projects were already live at the same time. This enables users to carry out a range of tasks inside the ecosystem. On the other side, Optimistic employs a whitelisting system, allowing only whitelisted projects to be distributed on its primary network.

It was not the basic DeFi protocol that made Arbitrum famous, but rather the many “degen” investments—those promised unscrupulously large returns—due to Arbitrum’s open deployment process.

ArbiNYAN, which draws investors to bet their native tokens with returns of 1000 percent or more, is significantly responsible for Arbitrum’s first TVL growth. These undertakings, although not necessarily legal, allowed for the emergence of a new ecology.

The Arbitrum Ecosystem: An Overview

Arbitrum currently has 44 active projects, which is not a significant number. DEX, loan, and asset categories are the most popular in the DeFi category.

DEX accounts for 56 percent of TVL, while assets account for 18 percent and lending contributes for 17.8%.

3 reasons why Arbitrum TVL leads in Ethereum layer 2Footprint Analytics – TVL Share of Category On Arbitrum is the data source. 

Degen projects are no longer in the top five TVL rankings for DeFi projects, with mainstream developments climbing to the top. With a TVL of $420 million, Curve is in first position.

3 reasons why Arbitrum TVL leads in Ethereum layer 2Footprint Analytics – Top 5 DeFi Protocols on Arbitrum is the source of the data.

Conclusion

With $124 million in Series A and B investment and a value of $1.2 billion, Arbitrum, a prominent participant in the Ethereum growth, is already drawing a lot of financial interest. Arbitrum is not presently in the process of launching a cryptocurrency, and Offchain Labs, the co-founder of its development team, has declared that there are no intentions to do so in the foreseeable future.

Arbitrum is still in its infancy, therefore we anticipate it to continue to grow and attract more developers and investors.

Footprint Analytics is the source of this report.

What does it mean to have a footprint?

Footprint Analytics is a one-stop shop for analyzing blockchain data and uncovering insights. It cleans and combines on-chain data so that users of any skill level may begin exploring tokens, projects, and protocols right away. Anyone may create their own personalized charts in minutes using over a thousand dashboard templates and a drag-and-drop interface. With Footprint, you can discover blockchain data and invest more wisely.

Posted in: Technology, Ethereum

3 reasons why Arbitrum TVL leads in Ethereum layer 2

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