On September 1st, Arbitrum, the popular Layer 2 scaling platform for Ethereum, successfully implemented the “Nitro” update. This now brings even faster transactions and lower fees. To do this, Arbitrum relies on Optimistic Roll-Up technology, in which transactions are bundled, compressed and only then validated as a bundle.
Arbitrum is already the largest Layer 2 platform in crypto space, with $2.8 billion Total Value Locked (TVL), according to L2-Beat. Much of the DeFi activity on the Ethereum network could soon take place here.
The network also wants to grow beyond the DeFi space. With the “Nova” update, Arbitrum created its own chain for gaming and social apps. This also applies to the popular Internet forum Reddit, which has recently started using Arbitrum for its blockchain-based community points.
This should offer users another opportunity to benefit from the growth of the ETH network. The second-largest cryptocurrency, meanwhile, is in the final stages of the merge that heralds Ethereum 2.0 and the move to the proof-of-stake consensus mechanism. More on this in the podcast:
Arbitrary Token Airdrop
Unlike other Layer 2 blockchains, Arbitrum does not currently have its own token that can be used to represent the value of the network. For Arbitrum, this represents another competitive disadvantage that they may want to remedy soon. Platforms such as Polygon or Optimism already use their own tokens, which can be used to pay fees and manage the network. In order to sell these online, Optimism, for example, subsequently airdropped its OP token to active users of the blockchain.
Anyone who is active on Arbitrum could therefore also qualify for such an airdrop. And indeed, a kind of DeFi scavenger hunt is currently running on the network, which is a logical basis for qualifying for a future airdrop. Users can join the “Arbitrum Guild” here and gradually complete tasks. For example, acquiring smaller amounts of DAO and DeFi tokens. The whole thing is also suitable for a quick introduction to the numerous applications on Arbitrum.
A choice of dApps
The largest layer 2 chain for Ethereum graces an extensive DeFi ecosystem. Many well-known applications on Ethereum already allow access via Arbitrum. These include Uniswap, Sushiswap and Curve Finance. But Arbitrum’s own projects are also on the rise.
So does GMX. The decentralized trading platform currently ties up the majority of the capital on Arbitrum with $297 million in total value locked. It is particularly popular with traders who find the fees on Ethereum too high. Here BTC, ETH and other cryptos can be traded with leverage. In addition, the GMX token can be staked. Unlike on ordinary DeFi platforms, however, the staking rewards are paid out in ETH. GMX is proud to be part of the new “real yield” DeFi trend. Furthermore, options and derivatives can be traded on trading platforms such as Dopex (DPX) or Mycelium (MYC), which means that professional traders should also benefit from Arbitrum’s DeFi ecosystem.
Numerous infrastructure protocols also offer an opportunity for participation. These include, for example, Synapse (SYN) or Stargate (STG), which make it possible to easily exchange tokens across chains. For example, USDC on the Ethereum blockchain to ETH on Arbitrum or others. For the contribution of the required liquidity in the corresponding token pools, returns can also be earned here and at the same time a contribution can be made to the maintenance of the network. However, anyone working with cross-chain protocols should know that they always come with some risk.
The Future of Ethereum
Compared to the comparatively slow Ethereum blockchain, Arbitrum is almost at the speed of light. However, since the chain is based on Ethereum and also uses ETH as a coin to pay fees, the handling should feel very familiar to many. That also speaks for Arbitrum. Because after a short bridging of the tokens you can start directly on Arbitrum. The doors to the high-speed ecosystem will be open from here, giving a glimpse of how the Ethereum blockchain could be running in just a few years.
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