Arbitrum’s lock-up volume has increased by 640 times in the past 15 days, which indicates that the market may be optimistic about DeFi assets.
Original title: ” Arbitrum Bridge Activity Report: Layer 2 has a clear lead, Polygon may soon be surpassed “
Written by: Ashwath Balakrishnan, Jeremy Ong
Translation: Kyle
Key points
Less than a week after its launch, the value locked on the Arbitrum Bridge is approaching Polygon. In the past few weeks, Avalanche, Fantom and Harmony have released a series of liquidity mining plans. Nevertheless, Arbitrum has been able to surpass its EVM-compatible competitors. This proves how much the market expects the launch of Arbitrum.
Arbitrum’s bridge only locked $22 million on September 1, which means that the bridge only accounts for 0.047% of the total TVL of the Ethereum Bridge. In the past two weeks, some speculative income farming and established agreements have pushed this share up to 32%-increasing the bridge’s share by 640 times in just 15 days.
Arbitrum’s take-off in early September coincided with a sharp drop in the median daily gas price on the Ethereum mainnet. In theory, this makes sense, because Layer 2 like Arbitrum can scale Ethereum’s throughput to a large extent. However, it is difficult to determine whether this is just an exciting coincidence or whether there is a causal relationship.
The future of Layer 2 looks very promising (although there are some minor issues). The market may be bullish on DeFi assets, even though these assets have performed poorly in the past six months. Blue chips such as CRV, SNX, AAVE and COMP led the rebound, followed by derivative protocol tokens such as PERP and MCB. Despite undoubtedly having the safest product market fit, DEX still lags behind other parts of DeFi, highlighting potential opportunities.
Market dynamics
The market rebounded for the second day in a row, and each trading day (Asia, Europe, North America) opened stronger. CRV is definitely a surprise today, but other top DeFi tokens are also in a green state.
Busy Arbitrum Bridge
Ethereum has the most capitalized DeFi ecosystem, with more than 100 billion U.S. dollars of capital locked in smart contracts. Therefore, it makes sense to assess how much of this capital is transferred to other networks.
Less than a week after its launch, the value locked on the Arbitrum Bridge is approaching Polygon. In the past few weeks, Avalanche, Fantom and Harmony have released a series of liquidity mining plans. Nevertheless, Arbitrum has been able to surpass its EVM-compatible competitors. This proves how much the market expects the launch of Arbitrum.
The sharp increase over the weekend brought the total value locked on the Arbitrum Bridge to $2.4 billion. On the other hand, the Polygon Bridge TVL has been declining slowly and has been hovering at around US$2.5 billion since its peak of US$4.6 billion. It is worth noting that Fantom and Avalanche have done a good job in attracting funds.
Arbitrum’s bridge contract only locked $22 million on September 1, which means that the bridge only accounts for 0.047% of the total TVL of Ethereum’s various bridges. In the past two weeks, some speculative income farming has pushed this share up to 32%-increasing the bridge share by 640 times in just 15 days.
As mentioned above, most of Arbitrum’s capital is planting a highly speculative token, NYAN, so this does not necessarily indicate that this is driven by high-quality projects migrating to Arbitrum. However, given the scale of the project that will soon be deployed on Arbitrum, don’t naively expect that this will not happen.
Mainstream currencies account for the majority of bridge assets
In-depth study of the asset segmentation bridged from Ethereum, it is not surprising that WETH/ETH, USDC, USDT, DAI and WBTC account for nearly 90% of the asset value.
The reason is obvious: the liquidity of these assets on the Ethereum DeFi layer is very high, partly because of their large market capitalization. Most DeFi liquidity pools and income farming support one or all of these assets, making them the most logical choice for bridging assets and entering new ecosystems.
Coincidence or the explosion of Layer 2’s influence?
Arbitrum’s take-off in early September coincided with a sharp drop in the median daily gas price on the Ethereum mainnet. In theory, this makes sense, because Layer 2 like Arbitrum can scale Ethereum’s throughput to a large extent. However, it is difficult to determine whether this is just an exciting coincidence or whether there is a causal relationship.
It is worth noting that NFTs seem to have lost momentum recently-they have made a huge contribution to the gas price increase from July to September. The slowdown of the NFT boom has undoubtedly played a vital role in reducing gas prices again.
DeFi fall?
So from the four charts above, it is clear that the future of Layer 2 looks very promising (although there are some minor issues). The market may be bullish on DeFi assets, even though these assets have performed poorly in the past six months.
Blue chip stocks such as CRV, SNX, AAVE and COMP have begun to lead the rebound, followed by derivative protocol tokens such as PERP and MCB. Despite undoubtedly having the safest product market fit, DEX still lags behind other parts of DeFi, which highlights potential opportunities for investors.
MKR’s recent performance even lags behind big currencies like ETH and BTC, which is unusual considering its strength earlier this year.
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