{"id":50469,"date":"2021-10-01T07:00:00","date_gmt":"2021-10-01T04:00:00","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=50469"},"modified":"2025-09-02T18:11:52","modified_gmt":"2025-09-02T15:11:52","slug":"defi-reboot-how-arbitrum-became-ethereums-leading-layer-2-solution","status":"publish","type":"post","link":"https:\/\/u1f987.com\/en\/defi-reboot-how-arbitrum-became-ethereums-leading-layer-2-solution\/","title":{"rendered":"DeFi reboot: how Arbitrum became Ethereum\u2019s leading layer-2 solution"},"content":{"rendered":"<p>Ethereum remains one of the main pillars of the crypto economy, boosted by the rapid growth of the DeFi segment and the unrelenting hype around NFTs.<\/p>\n<p><!--more--><\/p>\n<p>The enormous variety of applications, influx of new users, revived on\u2011chain activity and the associated <a href=\"https:\/\/u1f987.com\/en\/news\/the-invisible-tax-on-ethereum-what-mev-is-and-how-to-counter-it\">MEV<\/a> negative effects have led to Ethereum network congestion. Fees rose to unimaginable levels once again exposing the scalability problem.<\/p>\n<p><script async=\"\" src=\"https:\/\/telegram.org\/js\/telegram-widget.js?15\" data-telegram-post=\"forklog\/21296\" data-width=\"100%\"><\/script><\/p>\n<p>The long\u2011term strategy to boost Ethereum\u2019s performance relies on <a href=\"https:\/\/u1f987.com\/en\/news\/what-is-ethereum-2-0\">a completely different consensus mechanism and sharding<\/a>. However, the current market dynamics and competition imposed by <a href=\"https:\/\/u1f987.com\/en\/news\/the-binance-smart-chain-case-why-users-choose-low-fees-over-decentralisation\">new DeFi ecosystems<\/a> require technologies oriented to the short\u2011 and mid\u2011term horizons.<\/p>\n<p>Various projects have stepped up efforts to build <a href=\"https:\/\/u1f987.com\/en\/news\/what-is-a-layer%e2%80%912-solution-in-blockchain\">second\u2011layer scaling solutions<\/a> (L2). These technologies are designed to reduce network load by bundling transactions and moving part of the computations outside Ethereum \u2014 into sidechains.<\/p>\n<p>The Arbitrum solution developed by Offchain Labs quickly gained popularity \u2014 it has already been integrated by major DeFi projects such as Curve, SushiSwap, <a href=\"https:\/\/u1f987.com\/en\/news\/uniswap-users-back-arbitrum-deployment-of-dex-on-layer-2\">Uniswap<\/a> and <a href=\"https:\/\/u1f987.com\/en\/news\/1inch-network-integrates-arbitrum-layer-2-solution\">1inch<\/a>. <\/p>\n<p>ForkLog examined the features of Arbitrum, uncovered the reasons for the rapid growth of the ecosystem built on it, and learned about the pitfalls of this trendy solution.<\/p>\n<div class=\"wp-block-text-wrappers-keypoints article_keypoints\">\n<ul class=\"wp-block-list\">\n<li>Arbitrum\u2019s L2 technology has quickly gained popularity among numerous DeFi projects thanks to its simple interface, <span data-descr=\"Ethereum Virtual Machine (EVM), Ethereum Virtual Machine\" class=\"old_tooltip\">EVM<\/span>-compatibility, high speed and low fees;<\/li>\n<li>second\u2011layer solutions are not immune to failures due to bugs in code, many <span data-descr=\"decentralized applications\" class=\"old_tooltip\">Dapps<\/span> built on them look immature, liquidity volumes in them are relatively small;<\/li>\n<li>competition among L2 technologies is likely to grow, and the segment will continue to develop even after the Ethereum 2.0 launch.<\/li>\n<\/ul>\n<\/div>\n<h2 class=\"wp-block-heading\"><strong>Arbitrum features<\/strong><\/h2>\n<p>There are two main paths to solving Ethereum\u2019s scalability problem:<\/p>\n<ul class=\"wp-block-list\">\n<li><em>On\u2011chain scaling<\/em> \u2014 changes at the first level of the system, where, as with Bitcoin, the main economic activity currently occurs. Example: the move to <a href=\"https:\/\/u1f987.com\/en\/news\/what-is-ethereum-2-0\">Ethereum 2.0<\/a>, involving a change in the consensus mechanism and other fundamental changes.<\/li>\n<li><em>Second\u2011layer solutions<\/em>, operating over the blockchain. Their deployment does not require changes to the first layer; L2 uses L1 security parameters and other already existing elements, including smart contracts.<\/li>\n<\/ul>\n<p>Second\u2011layer solutions are intended to scale the network in the short\u2011 and mid\u2011term. One of the most promising and advanced approaches to L2 scaling are <strong>Rollups<\/strong>. They reduce network load by bundling transactions and moving part of the computations outside Ethereum \u2014 into <a href=\"https:\/\/u1f987.com\/en\/news\/sidechains-what-they-are-and-how-they-work\">sidechains<\/a>. <\/p>\n<p>There are two main types of Rollups: ZK\u2011Rollups and Optimistic rollups. In the first case cryptographic proofs (SNARKs) are generated, used to include transactions in the blockchain and reconcile states of the base layer and the layer\u20112 chain. <\/p>\n<p>Optimistic rollups rely on \u201cfraud proofs\u201d. They \u201coptimistically\u201d <a href=\"https:\/\/hub.forklog.com\/chto-takoe-optimistic-rollups\/\">assume<\/a> by default that data published to the network is valid unless proven otherwise. <\/p>\n<p>The Arbitrum technology <a href=\"https:\/\/developer.offchainlabs.com\/docs\/rollup_basics\">is based<\/a> on fraud proofs and, therefore, the \u201coptimistic\u201d method of L2 scaling. This approach has several significant advantages:<\/p>\n<ul class=\"wp-block-list\">\n<li>Optimistic rollups are compatible with the Ethereum Virtual Machine (EVM). This means first\u2011layer applications can easily integrate Arbitrum\u2019s L2 technology;<\/li>\n<li>high speed and low transaction costs with limited computational resource requirements and the security guarantees provided by the base Ethereum network.<\/li>\n<\/ul>\n<p>Arbitrum is developed by Offchain Labs, a New Jersey\u2011based startup. In April 2019 the project <a href=\"https:\/\/www.crunchbase.com\/funding_round\/offchain-labs-seed--f12ce4bf\">raised $3.7 million<\/a> in seed investments from Pantera Capital, Compound VC and BlockNation. The alpha version of the product in the same year attracted the interest of Coinbase Ventures, the VC arm of the largest US exchange, which invested an undisclosed amount.<\/p>\n<p>According to Crunchbase, in spring 2021 Offchain Labs <a href=\"https:\/\/www.crunchbase.com\/funding_round\/offchain-labs-series-a--c1ab5228\">closed a Series A round of $20 million<\/a>. <\/p>\n<p>In August the company <strong>raised $100 million<\/strong> from Lightspeed Venture Partners, Polychain Capital, Ribbit Capital, Redpoint Ventures, Pantera Capital, Alameda Research and Mark Cuban, closing the Series B round. At the same time Offchain Labs announced the launch of the Arbitrum One mainnet.<\/p>\n<h2 class=\"wp-block-heading\"><strong>Arbitrum\u2019s rise in popularity<\/strong><\/h2>\n<p>A few months before the mainnet launch UNI token holders <strong>supported<\/strong> Uniswap v3 on Arbitrum. The founder of the decentralised exchange, Hayden Adams, highly praised the potential and prospects of this L2 solution.<\/p>\n<p>Within two weeks of the mainnet launch the total value locked (TVL) in Arbitrum <strong>reached $2.2 billion<\/strong>, significantly surpassing dYdX, Optimism, Loopring and other L2 protocols combined. <\/p>\n<p>Exponential TVL growth began on September 9, when the startup launched the ArbiNYAN yield farming program based on the NYAN token.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\">Farm NYAN on Arbitrum! Eth pool launch 23:00 UTC <a href=\"https:\/\/t.co\/RiOlaNkQqn\">pic.twitter.com\/RiOlaNkQqn<\/a><\/p>\n<p>\u2014 arbinyan (@arbinyan) <a href=\"https:\/\/twitter.com\/arbinyan\/status\/1435723034535542791?ref_src=twsrc%5Etfw\">September 8, 2021<\/a><\/p><\/blockquote>\n<p> <script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>The NYAN price surged from a few cents to nearly $8, then collapsed back to its original levels.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"332\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/ArbiNYAN-1024x332.png\" alt=\"DeFi reboot: how Arbitrum became Ethereum\u2019s leading layer-2 solution\" class=\"wp-image-151331\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/ArbiNYAN-1024x332.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/ArbiNYAN-300x97.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/ArbiNYAN-768x249.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/ArbiNYAN.png 1529w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption>Data: <a href=\"https:\/\/www.defined.fi\/arb\/0x70df9dd83be2a9f9fcc58dd7c00d032d007b7859?cache=d9bef\">Defined<\/a>.<\/figcaption><\/figure>\n<p>Shortly before the mainnet launch Reddit\u2019s social content platform <strong>announced<\/strong> testing of Arbitrum for its Community Points program. In the prospect, the network plans to move MOONS and BRICKS tokens to the Ethereum mainnet.<\/p>\n<p>Among large projects recently integrating Arbitrum is <strong><a href=\"https:\/\/u1f987.com\/en\/news\/1inch-network-integrates-arbitrum-layer-2-solution\">DeFi project 1inch Network<\/a><\/strong>. According to its representatives, L2 support reduced fees and delivered higher transaction speeds.<\/p>\n<p>Against a backdrop of deteriorating market sentiment from the second half of September, activity in the Arbitrum ecosystem cooled somewhat \u2014 as of 30.09.2021 TVL stood at $1.37 billion (-41% in the last seven days).<\/p>\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"985\" height=\"401\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum-TVL.png\" alt=\"DeFi reboot: how Arbitrum became Ethereum\u2019s leading layer-2 solution\" class=\"wp-image-151333\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum-TVL.png 985w, https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum-TVL-300x122.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum-TVL-768x313.png 768w\" sizes=\"auto, (max-width: 985px) 100vw, 985px\" \/><figcaption>Data: <a href=\"https:\/\/l2beat.com\/projects\/arbitrum\/\">L2 Beat<\/a>.<\/figcaption><\/figure>\n<p>Earlier in September, Arbitrum\u2019s TVL growth momentum surpassed 2,000% in a week.<\/p>\n<blockquote class=\"twitter-tweet\" data-conversation=\"none\">\n<p lang=\"en\" dir=\"ltr\">5\/ Amount of Bridged ETH to Arbitrum<\/p>\n<p>In the past 2 weeks, the amount of ETH that has been bridged over to <a href=\"https:\/\/twitter.com\/arbitrum?ref_src=twsrc%5Etfw\">@arbitrum<\/a> has continued to increase <\/p>\n<p>+2014% in the past 7 days with about 660k ETH bridged<\/p>\n<p>Data sources: <a href=\"https:\/\/twitter.com\/l2beatcom?ref_src=twsrc%5Etfw\">@l2beatcom<\/a> <a href=\"https:\/\/twitter.com\/nansen_ai?ref_src=twsrc%5Etfw\">@nansen_ai<\/a> <a href=\"https:\/\/t.co\/PFHnSvujeB\">pic.twitter.com\/PFHnSvujeB<\/a><\/p>\n<p>\u2014 \ud83c\udfae Play Intern \u30b3\u30fc\u30d7 (@playtern) <a href=\"https:\/\/twitter.com\/playtern\/status\/1439224036601389060?ref_src=twsrc%5Etfw\">September 18, 2021<\/a><\/p><\/blockquote>\n<p> <script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>Nevertheless, Arbitrum still far outstrips its L2 rivals in TVL.<\/p>\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"993\" height=\"731\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/L2-List.png\" alt=\"DeFi reboot: how Arbitrum became Ethereum\u2019s leading layer-2 solution\" class=\"wp-image-151335\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/L2-List.png 993w, https:\/\/u1f987.com\/wp-content\/uploads\/L2-List-300x221.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/L2-List-768x565.png 768w\" sizes=\"auto, (max-width: 993px) 100vw, 993px\" \/><figcaption>Data: <a href=\"https:\/\/l2beat.com\/\">L2 Beat<\/a> as of 30.09.2021.<\/figcaption><\/figure>\n<p>Twitter analyst Play Intern believes the rise in Arbitrum\u2019s ecosystem was driven by attractive yields from yield\u2011farming programs and users\u2019 hopes for token airdrops.<\/p>\n<blockquote class=\"twitter-tweet\" data-conversation=\"none\">\n<p lang=\"en\" dir=\"ltr\">6\/ So what caused this surge of inflows?\\n\\nInitially, I believe this could be attributed to the crazily high yields of pool 0 \u201crisk\u2011free\u201d yield farms that sprung up on @arbitrum\\n\\nAnother is perhaps users anticipating an airdrop similar to that of the $GB airdrop for AVAX bridgers <a href=\"https:\/\/t.co\/kolUiQ6rQn\">pic.twitter.com\/kolUiQ6rQn<\/a><\/p>\n<p>\u2014 \ud83c\udfae Play Intern \u30b3\u30fc\u30d7 (@playtern) <a href=\"https:\/\/twitter.com\/playtern\/status\/1439224043131977728?ref_src=twsrc%5Etfw\">September 18, 2021<\/a><\/p><\/blockquote>\n<p> <script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>Yet Arbitrum still leads in TVL by a wide margin compared with its L2 peers.<\/p>\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"993\" height=\"731\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/L2-List.png\" alt=\"DeFi reboot: how Arbitrum became Ethereum\u2019s leading layer-2 solution\" class=\"wp-image-151335\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/L2-List.png 993w, https:\/\/u1f987.com\/wp-content\/uploads\/L2-List-300x221.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/L2-List-768x565.png 768w\" sizes=\"auto, (max-width: 993px) 100vw, 993px\" \/><figcaption>Data: <a href=\"https:\/\/l2beat.com\/\">L2 Beat<\/a> as of 30.09.2021.<\/figcaption><\/figure>\n<p>Twitter analyst Play Intern believes the rise in Arbitrum\u2019s ecosystem was driven by attractive yields from yield\u2011farming programs and users\u2019 hopes for token airdrops.<\/p>\n<blockquote class=\"twitter-tweet\" data-conversation=\"none\">\n<p lang=\"en\" dir=\"ltr\">6\/ So what caused this surge of inflows?<\/p>\n<p>Initially, I believe this could be attributed to the crazily high yields of pool 0 \u201crisk-free\u201d yield farms that sprung up on @arbitrum<\/p>\n<p>Another is perhaps users anticipating an airdrop similar to that of the $GB airdrop for AVAX bridgers <a href=\"https:\/\/t.co\/kolUiQ6rQn\">pic.twitter.com\/kolUiQ6rQn<\/a><\/p>\n<p>\u2014 \ud83c\udfae Play Intern \u30b3\u30fc\u30d7 (@playtern) <a href=\"https:\/\/twitter.com\/playtern\/status\/1439224043131977728?ref_src=twsrc%5Etfw\">September 18, 2021<\/a><\/p><\/blockquote>\n<p> <script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>However, speed and low transaction costs remain decisive. According to L2 Fees, Arbitrum\u2019s network fees are several times lower than those on Ethereum.<\/p>\n<blockquote class=\"twitter-tweet\" data-conversation=\"none\">\n<p lang=\"en\" dir=\"ltr\">7\/ Of course the speed and low tx costs on L2 (\ud83d\udc47 10-12x) are a big factor as users look forward to seeing their favorite ETH applications migrate over to @arbitrum<\/p>\n<p>PS: Fees are bound to get even \ud83d\udd3b cheaper when throttling is finally turned off<\/p>\n<p>Source: https:\/\/t.co\/PyRbiTDteU <a href=\"https:\/\/t.co\/aS2XECnwYz\">pic.twitter.com\/aS2XECnwYz<\/a><\/p>\n<p>\u2014 \ud83c\udfae Play Intern \u30b3\u30fc\u30d7 (@playtern) <a href=\"https:\/\/twitter.com\/playtern\/status\/1439224047200473095?ref_src=twsrc%5Etfw\">September 18, 2021<\/a><\/p><\/blockquote>\n<p> <script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>In the first half of September Arbitrum\u2019s share of TVL among L1\/L2 bridges rose from 0.47% to 32%, becoming comparable to Polygon\u2019s level.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\">0\/ In today\u2019s Delphi Daily, we dove deep into <a href=\"https:\/\/twitter.com\/arbitrum?ref_src=twsrc%5Etfw\">@arbitrum<\/a><\/p>\n<p>We looked at Arbitrum\u2019s bridge activity, its correlation with Ethereum gas, and its spectacular past two weeks.<\/p>\n<p>For a more detailed look \ud83e\uddf5\ud83d\udc47 <a href=\"https:\/\/t.co\/LU5Sa5T3yX\">pic.twitter.com\/LU5Sa5T3yX<\/a><\/p>\n<p>\u2014 Delphi Digital (@Delphi_Digital) <a href=\"https:\/\/twitter.com\/Delphi_Digital\/status\/1438232245282746368?ref_src=twsrc%5Etfw\">September 15, 2021<\/a><\/p><\/blockquote>\n<p> <script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>The surge in Arbitrum\u2019s metrics coincided with a sharp drop in Ethereum\u2019s median gas price.<\/p>\n<blockquote class=\"twitter-tweet\" data-conversation=\"none\">\n<p lang=\"en\" dir=\"ltr\">5\/ Arbitrum\u2019s take-off in early Sept. coincides with a sharp decrease in the median gas price on Ethereum mainnet. <\/p>\n<p>Theoretically L2s like Arbitrum scale Ethereum\u2019s throughput to a great degree. <a href=\"https:\/\/t.co\/l46i2RDyOF\">pic.twitter.com\/l46i2RDyOF<\/a><\/p>\n<p>\u2014 Delphi Digital (@Delphi_Digital) <a href=\"https:\/\/twitter.com\/Delphi_Digital\/status\/1438232270024986626?ref_src=twsrc%5Etfw\">September 15, 2021<\/a><\/p><\/blockquote>\n<p> <script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cTheoretically, L2 solutions like Arbitrum significantly scale Ethereum\u2019s throughput,\u201d<\/p>\n<\/blockquote>\n<p>Experts noted that the future of layer\u20112 solutions looks promising.<\/p>\n<blockquote class=\"twitter-tweet\" data-conversation=\"none\">\n<p lang=\"en\" dir=\"ltr\">6\/ The future of L2s looks extremely promising. <\/p>\n<p>The market may be looking favorably towards DeFi assets, which have had a rough past six months. Blue chips are leading the bounce, followed by derivative protocol tokens. <a href=\"https:\/\/t.co\/7nr3oZh3dV\">pic.twitter.com\/7nr3oZh3dV<\/a><\/p>\n<p>\u2014 Delphi Digital (@Delphi_Digital) <a href=\"https:\/\/twitter.com\/Delphi_Digital\/status\/1438232275628474372?ref_src=twsrc%5Etfw\">September 15, 2021<\/a><\/p><\/blockquote>\n<p> <script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<h2 class=\"wp-block-heading\"><strong>The Arbitrum ecosystem<\/strong><\/h2>\n<p>On the project portal you can view the list of DeFi services that have integrated Arbitrum. Aave, Loopring, Zerion and other well\u2011known platforms plan to follow suit soon.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"538\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum-portal-1024x538.png\" alt=\"DeFi reboot: how Arbitrum became Ethereum\u2019s leading layer-2 solution\" class=\"wp-image-151340\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum-portal-1024x538.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum-portal-300x158.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum-portal-768x404.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum-portal-1536x807.png 1536w, https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum-portal.png 1614w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption>Data: Arbitrum One Portal.<\/figcaption><\/figure>\n<p>The DeFi Llama site lists over 20 projects in the decentralized finance sphere operating on this L2 solution. Their total TVL amounts to around $1 billion.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"555\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/DeFi-Llama-1024x555.png\" alt=\"DeFi reboot: how Arbitrum became Ethereum\u2019s leading layer-2 solution\" class=\"wp-image-151342\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/DeFi-Llama-1024x555.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/DeFi-Llama-300x163.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/DeFi-Llama-768x416.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/DeFi-Llama.png 1383w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption>Data: <a href=\"https:\/\/defillama.com\/chain\/Arbitrum\">DeFi Llama<\/a>.<\/figcaption><\/figure>\n<p>In this sector, and in DeFi overall, Curve leads. It is followed by SushiSwap, which supports many other protocols.<\/p>\n<p>Besides these <span data-descr=\"DEX \u2014 \u0434\u0435\u0446\u0435\u043d\u0442\u0440\u0430\u043b\u0438\u0437\u043e\u0432\u0430\u043d\u043d\u044b\u0435 (\u043d\u0435\u043a\u0430\u0441\u0442\u043e\u0434\u0438\u0430\u043b\u044c\u043d\u044b\u0435) \u0431\u0438\u0440\u0436\u0438\" class=\"old_tooltip\">DEX<\/span>, Arbitrum also hosts Balancer, DODO, Swapr and Uniswap.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"532\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_Dexes-1024x532.png\" alt=\"DeFi reboot: how Arbitrum became Ethereum\u2019s leading layer-2 solution\" class=\"wp-image-151344\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_Dexes-1024x532.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_Dexes-300x156.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_Dexes-768x399.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_Dexes.png 1200w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<p>In the image below are some derivative platforms and synthetic asset platforms that use this advanced L2 solution:<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"532\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_Derivatives-1024x532.png\" alt=\"DeFi reboot: how Arbitrum became Ethereum\u2019s leading layer-2 solution\" class=\"wp-image-151345\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_Derivatives-1024x532.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_Derivatives-300x156.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_Derivatives-768x399.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_Derivatives.png 1200w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<p>There are also lending protocols on Arbitrum, also important for the industry.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"532\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_Lending-1024x532.png\" alt=\"DeFi reboot: how Arbitrum became Ethereum\u2019s leading layer-2 solution\" class=\"wp-image-151346\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_Lending-1024x532.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_Lending-300x156.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_Lending-768x399.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_Lending.png 1200w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<p>There are already many gaming and NFT applications. Here are some of them:<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"532\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_NFT-1024x532.png\" alt=\"DeFi reboot: how Arbitrum became Ethereum\u2019s leading layer-2 solution\" class=\"wp-image-151347\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_NFT-1024x532.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_NFT-300x156.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_NFT-768x399.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_NFT.png 1200w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<p>Modern DeFi ecosystems would be hard-pressed to function without yield optimisers and other services that attract users with liquidity mining programs.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"532\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_Yield-1024x532.png\" alt=\"DeFi reboot: how Arbitrum became Ethereum\u2019s leading layer-2 solution\" class=\"wp-image-151348\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_Yield-1024x532.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_Yield-300x156.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_Yield-768x399.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_Yield.png 1200w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<p>Meme-token platforms built on Arbitrum enrich the already colourful DeFi palette.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"532\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_Memes-1024x532.png\" alt=\"DeFi reboot: how Arbitrum became Ethereum\u2019s leading layer-2 solution\" class=\"wp-image-151349\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_Memes-1024x532.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_Memes-300x156.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_Memes-768x399.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/Arbitrum_Memes.png 1200w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<h2 class=\"wp-block-heading\"><strong>Bridges to Arbitrum<\/strong><\/h2>\n<p>The Arbitrum One Bridge tool allows users, in a few clicks, to move ETH and <a href=\"https:\/\/u1f987.com\/en\/news\/what-are-erc-20-tokens\">ERC-20 tokens<\/a> to the second layer.<\/p>\n<p>To use this cross\u2011chain bridge, first you need to add the Arbitrum One network to MetaMask. The screenshot below shows the corresponding Web3 wallet settings.<\/p>\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"678\" height=\"982\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/MMSK_Arb_settings.png\" alt=\"DeFi reboot: how Arbitrum became Ethereum\u2019s leading layer-2 solution\" class=\"wp-image-151350\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/MMSK_Arb_settings.png 678w, https:\/\/u1f987.com\/wp-content\/uploads\/MMSK_Arb_settings-207x300.png 207w\" sizes=\"auto, (max-width: 678px) 100vw, 678px\" \/><figcaption>Data: <a href=\"https:\/\/arbitrum.io\/bridge-tutorial\/\">Arbitrum Bridge Tutorial<\/a>.<\/figcaption><\/figure>\n<p>However, it\u2019s much easier and quicker to use the Chainlist service, where you select the required network, click Connect Wallet, and then approve in MetaMask.<\/p>\n<p>After that you need to connect your wallet to the Arbitrum Token Bridge and choose the asset for the cross\u2011chain operation.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"710\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/ArbOneBridge-1024x710.png\" alt=\"DeFi reboot: how Arbitrum became Ethereum\u2019s leading layer-2 solution\" class=\"wp-image-151351\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/ArbOneBridge-1024x710.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/ArbOneBridge-300x208.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/ArbOneBridge-768x533.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/ArbOneBridge.png 1185w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<p>Finally, you need to enter the amount, click <em>Deposit<\/em> and confirm the operation in MetaMask.<\/p>\n<p>A full migration guide for Ethereum assets to Arbitrum is available at the <a href=\"https:\/\/arbitrum.io\/bridge-tutorial\/\">link<\/a>.<\/p>\n<p>It is worth noting that although asset migration to L2 does not take long, withdrawing funds back to the mainnet will take seven days. This remains the main drawback of Optimistic rollups.<\/p>\n<p>Bypassing the seven\u2011day period is possible with cross\u2011chain bridges from third\u2011party developers, albeit with some additional transaction costs. <\/p>\n<p>One such tool is <a href=\"https:\/\/cbridge.celer.network\/#\/transfer\">cBRIDGE<\/a> from Celer Network. Play Intern notes that cross\u2011chain operations take about 15 minutes.<\/p>\n<blockquote class=\"twitter-tweet\" data-conversation=\"none\">\n<p lang=\"en\" dir=\"ltr\">3\/ For those looking to bypass the 7 day withdrawal period, <a href=\"https:\/\/twitter.com\/CelerNetwork?ref_src=twsrc%5Etfw\">@CelerNetwork<\/a> has a bridge that you can access via <a href=\"https:\/\/t.co\/b3w5lTlkIJ\">https:\/\/t.co\/b3w5lTlkIJ<\/a> (bridging back takes about 15 mins)<\/p>\n<p>\ud83d\udc49 Faster + Cheaper<br \/>\ud83d\udc49 Uses WETH<br \/>\ud83d\udc49 Currently can bridge from Arbitrum to (ETH, BSC, MATIC, FTM, and AVAX) <a href=\"https:\/\/t.co\/2ah0fYlzHm\">pic.twitter.com\/2ah0fYlzHm<\/a><\/p>\n<p>\u2014 \ud83c\udfae Play Intern \u30b3\u30fc\u30d7 (@playtern) <a href=\"https:\/\/twitter.com\/playtern\/status\/1439224026853875719?ref_src=twsrc%5Etfw\">September 18, 2021<\/a><\/p><\/blockquote>\n<p> <script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>The bridge supports not only Ethereum and Arbitrum, but also Binance Smart Chain, Avalanche, Polygon, xDai, OKExChain, Huobi ECO Chain, Optimism and Fantom.<\/p>\n<p>Another similar tool is <a href=\"https:\/\/xpollinate.io\/\">xPollinate<\/a>. The project Connext attracted substantial investment from <a href=\"https:\/\/u1f987.com\/en\/news\/ethereum-project-connext-raises-12-million-from-consensys-backed-mesh-and-1kx\">ConsenSys, Coinbase Ventures<\/a>, <a href=\"https:\/\/u1f987.com\/en\/news\/connext-raises-2-2-million-seed-round-from-huobi-and-polychain-capital\">Huobi and Polychain Capital<\/a>.<\/p>\n<p>Similar functionality is offered by <a href=\"https:\/\/app.hop.exchange\/send?token=USDC\">Hop.Exchange<\/a>, <a href=\"https:\/\/synapseprotocol.com\/?inputCurrency=ETH&#038;outputCurrency=ETH&#038;outputChain=42161\">Synapse Bridge<\/a>, the <a href=\"https:\/\/mosaic.composable.finance\/\">Mosaic<\/a> tool from Composable Finance and <a href=\"https:\/\/anyswap.exchange\/dashboard#\/router\">AnySwap<\/a>. <\/p>\n<p>Other useful resources include:<\/p>\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/arbiscan.io\/\">Arbiscan<\/a> \u2014 the Arbitrum One blockchain explorer;<\/li>\n<li><a href=\"https:\/\/developer.offchainlabs.com\/docs\/inside_arbitrum\">Inside Arbitrum<\/a> \u2014 technical documentation from Offchain Labs.<\/li>\n<\/ul>\n<h2 class=\"wp-block-heading\"><strong>A thorny path<\/strong><\/h2>\n<p>On September 14, Arbitrum <strong>experienced a 45\u2011minute outage<\/strong> due to a Sequencer contract error. During this time the network did not process transactions.<\/p>\n<p>Developers assured users that their funds were safe.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cSequencer cannot steal funds or forge transactions, because every transaction it processes carries a user\u2019s digital signature, which is verified by the Arbitrum chain. Users\u2019 funds were not at risk,\u201d<\/p>\n<\/blockquote>\n<p>They also noted that the Arbitrum network is resilient to prolonged Sequencer outages.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cUsers have the option to bypass Sequencer and submit transactions directly to Ethereum for delayed inclusion in the Arbitrum chain, and that option remained fully available during the incident,\u201d<\/p>\n<\/blockquote>\n<p>The project team warned of potential further outages as Arbitrum One remains in beta testing.<\/p>\n<p>As noted earlier, the architecture of Arbitrum and many other L2 solutions contemplates a seven\u2011day withdrawal period to the mainnet. However there are many third\u2011party services helping to bypass this restriction, albeit with some additional transaction costs for users.<\/p>\n<p>Many Arbitrum apps may look somewhat rough and have limited liquidity. This is not surprising given that the ecosystem is still in its early stages. <\/p>\n<p>Despite these and other potential drawbacks, the future of L2 solutions looks promising. Ethereum creator Vitalik Buterin <a href=\"https:\/\/u1f987.com\/en\/news\/vitalik-buterin-proposes-moving-ethereum-issued-nfts-to-layer-2\">proposed<\/a> moving non\u2011fungible tokens issued on the Ethereum blockchain into the L2 ecosystem.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cTo lower fees we need to move NFTs into the L2 ecosystem. However, to do this \u2018properly\u2019 we need good L2 compatibility standards so that the ecosystem does not get locked into a single solution,\u201d<\/p>\n<\/blockquote>\n<p>For transfers one can use existing solutions such as Arbitrum. But Buterin notes there are several significant drawbacks:<\/p>\n<ul class=\"wp-block-list\">\n<li>All major rollup platforms with EVM support have backdoors and other security issues, so it\u2019s risky to rely on a single solution;<\/li>\n<li>The NFT ecosystem could become too large to operate on a single L2;<\/li>\n<li>The NFT ecosystem is not closed \u2014 it must interact with other Ethereum projects.<\/li>\n<\/ul>\n<p>As a possible option, Buterin proposed a system that enables tokens to be transferred between rollup platforms or base chains by issuing wrapped tokens.<\/p>\n<p>According to Etherscan, NFT marketplace OpenSea is the largest gas consumer on the Ethereum network.<\/p>\n<p>Layer\u20112 solutions could coexist with Ethereum 2.0\u2019s sharding, which in theory could enable thousands or even millions of transactions per second.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cWhen Phase 1 arrives and Rollups move into the Eth2 ecosystem with data sharding for storage, we\u2019ll reach the theoretical maximum of ~100,000 TPS,\u201d<\/p>\n<\/blockquote>\n<h2 class=\"wp-block-heading\"><strong>***<\/strong><\/h2>\n<p>Complex smart\u2011contract based systems do have drawbacks. Users should consider the risks, as many protocols are still at an early stage of development.<\/p>\n<p>Yet there is little reason to doubt that the number of L2\u2011based platforms will continue to grow, and competition between them will intensify. In the race for users and the TVL they generate, projects will devise new liquidity mining programs and conduct airdrops.<\/p>\n<p>Against the backdrop of the persistent scalability challenge facing Ethereum, Arbitrum and other such L2 technologies appear well positioned. Their development is unlikely to be hindered by the impending full Ethereum 2.0 launch \u2014 L2 solutions will only enhance the already high efficiency of the Proof\u2011of\u2011Stake blockchain.<\/p>\n<p>Subscribe to ForkLog\u2019s channel on YouTube!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>ForkLog examined Arbitrum\u2019s features, the reasons behind the rapid growth of its ecosystem, and the pitfalls of this trendy solution.<\/p>\n","protected":false},"author":1,"featured_media":50470,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[1144],"tags":[1335,1093,46,1179,277],"class_list":["post-50469","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-longreads","tag-arbitrum-arb","tag-defi","tag-ethereum","tag-layer-2-solutions","tag-scaling"],"aioseo_notices":[],"amp_enabled":true,"views":"42","promo_type":"1","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/50469","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/comments?post=50469"}],"version-history":[{"count":1,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/50469\/revisions"}],"predecessor-version":[{"id":50471,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/50469\/revisions\/50471"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media\/50470"}],"wp:attachment":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media?parent=50469"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/categories?post=50469"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/tags?post=50469"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}