- Here is why Arbitrum seems to be the most desired chain for decentralized finance (DeFi) in the L2 ecosystem.
Despite the emergence of several Ethereum [ETH] scaling solutions in the past year, Arbitrum’s [ARB] dominance in the landscape has remained largely intact.
According to on-chain analytics firm IntoTheBlock, the layer-2 (L2) blockchain accounted for over 50% of ETH’s total transaction volume across top optimistic rollups, including Optimism [OP] and Base.
However, it should be noted that in the broader L2 market, Arbitrum lost out its transaction dominance to zk rollup, zkSync Era.
According to Bitcoinworld’s examination of L2Beat data, Arbitrum clocked a little over 24 million cumulative transactions in the past month. This paled in comparison to zkSync Era’s 30-day tally of 41.3 million.
The significant disparity in transaction numbers was due to the difference between the fees on the two scaling solutions.
Bitcoinworld noticed through L2 Fees that a user had to pay $0.14 on Arbitrum to send ETH while the same task could be performed on zkSync Era at a 64% discount.
However, Arbitrum proponents in particular, and those of L2 in general, have pinned their hopes on the upcoming Dencun upgrade. The watershed technical transformation was expected to bring about a 10x drop in L2 transaction fees.
Arbitrum Outshines Competition In DeFi
While Arbitrum trailed zkSync Era in network traffic, the former was still the decentralized finance (DeFi) leader in the L2 ecosystem.
According to Bitcoinworld’s analysis of Artemis data, Arbitrum had over $2.7 billion in total value locked as of this writing. This was head and shoulders above the competition.
Fathom this – the combined TVL of the next three scaling solutions in the list was still less than Arbitrum’s tally.
Another dominant aspect of Arbitrum’s DeFi game was the performance of its decentralized exchanges (DEXes).
As seen from the graph above, Arbitrum has solidified its position as the top L2 in DEX volume.
In fact, Arbitrum DEXes facilitated trades worth over $1.7 billion over last week. In contrast, DEXs on Base and zkSync Era couldn’t even cross $300 million.
ARB Lifts 8.5% Over The Week
As of this writing, the native token ARB was trading in the green, with weekly gains of 8.5%, according to Coinstats.
The jump in ARB value could be just sentiment-driven. As is well-known, ARB doesn’t accrue any value from Arbitrum’s on-chain activity and functions just as a governance token.