Can the launch of Arbitrum governance token, the leader in Layer2, boost the ecosystem?

On the evening of March 16, Ethereum Layer2 leading project Arbitrum announced the issuance of governance Token ARB, and will Airdrop it to community members on March 23. According to relevant statistics, more than 600,000 wallet users will receive the Token. The news once again set off major communities.

In the second half of last year, even though the entire crypto market was in a deep bear market, Arbitrum ecosystem representative projects GMX and Treasure DAO continued to grow against the trend, with both user data and token market performance being remarkable and eye-catching.
Since 2023, with the overall market recovery, the Arbitrum ecosystem has blossomed and its popularity has only increased. What are the projects in the Arbitrum ecosystem that are worth paying attention to?

Before that, we need to understand Arbitrum’s position in the entire Layer 2 (second-layer network).

Layer2 is an expansion solution proposed by Ethereum to solve the high gas fees and slow processing speeds. Part of the data processing is carried out on layer2 to reduce the workload of the main network. The main network is responsible for settlement, thereby improving overall work efficiency.

Since the Layer2 was proposed, the ecosystem has continued to develop steadily. The figure below shows the trend of Layer2 total locked value (TVL) from November 15, 2019 to March 17, 2023, calculated in Eth terms.

Image source: L2beat

In Layer2, Arbitrum is the most successful so far. Arbitrum is nearly 100% EVM compatible, allowing applications on the first layer network to be seamlessly migrated to the second layer. At the same time, Arbitrum is the first to launch the mainnet in the second layer, and has a certain first-mover advantage. When the mainnet was launched, 74 projects, led by Uniswap V3, were deployed on it.
As shown in the figure, to date, Arbitrum's TVL accounts for more than half of the total second-layer, and it can be said to be the undisputed leader in Layer2.

Market share ranking on the far right, source: L2beat

Next, the editor will introduce the projects with high popularity on Arbitrum from major sectors such as DeFi, GameFi, etc.

01
DeFi

• Derivatives

1.Gmx

Launched in September 2021, GMX is a perpetual contract and spot DEX that supports users with 0 slippage and up to 50x leverage, with no KYC or geographical restrictions.
Use the dynamic aggregate oracle feed price provided by Chainlink (from the head Cex) for pricing.

The project is unique in its economic model and operating mechanism: There are two types of tokens in the GMX system, namely the protocol's governance token GMX and the LP (liquidity provider) token GLP.

GMX two token circulation situations

GMX and GLP holders receive 30% and 70% of the spot and leverage fees in the protocol respectively, and the token has good value capture.
At the same time, GMX Token adopts a double pledge mechanism to reduce the risk of GMX inflation and reduce Token circulation. As a counterparty, GLP liquidity providers can obtain the profits of those who lose money in the liquidity pool. Because GLP is a zero-sum game, if users lose money, GLP will make a profit, and vice versa.

Gmx is currently the project with the highest locked-in volume on Arbitrum, with a TVL of 28.5% (according to Deflama data) and a market value of US$680 million.

2.Gains Network

The founding team of Gains Network remains anonymous. Its product gTrade is a decentralized synthetic leverage protocol for crypto assets, foreign exchange, and stocks. It has a rich variety of products, including more than 100 types of tokens, foreign exchange, and tokenized stocks. The leverage ratio is the highest among all DEXs, and the crypto asset category supports up to 150x leverage.
Use a custom real-time Chainlink Node Operator Network (DON) to quote and obtain the median value for each price, which effectively protects user rights.

Gains adopts a model that is somewhat similar to GMX. The operator also plays games with liquidity providers, but liquidity providers can only use DAI to deposit into the vault. The product is equivalent to the U-based contract commonly used in CEX.

Its native Token GNS has a destruction mechanism. When the system's mortgaged DAI reaches 130%, GNS will be purchased and destroyed from the GNS/DAI pool to achieve the purpose of Token deflation.

Currently, Gains is the second largest derivatives DEX on Arbitrum in terms of exchange volume after GMX , with a market value of US$270 million.

• Option Arbitrum

  
  

3.Dopex

Dopex is a decentralized options protocol that aims to maximize liquidity while minimizing losses for option sellers and maximizing gains for option buyers.
Dopex provides a simple and easy-to-use platform, which means that anyone can participate in the options pool. Users can deposit basis/quotes for their respective pools and earn passive income by selling and buying discounted options through the liquidity pool.

The project uses a dual-token model. DPX is a governance token with a limited supply, and rDPX is a rebate token to compensate option sellers for losses, which can be used to mint synthetic assets.

Dopex is the option project with the highest locked-in volume on Arbitrum. The current token market value is 90 million US dollars. The main liquidity is currently on sushiswap

• Dex

4. Camelot

The main function of Camelot is a Uniswap V2+Curve type DEX, with improvements in handling fees, incentives, token models, etc. It has a Launchpad, through which project parties can raise funds and guide liquidity.

• Metonymy

5.RNDT Radiant

Radiant is a full-chain lending protocol on Arbitrum, which aims to become a full-chain capital market where users can deposit assets on any supported chain and borrow various assets across multiple chains. Cross-chain interoperability will be built on LayerZero, using Stargate's routing interface to allow collateralized parties to withdraw funds on various chains. Aave, the leading lending project, will also support cross-chain lending in version V3, but it has not yet been launched.

Radiant officials recently stated that they expect to officially launch V2 on Arbitrum and migrate in the next few weeks, and will also be deployed on BNB Chain in the future. Currently, the official uses liquidity mining to stimulate users to use the lending service, and TVL has soared. As shown in the figure, Radiant is currently the lending protocol with the highest TVL on Arbitrum.

TVL lending protocol ranking, source: defillama

• Stablecoins

6. Vesta Finance

Vesta Finance is a stablecoin protocol within the Arbitrum ecosystem that allows users to deposit collateral to mint the U.S. dollar stablecoin VST, which is pegged to the U.S. dollar.

Several other features of Vesta include:

· Low Collateralization Ratio: Requires users’ collateral vaults to be collateralized at a minimum collateralization ratio that is much lower than competitors (e.g., 110% for ETH, 110% for renBTC, and 175% for gOHM).
· Instant Redemption: VST holders can redeem their VST stablecoins for underlying collateral at any time. The redemption mechanism and algorithmically adjusted fees guarantee a minimum stablecoin value of $1.

The project's Mcap/TVL is only 0.22, the lowest among the stablecoin protocols in the Arbitrum ecosystem. Generally speaking, the smaller the value, the greater the project's growth potential.

02
GameFi

1. Treasure DAO

Treasure DAO is a decentralized game publishing platform that connects games and communities through bottom-up driven IP and infrastructure, unified by a common set of composable resources.

Initially, its IP came from a well-known NFT project Loot, from which derivative NFT projects and NFT ecosystems were developed. It was launched by the community in September 2021 in a community-driven and fair launch manner.

MAGIC is the native token of Treasure and the only asset in the Treasure market. Each community in the Treasure ecosystem constructs its own story around the MAGIC Token, linking the narrative and economic ecology together through MAGIC.

TreasureDAO Ecosystem Games

TreasureDAO is managed by staked MAGIC holders and is responsible for overseeing the project. The DAO votes on which projects to join, MAGIC Token allocation, and revenue sharing for the market and protocol.

Most of the team members came directly from the community. After several rounds of strategic investment and community development, more than ten games and infrastructure projects were born, among which the beacon game became popular in November last year . The feature of the project is that it uses magic native tokens to integrate the entire ecosystem, connect them, build a more complete economic structure, and make the gameFi ecosystem more sustainable.

2. Trident

Trident is a 2D MMO, procedurally generated infinite universe game developed by Geyser Forge Studios that proposes a new sustainable GameFi model “Risk To Earn” to enhance the player’s in-game economy.
R2E means that players and coin holders can earn income by betting, and the protocol will take a cut of the income and feed back to the token. For example, when one person wins, they will receive a bounty of "Risk" from the loser. The bet tokens are either exchanged between players, with a small portion going into the treasury, or they can interact on the open market. This method increases the consumption of game tokens, prolongs the cycle of token inflation to a certain extent, and increases the life of the game economy.

Trident currently has two games in development: Trident MMO and Trident Sprite Duels , as well as Trident's practice mode, Legacy Trident, which incorporates the Risk To Earn mode into its gameplay.

03 NFT

1.Yieldification

Yieldification is a DeFi platform that supports NFTFi. The platform currently consists of three main parts: perpetual contracts, OTC, and NFT. The YDF ecosystem is building a unique NFT utility designed to generate additional income for NFT players and provide investors with more long-term investment income options.

04
Cross-chain

1. Synapse

Synapse is a cross-chain messaging protocol that includes: generalized cross-chain communication, security model, and syn bridge.
Synapse Bridge enables users to swap between a range of L1 and L2 assets using AMMs. Synapse extends to Ethereum and its included chains and supports swaps between Layer 1s such as Canto, Avalanche, and Harmony, as well as well-known Ethereum L2s such as Arbitrum and Optimism.

The project's native Token SYN has a market value of US$200 million and was recently launched on major platforms on February 22.

There are many more popular projects on Arbitrum, and those who are interested can learn more about them. In general, the types of projects on Arbitrum almost cover most of the current project categories, but there are also some unofficial projects that are just trying to gain popularity. Emerging projects are high-risk, so you need to be careful.