Arbitrum, the Ethereum-scaling powerhouse, is shaking up the cryptocurrency world. With the fastest-growing user base among leading crypto ecosystems and liquidity nearly equal to Polygon and Avalanche combined, the platform is making a name for itself.
Despite not having its own native token, Arbitrum's considerable momentum has had a ripple effect on many projects operating on its network. As user numbers, transactions and revenue increase, numerous projects are experiencing explosive growth.
For astute observers, the Arbitrum ecosystem is a refreshing oasis within the otherwise slow-moving and uneventful cryptocurrency market. The platform is rife with promising projects that are well-positioned for growth, making it a compelling choice for those looking to diversify their investment portfolios.
The following discussion will examine the top projects on the Arbitrum platform, how they work and where the Arbitrum ecosystem is headed next.
What is Arbitrum?
Ethereum’s sluggish speed, high transaction fees and expensive data storage limit its potential for mainstream adoption. Layer 2 solutions aim to assist blockchain to improve efficiency and speed, alleviating these issues to some extent.
Arbitrum is the world’s leading Layer 2 solution, specifically designed to tackle network congestion, poor efficiency and high transaction fees on Ethereum, the world's second-largest cryptocurrency in terms of market capitalization.
How Does Arbitrum Work?
Arbitrum boosts Ethereum’s scalability by using optimistic rollup, a data compression technique that combines multiple transactions into one. This technique saves time because the blockchain only needs to verify one transaction instead of many, which makes it more efficient.
Each transaction is validated on a separate layer to increase speed and scalability and then safely transferred back to Ethereum's mainnet, thereby ensuring a secure environment for users. This approach allows Arbitrum to provide fast and efficient blockchain solutions without compromising security.
Despite competition from other prominent scaling solutions such as Polygon, Optimism and Metis, Arbitrum's remarkable user growth and liquidity sets it apart from the rest.
Arbitrum leads all Ethereum Layer 2 solutions with a total value locked (TVL) of $1.9 billion, as of February 2023. Remarkably, this amount is nearly equal to the combined TVL of Polygon and Optimism (approximately $2.1 billion), which are the second and third-largest Ethereum Layer 2s by TVL, and the ninth and 79th largest crypto by market capitalization. TVL is an important metric for measuring the health and value held in a blockchain protocol, as it reflects the value of assets locked into these protocols.
Arbiturm’s wide EVM compatibility — including Solidity and Vyper — makes it one of the most promising EVM-compatible rollups. Moreover, it has already partnered with a vast range of Ethereum decentralized applications (dApps) and infrastructure projects, including Uniswap, Sushi, DODO and dozens of others.
Top Projects Built on Arbitrum
Arbitrum’s rapid growth has made it a popular choice for developers looking to build dApps. The following section will explore the top five projects built on Arbitrum, examining their unique features and potential for growth.
GMX is a decentralized exchange (DEX) that enables users to trade BTC, ETH and other popular cryptocurrencies without needing permission from anyone. It provides traders with advanced trading features, such as spot swaps and perpetuals up to 50x leverage. With the ability to retain custody of their assets, traders can enjoy the benefits of both security and advanced trading tools.
The goal of GMX is to offer a superior trading experience by providing zero-price impact trades and low swap fees. Trading on GMX is facilitated through its multi-asset pool called GLP, which pays liquidity providers for their services. In addition, GMX uses Chainlink Oracles, which collect real-time pricing information from high-volume exchanges to provide dynamic pricing.
Since its launch on Arbitrum One in September 2021, GMX has become the largest protocol on the network, with a TVL of around $500 million. It was later deployed on the Avalanche blockchain in January 2022, and its native token, GMX, serves as both a utility and governance token that allows holders to participate in voting on proposals. As a top 100 crypto by market capitalization, GMX can be purchased on popular exchanges like Binance, KuCoin and OKX.
Overall, GMX has a favorable position to keep expanding as more liquidity enters Arbitrum because of its liquid dual exchange model, user-friendly interface and diverse set of community-built tools. As the team continues to innovate and enhance capital efficiency via the GLP pool, the possibilities for the protocol's growth are limitless.
One of the core challenges of decentralized finance (DeFi) is the fragmentation of capital across multiple chains, resulting in numerous siloed money markets with their own liquidity. This leads to a suboptimal trading experience, where users have to navigate through multiple endpoints to deposit on one chain and withdraw on another.
Radiant addresses the issue of cumbersome transactions and fragmented capital in the DeFi sector with its omnichain money market. This market supports major assets on any major chain, enabling users to deposit and borrow a variety of supported assets across multiple chains. By selecting Arbitrum as their platform of choice for launching Radiant version 1, the team was able to develop a product that strikes the perfect balance between competitive interest rates and high-level security for its users.
Currently, Radiant is the seventh largest protocol on Arbitrum, with a TVL of $85 million. Its native token RDNT serves as the native utility token and has a market capitalization of roughly $55 million. Overall, Radiant's future looks bright, especially with the upcoming launch of Radiant v2. This version will allow cross-chain borrowing and lending on major cryptocurrencies such as BTC, ETH and USDC. Radiant DAO’s voting mechanism will continually introduce more assets on the platform, further expanding its capabilities.
Jones DAO is a protocol specifically designed to optimize liquidity and yield by offering institutional-level strategies through its vaults. By using yield-bearing tokens, each strategy not only improves liquidity and efficiency but also unlocks capital for DeFi. This vital feature differentiates Jones DAO from other protocols and can generate lucrative returns for its users.
The protocol caters to three distinct groups:
- Users who prefer not to manage their strategies actively and wish to leverage the pre-deployed strategies offered by the vaults.
- Users who prioritize liquidity and prefer to keep their tokens liquid instead of locking them.
- Users who seek to earn additional yield on their treasury positions.
In just one click, users can access some of the best yields in DeFi through Jones vaults. The aim of the vaults is to increase their token holdings over time, and these tokens are denominated in the native vault token.
Source - Jones DAO
At the time of writing, Jones DAO is the 14th largest protocol on Arbitrum, boasting a TVL of approximately $30 million. It has experienced rapid growth, with its TVL surging by more than 600% in February 2023. As a leading options vault on Arbiturm, Jones DAO is in a favorable position to continue its expansion, especially as more liquidity flows into the Arbitrum network.
How to Bridge Funds to Arbitrum
Before you can use any of the best projects on Arbitrum, you need to bridge funds to the network. Using Arbitrum for the first time can be daunting for new investors but it's actually extremely easy. Here is a quick guide on how to use some of the top projects built on Arbitrum today.
1. Purchase Ethereum
The first step you need to take is to acquire ETH — the native cryptocurrency of the Ethereum network. ETH is used to pay transaction fees on the Ethereum mainnet and Arbitrum.
You can purchase ETH on nearly all centralized exchanges. Some of the best include OKX, eToro, Binance (or Binance.US for U.S. users) and Uphold then transfer it to an ETH-compatible software wallet like MetaMask, which connects to hundreds of dApps. Major Arbitrum projects such as GMX can be purchased on exchanges such as Binance or KuCoin. Many of these platforms allow you to purchase GMX using your credit card, through swapping features or via trading pairs such as GMX/USDT or GMX/BTC. Smaller projects like JONES require the use of a decentralized protocol like SushiSwap or Uniswap on the Arbitrum Network for purchase, which involves connecting your software wallet.
- securely through OKX's websiteBest For:Variety of TokensRating:
- securely through eToro's websiteBest For:Demo Accounts
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2. Connect Arbitrum to MetaMask
To add the Arbitrum network to your software wallet, use the one-click method on the Arbitrum Bridge website. With MetaMask, this is done by clicking on "Add/Switch to Arbitrum Network" and approving the pop-up message. The process is straightforward and user-friendly.
3. Bridge Funds to Arbitrum
Once you've bought ETH, the subsequent step involves bridging your Ethereum from the mainnet to the Arbitrum network.
To transfer your ETH from the Ethereum mainnet to the Arbitrum network, connect your personal wallet to the Arbitrum website and follow the instructions provided, which can take a few minutes to complete.
Where to Store the Best Arbitrum Project Tokens
Ledger hardware wallets are the best way to store tokens on Arbitrum for a lot of people because of the wallets' incredible integration with the Metamask software wallet. With this integration you can connect you Ledger to Metamask and use it just like a software wallet (with the extra step of confirming any transactions on the Ledger device). This also makes it extremely easy to use EVM-compatible networks like Arbitrum, Optimism, Polygon, Binance Smart Chain, Avalanche and many more. All you have to do is add the network at the top of your Metamask window and you are ready to go. It's important to note that you will probably have to manually add the tokens to Metamask to see your holdings (though it's not necessary to receive them). The best way to do this is to navigate to Coinmarketcap, find the coin, and copy and paste the smart contract into the Import Token function of Metamask.
Why Arbitrum Could Be the Future of DeFi
Arbitrum is a top-notch Ethereum scaling solution with growing TVL, user adoption and a diverse ecosystem of dApps. In February 2023, Arbitrum surpassed Ethereum in daily transaction volume for the first time in history. This remarkable achievement serves as a testament to Arbitrum's surging popularity within the crypto community.
Arbitrum’s current position in the Ethereum scaling market is robust; however, its future success will be determined by the platform's ability to innovate and maintain user adoption. If these conditions are met, Arbitrum could be a crucial component of the cryptocurrency, serving as the backbone for current and future projects in DeFi, NFTs, and the creator economy, thus advancing the Ethereum ecosystem as a whole.
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