Is Arbitrum (ARB) still the leading Layer 2 solution in 2024?
Arbitrum updates
In October 2023, Offchain Labs, the organization behind Arbitrum's development, released Orbit, a tool that enables the creation of Layer 3 blockchains (L3 networks) based on Arbitrum's core network (main net). L3 blockchains allow for even more significant reductions in transaction fees, even compared to L2 networks, without sacrificing transaction security.
In July 2024, the Offchain Labs team announced plans to extend the capabilities of the Orbit tool, allowing blockchains to be created outside of the Ethereum ecosystem. According to the Arbitrum team, once the extended version of Orbit is implemented, developers will be able to build their Layer 2 and Layer 3 solutions in ecosystems such as:
In addition, Offchain Labs has provided developers with another tool called Stylus. It allows them to create smart contracts using the most used programming languages instead of Solidity, which is used to develop all DApps based on the Ethereum Tier 1 network.
The Stylus solution appeared in the Arbitrum core network at the end of August 2024, so now developers can create applications and their own L3 solutions using not only the Solidity programming language but also more familiar ones: Rust, C / C++, etc. This will help attract new developers to the Arbitrum ecosystem and accelerate its development.
In March 2024, the Offchain Labs team introduced an update to ArbOS called Atlas. With this update, Arbitrum's L2 network can now perform so-called BLOB transactions, which reduce the cost of transferring data from the second layer to the underlying Ethereum blockchain. As a result of the launch of the Atlas update, developers could reduce the price from 0.1 to 0.01 gwei on average.
The opportunity to add support for BLOB transactions to Arbitrum came after the Dencun update (EIP-4844) on the Ethereum network in March 2024. This update was precisely aimed at reducing the cost of commissions on second-tier networks such as:
Activity in the Arbitrum network and other ecosystem events
Over the past year, user activity on blockchain networks, including layer 2, has increased significantly. As a result, various blockchains have increasingly started to experience failures that result in suspended transactions.
Arbitrum was also affected by this trend: on December 15, 2023, the network was suspended for about 1.5 hours due to a sharp increase in transactions. As in many such cases, the spike in activity was due to "inscriptions" like Ordinal or BRC-20 in the Bitcoin protocol. Similar things have also been observed in the TON and Avalanche networks.
Arbitrum's L2 network continues to lead the decentralized finance (DeFi) market in terms of the total value of blockchain assets (TVL) among all Tier 2 solutions: as of October 2024, this figure exceeds $2.8 billion. According to DeFi Llama, Arbitrum ranks 5th among all blockchains in terms of TVL, behind only Ethereum, Tron, Solana, and BNB Smart Chain (BSC).
However, the ARB native token only ranks 3rd in CoinMarketCap's ranking among L2 blockchains after ImmutableX and Optimism. Nevertheless, in May 2024, Arbitrum became the most used network on the decentralized exchange Uniswap.
In July of the same year, the team of the most famous credit protocol, Aave, released its own stablecoin, GHO, on Arbitrum's L2 network. Moreover, Arbitrum became the first network chosen to use GHO due to its high speed and low transaction cost.
GHO is a multi-collateralized stablecoin backed by deposits on the Aave platform and decentralized, i.e., it has no specific issuer. The GHO stablecoin supports the Chainlink Cross-Chain Interoperability Protocol (CCIP), which provides a cross-chain standard for using tokens in various blockchain networks.
Conclusion
Arbitrum continues to hold its ground and remains the leading L2 blockchain in the DeFi ecosystem. In addition, Offchain Labs is actively developing its ecosystem through innovations such as tools for developing third-level solutions that can take Arbitrum to an even higher level.
