Ethereum’s layer 2 scaling solution, Arbitrum, has seen a massive increase in activity since its Nitro update in August, registering around 62% more transactions than the base layer of Ethereum.
In a report on Nov. 1, cryptocurrency research firm Delphi Digital noted that in the week ending October 24, the number of total Arbitrum transactions has increased 550% since August, citing data from Dune Analytics.
thisweek, @arbitrum had ~62% as many transactions as Ethereum L1. pic.twitter.com/DyuDNAjRGz
—Delphi Digital (@Delphi_Digital) November 3, 2022
This week, @arbitrum had ~62% as many transactions as the Ethereum base layer.
In a previous tweet, Delphi Digital initially stated that Arbitrum accounted for 62% of all transactions on Ethereum, which it later clarified was “wrong wording.”
Arbitrum is an optimistic roll-up built by blockchain development firm Offchain Labs, aimed at scaling Ethereum smart contracts.. It uses Optimistic Rollup technology to bundle large batches of off-chain transactions into Ethereum smart contracts and decentralized applications before sending them to Ethereum.
Several well-known protocols use Arbitrum, such as SushiSwap, Uniswap, and GMX decentralized exchanges, the Aave lending protocol, and the Stargate liquidity transport protocol.. According to L2Beat, at the time of this writing it has a current total value locked (TVL) of $2.59 billion.
Delphi analysts point out that Weekly active users have skyrocketed on Arbitrum, growing 125% since October 10 to hit a new high of 282,000 in the week ending October 24.
Analysts also suggest that much of the increase in activity was likely fueled by speculators trying to ramp up their on-chain activity in hopes of receiving a bigger launch for a native token that Offchain Labs co-founder Steven Goldfeder has implied.
On August 31, the Arbitrum One mainnet was upgraded to Nitro, which Offchain Labs said in an April 7 post would lead to lower transaction costs while increasing network capacity. , adding:
“Although Arbitrum today is already 90-95% cheaper than Ethereum on average, Nitro cuts our costs even further.”
The low fees have resulted in various players in the cryptocurrency ecosystem wanting to integrate with Arbitrum One, and on November 1 the decentralized finance (DeFi) optimization tool Furocombothe capital raising protocol Aelin and insurance protocol Y2K Finance each announced that they were available in the popular scaling solution.
On October 13, Offchain Labs announced that it had acquired one of the main development teams behind the Ethereum merger, Prysmatic Labs, which it hopes will enable more communication and collaboration between developments on both layers.
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