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Bankless: Arbitrum Season is coming, what opportunities are there?

Bankless

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How would you choose to gain exposure to the Arbiturm ecosystem?

Original title: "As Bankless 丨 Arbitrum completes Nitro upgrade, let's see what opportunities are there"

Original author: Ben Giove, Bankless analyst

Original compilation: DeFi Way

How to get Arbitrum ecological exposure

Arbitrum season is coming.

Following the successful completion of Nitro, the highly anticipated network upgrade that increases transaction throughput and reduced fees), Arbitrum is expected to grow further in terms of liquidity, users, and activity.

Additionally, there are several catalysts poised to benefit from enhanced trading capabilities and help promote this trend. First up is Arbitrrum Odyssey, a campaign aimed at encouraging the use of applications on L2. Odyssey should bring users and attention back to the web.

The second catalyst is the final launch of the Arbitrum token.

Arbitrum's ecosystem has been guided organically so far. Despite the absence of network-wide incentives, Arbitrum remains the largest L2 by TVL at over $2.58 billion. Launching a token will push that number even higher, as it may be used to incentivize liquidity and encourage the migration of more popular, L1-based applications.

While these catalysts have caused the network to become a buzzword, adoption of the network is still in its early days Phase - According to Nansen, only 0.45% of Ethereum addresses use Arbitrum.

So, how do you get in touch with this ecosystem?

Following.

1. Pure Game: Arbitrum Native Project

The most direct way to get exposure to the Arbitrum ecosystem is by investing in native projects.

These early adopters will be the main beneficiaries of inflow to Arbitrum as it may boost TVL , revenue, users, and other core KPIs.

There are many Arbitrum-based projects across different fields that investors can choose from to suit their portfolio composition and risk profile.

Let's talk about a few of them:

GMX (GMX)

GMX is a decentralized perpetual trading platform that uses a liquidity pool model that allows traders to open positions by borrowing from a basket of assets known as GLP. GLP acts as a counterparty to traders on the platform, bearing their p&l risk, while taking fees from opening and closing positions, swaps through GLP through DEX aggregators, and liquidations, distributed in ETH.

GMX TVL - Source: DeFi Llama

GMX is the largest protocol on Arbitrum, by The TVL was calculated at $282.7 million, or 29.6% of all value locked on the network, and generated $10.36 million in protocol revenue over the past six months. This income is paid entirely to GMX stakers in the form of ETH, and the current yield of the token is 6.58%. GMX is becoming a core element of Arbitrum, with Umami Finance, Dopex, Vesta, and other projects integrated or built on top of the platform. GMX currently has a market cap of $376 million and an FDV of $623 million.

Dopex (DPX)

Dopex is an options protocol that offers a suite of different products including a single-leg option pool (SSOV) that allows users to easily execute covered call options and The cash-secured put strategy, the interest rate library allows users to speculate on the yields of different curve pools, and its latest product, the straddle option. Straddles is the first implementation of Atlantic Options (AO), a unique new and original way for option buyers to borrow collateral locked in options contracts, for a fee.

Dopex TVL - Source: DeFi Llama

Dopex currently has 29.15 million in these products USD TVL, while DPX tokens can be locked to earn released Token and protocol fees paid in ETH. There are several projects built on Dopex, including Jones DAO, which created an options library that leverages Dopex infrastructure, and Plutus, an L2 meta-governance protocol. DPX currently has a market cap of $85 million and an FDV of $209 million.

Mycelium (MYC)

Mycelium, formerly Tracer DAO, is building a set of derivative products on Arbitrum, including perpetual pools, a new derivative that is most similar to leveraged ETFs , allowing users to hedge or take excess risk on a specific asset. Mycelium also recently launched Perpetual Swaps, a fork of GMX that allows users to provide liquidity to traders through MLP pools.

Mycelium TVL - Source: DeFi Llama

Mycelium has attracted TVL of $16.7 million. The DAO also caused a stir by recently announcing the appointment of former Bitmex CEO Arthur Hayes as an advisor. MYC currently has a market cap of $36 million and an FDV of $60 million.

Other items that need attention

There are many other exciting projects on Arbitrum that investors should keep an eye on, including Umami Finance (UMAMI), a project to build a no-release yield vault ; Vesta Finance (VSTA), a lending protocol and issuer of the VST stablecoin; Premia (PREMIA), an options protocol; and Galleon (DBL), a DAO that builds structured products.

Although these Token ’s circulating market cap is smaller and less liquid than the three listed above, but they should all benefit from the expected growth of the ecosystem.

Also, there are several other promising projects that have yet to go live at the time of their Arbitrum launch. These projects include Rage Trade, a full-chain perpetual protocol, STFX, a social trading platform, and Y2K, a protocol for hedging or pegging speculative assets. These projects may be airdropped for early adopters or community members - starting to pay attention to them now will likely be EV+ (positive expected value).

2. Picks and Shovels: Cross-Chain Infrastructure

Another way investors can gain exposure to Arbitrum is by investing in "picks and shovels", or the fundamentals that facilitate overall adoption of the L2 ecosystem Facility items, but not tied to any particular single rollup.

The most obvious "picks and shovels" are cross-chain bridges and message transfer protocols. While the field has been plagued by security concerns over the past year, these systems remain a critical part of the infrastructure as they allow users to move assets around the network quickly and easily and, critically, bypass optimistic rollups 7-day withdrawal period.

While they may not be directly derived from Arbitrum's growth, but they are still poised to reap the rewards of expected liquidity inflows into L2, as their revenue is based on fees that are a percentage of transfers between networks.

Next, let's take a look at these and Token Interoperability solutions and several potential targets related to retroactive airdrops.

Synapse, Hop and Stargate

Synapse (SYN) is a cross-chain information transfer protocol. Synapse Bridge enables users to exchange between typical assets (assets that are naturally issued on L1 or L2) using AMM. Synapse has facilitated $11.3 billion in bridged volume to date and plans to launch Synapse Chain, an optimistic rollup settlement to Ethereum utilizing Snyapse’s cross-chain messaging capabilities. SYN currently has a market cap of $233 million and an FDV of $311 million.

Hop Protocol (HOP) is another Token A standardized cross-chain liquidity protocol. Similar to Synapse, Hop uses AMMs to facilitate exchanges between typical assets and has facilitated $2.7 billion in bridging volume to date. HOP currently has a market cap of $5 million and an FDV of $135 million.

Stargate (STG) is the third cross-chain liquidity protocol that can bridge with Arbitrum, and have a native Token . Stargate is built on layer 0 and leverages its full-chain capabilities to enable users to transfer assets without going through any bridges. The protocol currently has a TVL of $631.2 million, STG currently has a market cap of $84 million and an FDV of $635 million.

3. Airdrop

Another way investors can gain exposure to Arbitrum is through an airdrop.

While Synapse, Hop and Stargate all have tokens, there are many other projects that have yet to launch Token , and if/when they do, they may use Token Allocations to reward early users and community members.

A few prominent candidates are cross-chain liquidity protocols Connext and Across, and bridge aggregation Device Li.Fi.

Arbitrum Ecological Token Airdrop

The last way investors can gain exposure to the Arbitrum ecosystem is through airdrop farming. Since it does not require the purchase of any Token , airdrop farming is a great way for risk-averse investors to share in the upside of the network.

Although it has not been officially confirmed yet, it is certain that Arbitrum will launch a Token . Token Not only does it provide upside for investors and team members, but if properly allocated, it can serve as an incredible tool to incentivize desired behavior and guide an ecosystem. Since other rollup providers such as Optimism, Polygon, ZK Sync, and Starkware have or plan to launch tokens, Arbiturm will be at a competitive disadvantage if they do not launch their own token.

Assumptions Token is inevitable, Arbitrum's Token Highly likely to be airdropped to early adopters (Optimism and Starkware allocated 19% and 9% to early adopters respectively Token ), and should (literally) pay the corresponding proportion.

In order to maximize the airdrop surface area, users should take two approaches. One is to use cross-chain bridges on the network and conduct transactions.

For more specific guidance, following the standards developed for the Optimism (OP) airdrop may be a Good idea to cover as many base items as possible.

Optimism Airdrop #1 Criteria

For those willing to be more aggressive, #1 The second way is to participate in the Arbitrum Odyssey. Odyssey is an eight-week event that encourages users to interact with protocols deployed on Arbitrum and rewards them with custom NFTs (more on this in William Peaster's guide to Metaversal).

Although Odyssey started in June, it was delayed in the second week due to User participation in activities causes network congestion. The Offchain Labs team says the event will resume after Nitro is complete -- so, keep an eye on Arbitrum's social media and their Discord!

While it is unclear how Labs will be included in the airdrop criteria, participation in the event is highly likely Will increase the user's allocation size. Considering the low cost of transacting on the network and the minimal effort required to obtain an NFT, taking the time to do so seems like quite EV+ (positive expected value).

Arbitrum Season is coming

Arbiturm is poised to experience significant growth in the coming weeks and months.

Among native DeFi projects, through cross-chain infrastructure and retrospective cultivation of their native Token , investors have many ways to gain exposure to the Arbiturm ecosystem.

What would you choose?