Arbitrum's Bridge Activity and Its Impact on DeFi Sentiment

SEP 15, 2021 • 4 Min Read

Disclosure: Delphi Ventures and members of our team have invested in tokens mentioned in this report. This statement is intended to disclose any conflict of interest and should not be misconstrued as a recommendation to purchase any token. This content is for informational purposes only and you should not make decisions based solely on it. This is not investment advice.

Key Takeaways

  • Less than a week after launching, the value locked in Arbitrum’s bridge is closing in on that of Polygon. There were a flurry of liquidity mining announcements across Avalanche, Fantom, and Harmony over the last few weeks. Despite this, Arbitrum has been able to outshine it’s EVM-compatible competitors. If anything, this is evidence of just how much the market had been anticipating Arbitrum’s launch.

  • Arbitrum’s bridge had a mere $22M locked in it on Sep. 1, which meant the bridge represented just 0.047% of total TVL in Ethereum bridges. In the past two weeks, a few speculative farms and legit protocols have pushed this share up to 32% — a 640x increase in bridge share in just 15 days.

  • Arbitrum’s take-off in early September coincides with a sharp decrease in the daily median gas price on Ethereum mainnet. Theoretically, this would make sense, as L2s like Arbitrum scale Ethereum’s throughput to a great degree. However, it’s tough to ascertain whether this is just a pleasant coincidence or if there’s a causal relationship.

  • The future of L2s looks extremely promising (despite some hiccups). The market may be looking favorably towards DeFi assets, which have had a rough past six months. Blue chips like CRV, SNX, AAVE, and COMP are leading the bounce, followed by derivative protocol tokens like PERP and MCB. DEXes are lagging the rest of DeFi despite undoubtedly having the most secure product-market fit, highlighting a potential opportunity.

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