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How Arbitrum and Optimism Made Millions in 2022

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How Arbitrum and Optimism Made Millions in 2022

Arbitrum and Optimism raked millions in profit despite the extended bear market that hammered decentralized finance (DeFi) activities and Ethereum (ETH) valuation in 2022.

Per on-chain data shared on Twitter, Arbitrum, and Optimism, general-purpose Ethereum layer-2 platforms, made 2,906 ETH and 2,086ETH, respectively. In USD terms, it translates to around $4.6 million and $3.3 million for each protocol.

L2s are amazing businesses

Arbitrum made 2,906ETH ($4.6M) of profit in 2022

Optimism made 2,086ETH ($3.3M) of profit in 2022 pic.twitter.com/ViOkPA0Juv

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— Kofi (@0xKofi) January 17, 2023

Based on user activity and the number of dApps launched on Ethereum, solid statistics show that developers prefer the first smart contracting over competitors. Since launching, the network has become a hub of activity, spearheading exciting innovations in decentralized finance (DeFi), NFTs, metaverse, and gaming. 

Trackers in mid-January 2023 state that the total value locked (TVL) in Ethereum stands at $26.88 billion, representing more than half of the assets locked across DeFi. The drop in TVL mirrors the fall in ETH prices in 2022.

Ethereum price, daily chart | Source: ETHUSDT on TradingView.com

In essence, Ethereum dominates with DeFi activity over the Binance Smart Chain (BSC), trailing at less than a quarter of the TVL of the leading platform, at $4.65 billion.

Despite this dominance, Ethereum’s scaling problem directly impacts Gas fees. As demand picks up, Gas fees fluctuate, leading to as much as $50 on this blockchain to post a simple transaction. Deploying smart contracts cost much more, sometimes upwards of $80, when the network is congested. As an illustration, the average transaction fees on Ethereum stood at $0.63 on January 17. However, on May 1, 2022, this figure stood at over $23.

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Ethereum layer-2 protocols are part of the scaling attempts made by developers to relieve the mainnet. By routing transactions off-chain, layer-2 solutions can help scale Ethereum but, most importantly, reduce Gas fees by several magnitudes. 

In Ethereum’s layer-2 realm, Arbitrum and Optimism dominate. According to L2Beat statistics, Arbitrum and Optimism had TVLs of $2.52 billion and $1.45 billion, with a market share of 52% and roughly 30%, respectively. 

Ethereum Layer-2 Protocols | Source: L2Beat.com

Riding on Network Effects

Although associated fees in Arbitrum, Optimism, and all other layer-2 networks are negligibly low, these protocols can profit based on activity. For every transfer or smart contract execution of Arbitrum and Optimism, there is an associated fee. 

Arbitrum and Optimism charge $0.11 and $0.23 for simple transfers, payable in ETH. If a smart contract is deployed, the fees rise to $0.30 and $0.35. They make more fees as more users deploy smart contracts or initiate transfers. Accumulating these amounts over months translate to a tidy profit for the protocol operator. 

In 2022, Ethereum layer-2 TVL fell roughly 40% from $7.45 billion to $3.3 billion in July 2022. Outflows were lower compared to layer-1 DeFi. As the market recovers, layer-2 operators may likely post higher revenue as users move assets to dApps launched on these scalable and low-fee protocols.

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Featured image from Flickr, Charts from TradingView.com.

altcoin

Arbitrum passes Optimism in key metric: Can its growth continue?

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Arbitrum passes Optimism in key metric: Can its growth continue?

  • Arbitrum surpassed Optimism in the number of transactions.
  • Despite growth, decline in active developers and stablecoin network growth raised questions about sustainability.

The Arbitrum protocol recently outperformed Optimism [OP] in terms of the number of transactions made on its network. According to Messari’s data, on 7 February, the number of transactions made on the protocol was significantly higher than Optimism.

L2 Protocol Screener

+Nearly all L2s saw increases in usage, TVL, and valuations
[email protected] sees usage drop following the end of “Optimism Quests” incentive program
[email protected] processed nearly 5x the number of transactions that @optimismFND did on Jan 29th pic.twitter.com/qcqKy0HL0r

— Messari (@MessariCrypto) February 7, 2023


Read Optimism’s [OP] Price Prediction 2023-2024


Users show interest in Arbitrum

The spike in transactions could be attributed to the growing number of accumulated users on the protocol. Out of these users, 74.1% made more than one transaction, while 20.9% were one-time users.

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Despite the average number of transactions per address being lower, the number of active addresses on Arbitrum increased, showing that more people were using the protocol at press time.

Source: Dune Analytics

This growth led to an increase in Arbitrum’s revenue. As per Token Terminal, the overall revenue generated by the protocol was $19,900 at press time, after increasing by 61% over the last 30 days. However, while this is a positive sign of growth and popularity, there were also some concerning signs.

One such sign was the decline in active developers, which implied that the development of the protocol may slow down.

Source: token terminal

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How much is 1,10,100 OP worth today?


The stablecoin angle

Additionally, the network growth of stablecoins on Arbitrum declined, as stablecoins like Tether [USDT], Dai [DAI], and USD Coin [USDC] all posted disquieting numbers, per data from Santiment. This could further herald an upcoming fall in the protocol’s overall activity.

Source: Santiment

Despite these warning signs, it was important to note that the Arbitrum protocol was still in its early stages of development. It was possible that the decline in active developers and stablecoin network growth is a temporary setback. However, it was also feasible that the decline was a sign of deeper issues that needed to be addressed.

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Ser Suzuki Shillsalot has 8 years of experience working as a Senior Investigative journalist at The SpamBot Times. He completed a two-hour course in journalism from a popular YouTube video and was one of the few to give it a positive rating. Shillsalot’s writings mainly focus on shilling his favourite cryptos and trolling anyone who disagrees with him. P.S – There is a slight possibility the profile pic is AI-generated. You see, this account is primarily used by our freelancer writers and they wish to remain anonymous. Wait, are they Satoshi? :/

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311

NFT Market Remains Resilient With 1.23% Increase In Sales, Ethereum Dominates With 81% Of Total NFT Settlements

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NFT Market Remains Resilient With 1.23% Increase In Sales, Ethereum Dominates With 81% Of Total NFT Settlements

Non-fungible token (NFT) sales rose slightly last week, increasing 1.23% to $232.49 million in recorded sales. The top two NFT collections, Otherdeed and Doodles, saw growth of 44% to 58% compared to the previous week. Ethereum continues to dominate the NFT industry, accounting for more than 81% of total sales last week with $188.51 million in NFT sales.

7-Day NFT Sales Increase; Otherdeed, Doodles See 44% to 58% Growth

NFT sales remain steady this week and during February 2023, with $39.72 million in recorded sales so far this month. Over the past seven days, there were $232.49 million in NFT sales, a 1.23% increase compared to the previous week.

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During that time, 481,917 buyers participated in NFT sales, 19.30% more than the previous week. Additionally, 1,390,784 NFT transactions were processed, a 3.21% increase over the prior week. Of the $232.49 million in sales, Ethereum had the most out of the 20 blockchain networks listed on cryptoslam.io.

Ethereum accounted for 81% of total NFT sales, or approximately $188.51 million in settlements. The second largest blockchain for NFT sales was Solana, which processed $27.40 million in the past week, a decrease of 2.65% from the previous week. Immutable X ranked third in NFT sales, with sales rising 37.85% to $4.5 million.

The remaining top NFT sales blockchains, in order, are Cardano, Polygon, Flow, BNB Chain, and Arbitrum. Fantom saw the largest increase in NFT sales this week, with a 73.81% rise, although only $17,064 in NFT sales were settled in the past seven days.

This past week, the top NFT collection was Otherdeed, with sales rising 44.37% to $17.33 million. Doodles saw a 58.49% increase, reaching $13.88 million in total sales. Otherdeed and Doodles were followed by Mutant Ape Yacht Club (MAYC), Bored Ape Yacht Club (BAYC), and Checks VV Edition.

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The highest NFT floor value on February 5, 2023, was for Cryptopunks, at 63.99 ether at 8:00 a.m. Eastern Time. The second highest floor value belonged to the BAYC collection, with a slightly lower value of around 63.5 ether.

The most expensive NFT sales from the past week include: Bored Ape Yacht Club #8,483, which sold for $581,000 seven days ago but then sold again for $490,000 two days later; Cryptopunk #2,311, sold for $511,000 three days ago; Cryptopunk #9092, sold for $496,000 four days ago; BAYC #8,483, making the fourth largest sale after being sold twice; and Cryptopunk #9,611, sold for $482,000 four days ago.

The fifth most expensive sale was Cryptopunk #9,611, followed by Hausphases #379, which sold for $461,000 on Sunday, Feb. 5, 2023.

Tags in this story

311, 483, 611, 63.99 ether, 73.81% increase, 81% total sales, Arbitrum, Blockchain, BNB Chain, Bored Ape Yacht Club, Bored Ape Yacht Club #8, Cardano, Checks VV Edition, Cryptopunk #2, Cryptopunk #9, Cryptopunk #9092, cryptopunks, Digital Collectible Sales, Digital Collectibles, Doodles, Ethereum, Ethereum domination, Fantom, Flow, growth, Hausphases #379, Immutable X, Mutant Ape Yacht Club, nft, NFT collections, NFT sales, NFTs, Non-fungible Token, Otherdeed, Polygon, sales, sales increase, Sales NFT, Solana

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What do you think will be the next big NFT collection to make waves in the market? Share your thoughts in the comments below.

Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits: Shutterstock, Pixabay, Wiki Commons, cryptoslam.io,

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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24-hour performance

Smart Contract Token Market Soars To $332 Billion; Defi Value Reaches High Not Seen Since FTX Collapse

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Smart Contract Token Market Soars To $332 Billion; Defi Value Reaches High Not Seen Since FTX Collapse

The smart contract token economy rose 5.6% against the U.S. dollar on Thursday, reaching $332 billion. Additionally, the value locked in decentralized finance (defi) increased to nearly $50 billion, a record high not seen since the collapse of FTX.

Smart Contract Economy and Defi TVL Bounces Back

On Thursday, Feb. 2, 2023, the top smart contract platform coin economy increased to $332.86 billion, a rise of 5.6% in the last 24 hours. Currently, roughly $20.44 billion in global trading volume is paired with smart contract tokens. Of the top ten smart contract crypto assets by market capitalization, polygon (MATIC) led in 24-hour gains, rising 12% in the last day. Aptos (APT) followed with the second-largest increase, jumping 10.4% higher on Thursday.

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Polkadot (DOT), chainlink (LINK), and solana (SOL) all experienced notable gains in the last day, jumping 6% to 7.1% higher. Smart contract coins outside the top ten that saw significant increases include near protocol (NEAR), which rose 11.4%, and fantom (FTM), which jumped 17.5% on Thursday. Parsiq (PRQ) was the largest gainer with a 27.7% increase, while counterparty (XCP) was the biggest smart contract token loser, shedding 9.9% on Thursday.

The value locked in decentralized finance (defi) has also risen and is near the $50 billion range, at approximately $49.48 billion. Lido Protocol leads the defi pack, as its total value locked (TVL) today represents 17.32% of the $49 billion on Thursday.

Lido’s TVL increased by 5.79%, and the second-largest defi protocol, Makerdao, jumped 2.97% in 24 hours. Rocket Pool experienced one of the biggest defi protocol increases in the last day with a 7.38% rise. According to defillama.com statistics, the top 20 defi protocol TVLs have all seen double-digit increases in the last 30 days.

Ethereum remains the top chain in decentralized finance today, as its defi protocols dominate the total value locked (TVL) by 59.4%. Ethereum is followed by Tron, Binance Smart Chain (BSC), Arbitrum, and Polygon, respectively, in terms of TVL size on Feb. 2, 2023.

Changes over the past month show that the top ten blockchains in terms of defi TVL have also seen double-digit increases in TVL. The largest increase in the last month was Optimism’s TVL, which increased by 47.41% over the 30-day span. The last time the TVL in defi was this high was in Nov. 2022, just before the crypto exchange FTX collapsed.

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Tags in this story

24-hour performance, Aave, Arbitrum, Binance Smart Chain, blockchain rankings, blockchains, bnb, Cardano, crypto economy, crypto market trends, Cryptocurrency, Curve, decentralized finance, DeFi, DeFi protocol competition, Dominance, Double-Digit Gains, Ethereum, Ethereum Dominance, Lido Finance, makerdao, Market Capitalization, market rally, Polygon, Price Increase, smart contract asset performance, Smart Contract Platforms, Solana, Tokens, total value locked, tron, TVL growth, TVL size, uniswap, weekly performance

What do you think about the market performances of smart contract tokens on Feb. 2 and the rise in defi’s TVL? Share your thoughts in the comments sections below.

Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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