Besides Uniswap, what other DeFi protocols choose Arbitrum for scaling?
Layer 2 is now at what stage? This is not the end, nor even the beginning of the end, but just the end of the beginning.This article is from Bibi News, original title: "Arbitrum's Landing on Layer 2", author: Xiao Niu.
On May 29, the Uniswap community passed the proposal to "deploy Uniswap v3 on Arbitrum" with nearly 100% support. Uniswap founder Hayden Adams previously stated that if the proposal was approved, he would follow the community's wishes and deploy Uniswap v3 on Arbitrum.
On the same day, the Arbitrum development team Offchain Labs announced the deployment of the Ethereum mainnet test version Arbitrum One, which is now open to developers. Currently, over 250 teams have applied to access the developer testnet.
With Uniswap's deployment and over 250 teams applying, Arbitrum's first-mover advantage seems to be evident.
As Arbitrum gains popularity, three questions need to be considered: Why is Arbitrum chosen by the market? Who is choosing Arbitrum? What potential issues might arise from this Layer 2 experiment?
Why is Arbitrum chosen by the market?
First, like Optimism, Arbitrum is a Layer 2 scaling solution based on Optimistic Rollup. Therefore, when comparing Arbitrum with Layer 2 scaling solutions based on ZK Rollup, Arbitrum can demonstrate the advantages of Optimistic Rollup.
Optimistic Rollup has the Optimistic Virtual Machine (OVM), which is compatible with the Ethereum Virtual Machine (EVM) execution environment and can support both simple payments and complex smart contracts. This means that under ideal conditions, dApps can relatively easily port their code to Optimistic Rollup. Although its security is not as strong as ZK Rollup, the difficulty of choosing Optimistic Rollup is relatively low, making it more likely to be implemented in a short time.
Arbitrum has the following advantages compared to Optimism.
Although both Arbitrum and Optimism use fraud proofs, Arbitrum employs multi-round fraud proofs, while Optimism uses single-round fraud proofs. The comparison of these two different fraud proof methods shows that multi-round fraud proofs offer two advantages.
First, it only needs to generate one state proof for an entire batch of transactions and publish it on-chain, reducing costs.
Second, the Layer 1 block gas limit is no longer important.
The third advantage is that Arbitrum is fully compatible with EVM and supports any EVM language (such as Vyper, YUL+, etc.).
How important is full compatibility with EVM? dForce founder Min Dao bluntly stated in a social media post: Optimism's lack of 100% compatibility with EVM is a major strategic misjudgment. Not to mention the delayed market launch, those people do not understand that 99.9% compatibility and 100% incompatibility are essentially the same thing.
The fourth advantage is obviously the advantage of launch time. Optimism's mainnet launch has been delayed to July, while Arbitrum's mainnet test version has already been opened to developers. More than a month is a good opportunity for Arbitrum to seize the market. As a high-frequency application, the demand for deploying on Layer 2 scaling solutions is increasingly strong, and Uniswap, as the leading DEX on Ethereum, plays a significant role.
Who is choosing Arbitrum?
Uniswap
The Uniswap community passed the proposal to "deploy Uniswap v3 on Arbitrum" with nearly 100% support. According to Uniswap founder Hayden Adams' previous commitment, deploying Uniswap v3 on Arbitrum is a done deal.
The Uniswap founder has expressed his preference for Optimistic Rollup scaling solutions and had already communicated with the Optimism team about deployment before Uniswap v3 went live. According to recent tweets, the plan to deploy Uniswap v3 on Optimism has not changed, while deploying Uniswap v3 on Arbitrum is in accordance with the community's wishes.
SushiSwap
On May 31, SushiSwap's official Weibo announced: SushiSwap has been deployed on Arbitrum.
SushiSwap's deployment on Arbitrum is not surprising.
As early as February 7 this year, a community member named "cryto_navi" posted a proposal on the SushiSwap forum to "deploy SushiSwap on Arbitrum Rollup," which received an 89% support rate in a subsequent vote.
If this was just a proposal, then the tweet "Arbitrum" posted by SushiSwap co-founder 0xMaki on May 26 was a straightforward endorsement.
SushiSwap has been exploring Layer 2.
As early as early March, SushiSwap's CTO revealed on Twitter that he was considering Layer 2 design and weighing Rollup solutions.
In early May, SushiSwap completed its deployment on Polygon and launched liquidity mining. As of now, the locked amount of SushiSwap running on Polygon has reached $800 million, ranking third among DeFi projects on the Polygon chain.
MCDEX
The decentralized perpetual contract and futures exchange MCDEX, short for MonteCarlo DEX, is the first project to adopt the Arbitrum scaling solution. MCDEX had been operating on the Arbitrum testnet and is scheduled to deploy MCDEX v3 on the Arbitrum mainnet on May 28.
MCDEX explained its reasons for choosing Arbitrum in a Medium post earlier this year. In addition to the previously mentioned multi-round interactive fraud proofs that reduce costs and full EVM compatibility, there are two more reasons.
First, compared to Optimism, Arbitrum provides more detailed documentation, code, and an unrestricted testnet.
Second, the sequencer model introduced by Arbitrum allows users to quickly confirm transaction status on Layer 2.
OKEx
In early May, OKEx announced that it was collaborating with Arbitrum to bring Ethereum Layer 2 scaling directly to users. OKEx will enable its features so that users can deposit directly onto the Arbitrum mainnet without interacting with Ethereum's base layer. While Arbitrum confirms the mainnet launch date, OKEx is working to speed up the integration.
DODO
DODO co-founder Diane Dai tweeted in February this year announcing the deployment of DODO on Arbitrum. Recently, Puzzle Ventures managing partner Jerry Zhou revealed that DODO is among the first batch of projects collaborating with Arbitrum and will soon launch on the Arbitrum mainnet.
In addition to the exchanges mentioned above, Arbitrum launched Arbitrum Rollout on the testnet in January this year, establishing a DeFi ecosystem demo on the Arbitrum testnet.
The list released by Arbitrum at the end of January showed that six external projects are developing on Arbitrum and participating in the DeFi demo. They are:
- Decentralized exchange Bancor
- Decentralized auction platform Bounce
- AMM-based decentralized exchange BurgerSwap
- Cross-Rollup transfer application HopProtocol
- Decentralized perpetual contract and futures exchange MCDEX
- Multi-chain, governance-supporting AMM Swapr
In addition, the infrastructure within the Arbitrum ecosystem, including wallets, oracles, tools, and browsers, is also very strong.
Supported wallets include: MetaMask, MathWallet, Formatic, Portis, WalletConnect, Burner Wallet.
The oracle that Arbitrum collaborates with is Chainlink. Although currently only Chainlink is involved, its influence in the oracle field somewhat affects projects' choice of Arbitrum.
Tools within the Arbitrum ecosystem include Solidity, Vyper, blockchain data indexing project The Graph, Web3 blockchain cloud infrastructure platform Ankr, Ethereum development environment tool Hardhat, blockchain data platform Blocknative, ethers.js, web3.js, Brownie, and blockchain development platform Alchemy.
On the browser front, Arbitrum recently reached a partnership with Etherscan, which will develop a browser for Arbitrum, expected to be completed by the end of July.
Arbitrum is an experiment
What stage is Layer 2 currently in? The most memorable answer is Churchill's quote: This is not the end, nor is it even the beginning of the end; it is merely the end of the beginning.
The development of the Layer 2 track is still in its early stages, and the scaling solutions on this track are all pioneers.
Due to the delay in the launch of Optimism's mainnet, Arbitrum's opportunity has indeed arrived. Many teams willing to deploy Layer 2 networks are choosing Arbitrum, as evidenced by the "over 250 teams" number.
As more and more projects deploy on the Arbitrum network, some issues are bound to arise in the future, and these issues are part of this experiment.
From the current two scaling solutions, it is not difficult to see that the security and finality speed of Optimistic Rollup are not as strong as those of ZK Rollup. In the short term, fast implementation is an advantage, but in the long run, scaling solutions within the Optimistic Rollup category still need optimization to adapt to large-scale applications.
Currently, the Arbitrum One mainnet test version is only open to developers, which is actually good news. The Arbitrum mainnet test version has just gone live, and the specific situation is unknown. The development team needs to test on Arbitrum One and get the project up and running. After experiencing the testnet and mainnet test version, Arbitrum's network performance should gradually stabilize and become efficient. Additionally, as many teams deploy applications on Arbitrum, some experiences and new developments will emerge, promoting the overall development of the Layer 2 track.
Finally, I want to remind development teams: Only you know whether the shoes fit. Development teams need to carefully weigh the pros and cons of various scaling solutions and make decisions based on the characteristics of their projects. Moreover, Layer 2 is a hard requirement for high-frequency applications. For low-frequency applications, Layer 2 is not a must-have option.
