Arbitrum: The currently underestimated L2 pioneer, ecological projects are about to explode

Original Title: 《Arbitrum Stylus - A World of New Opportunities》

Written by: DEGEN SENSEI

Compiled by: 深潮 TechFlow

Although Base is currently the most talked-about in Layer 2, we seem to have forgotten that Arbitrum has long been a market leader, despite local peaks in activity around the time of the ARB airdrop.

Therefore, in this article, we will explore the impact of Arbitrum Stylus and the current state of the Arbitrum ecosystem.

Quick Overview of Arbitrum Stylus

Stylus is an upgrade to Arbitrum Nitro that adds a second equivalent virtual machine to the EVM, executing WASM (WebAssembly) instead of EVM bytecode. The core value proposition of this upgrade is that you can now build smart contracts using different languages such as Solidity, C, C++, and Rust.

Those who are optimistic about Solana's long-term prospects have a very talented developer ecosystem. These developers can easily use Arbitrum Stylus to build smart contracts using the Rust programming language they are familiar with. This will also make it easier for protocols on Solana to deploy Arbitrum as a second chain when they consider expansion. Anyone who has been around here for a while knows that protocols expanding to Arbitrum often lead to positive price action. If Solana continues to develop, projects built on Arbitrum can take Solana's expansion into account and be active on two different L1s.

Ecosystem Activity

It is not surprising that the community-supported governance proposal to provide ARB incentives to the ecosystem came after the Camelot proposal was rejected amid significant controversy. After extensive discussion, the community concluded to incentivize the ecosystem with 50 million ARB, which could have a positive impact on the entire ecosystem.

So, let's take a look at some interesting upcoming protocols:

Tapioca

Tapioca is a long-awaited decentralized cross-chain currency market within the Arbitrum ecosystem, directly competing with Radiant. The value proposition of Tapioca is to launch a decentralized cross-chain stablecoin that can be minted through a CDP model. You can also deposit interest-bearing assets that will repay your loan over time while you can still take a stablecoin called USD0 to different DeFi cross-chain opportunities.

The protocol is still in the testing phase but is set to launch soon and is definitely worth keeping an eye on.

Dolomite

Dolomite is a decentralized margin protocol combined with a DEX, achieving higher capital efficiency. The protocol reuses liquidity on the platform to provide higher yields for end users. For example, if you deposit tokens as a lending supply on Dolomite, that asset can also earn trading fees in addition to its loan yield to amplify returns. You can also directly collateralize assets through the platform, gaining additional capital efficiency and autonomy.

The protocol is still in its early stages and has not yet launched its token.

Parallax

Parallax is a decentralized yield optimization protocol that operates vaults to facilitate yield liquidity mining strategies. They operate auto-compounding vaults that can be accessed on Arbitrum while being able to operate strategies on the mainnet. This allows those with smaller capital to participate in Ethereum mainnet yield liquidity mining strategies at a lower cost. The protocol places a strong emphasis on LSTfi and plans to build a set of customized strategies for this market segment.

The protocol is still in the testing phase but recently launched its token PLX.

Empyreal

Empyreal aims to democratize blockchain development through its SDK, hoping to bridge the gap between acquiring talented developers and the complexity of building exciting applications on-chain. Their current products include the Oasis privacy layer and the ability to easily use off-chain and on-chain data in their applications.

The protocol's token is EMP, which can be used to charge fees for those using its services through staking protocols to earn revenue.

Hyperliquid

Hyperliquid is a decentralized perpetual exchange operating as Arbitrum L3. It benefits from running on its own application chain, providing near-instant settlement and offering up to 50x leverage on your trades. The order book is fully transparent and is gaining popularity as it provides a channel for trading perpetual contracts on popular cryptocurrencies.

While Arbitrum has lagged in L2 for a long time (essentially since the ARB airdrop), Optimism and Base have dominated. However, it is clear that the trend is changing.

If incentives start to be distributed, users must acquire tokens and use certain protocols to receive these incentives, which will naturally stimulate activity in the ecosystem.

Is the ARB ecosystem season coming? The liquidity of stablecoins suggests this is possible and is worth tracking. Notably, trading volume has significantly increased over the past period.

Don't forget that EIP-4844 will launch at the end of the year, which is often overlooked by short-term thinkers. It is another powerful catalyst for Layer 2 that currently seems to be ignored.