How Arbitrum and Optimism Made Millions in 2022

Arbitrum and Optimism raked millions successful nett contempt the extended carnivore marketplace that hammered decentralized concern (DeFi) activities and Ethereum (ETH) valuation successful 2022.

Arbitrum And Optimism Win Big

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

L2s are astonishing businesses

Arbitrum made 2,906ETH ($4.6M) of nett successful 2022

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

— Kofi (@0xKofi) January 17, 2023

Based connected idiosyncratic enactment and the fig of dApps launched connected Ethereum, coagulated statistic amusement that developers similar the archetypal astute contracting implicit competitors. Since launching, the web has go a hub of activity, spearheading breathtaking innovations successful decentralized concern (DeFi), NFTs, metaverse, and gaming. 

Trackers successful mid-January 2023 state that the full worth locked (TVL) successful Ethereum stands astatine $26.88 billion, representing much than fractional of the assets locked crossed DeFi. The driblet successful TVL mirrors the autumn successful ETH prices successful 2022.

Ethereum price, regular illustration | Source: ETHUSDT connected TradingView.com

In essence, Ethereum dominates with DeFi enactment implicit the Binance Smart Chain (BSC), trailing astatine little than a 4th of the TVL of the starring platform, astatine $4.65 billion.

Despite this dominance, Ethereum’s scaling occupation straight impacts Gas fees. As request picks up, Gas fees fluctuate, starring to arsenic overmuch arsenic $50 connected this blockchain to station a elemental transaction. Deploying astute contracts outgo overmuch more, sometimes upwards of $80, erstwhile the web is congested. As an illustration, the mean transaction fees connected Ethereum stood at $0.63 connected January 17. However, connected May 1, 2022, this fig stood astatine implicit $23.

Ethereum layer-2 protocols are portion of the scaling attempts made by developers to relieve the mainnet. By routing transactions off-chain, layer-2 solutions tin assistance standard Ethereum but, astir importantly, trim Gas fees by respective magnitudes. 

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

Ethereum Layer-2 Protocols | Source: L2Beat.com

Riding connected Network Effects

Although associated fees successful Arbitrum, Optimism, and each different layer-2 networks are negligibly low, these protocols tin nett based connected activity. For each transportation oregon astute declaration execution of Arbitrum and Optimism, determination is an associated fee. 

Arbitrum and Optimism charge $0.11 and $0.23 for elemental transfers, payable successful ETH. If a astute declaration is deployed, the fees emergence to $0.30 and $0.35. They marque much fees arsenic much users deploy astute contracts oregon initiate transfers. Accumulating these amounts implicit months construe to a tidy nett for the protocol operator. 

In 2022, Ethereum layer-2 TVL fell astir 40% from $7.45 cardinal to $3.3 cardinal successful July 2022. Outflows were little compared to layer-1 DeFi. As the marketplace recovers, layer-2 operators whitethorn apt station higher gross arsenic users determination assets to dApps launched connected these scalable and low-fee protocols.

Featured representation from Flickr, Charts from TradingView.com.