Arbitrum, a layer 2 network built on the Ethereum blockchain, is showing strong performance as the new year begins. In particular, the platform has experienced a significant rise in both trading volume and the value of its native token. ARB.
In fact, this positive momentum points to a promising trajectory for Arbitrum early this year.
Arbitrum’s Thriving DeFi Ecosystem
On-chain data from DeFiLlama shows that the Arbitrum network’s decentralized exchange (DEX) trading volume surpassed other blockchains including Binance Smart Chain, Solana, and Polygon last week. Surprisingly, on January 5th, Arbitrum’s DEX trading volume briefly surpassed that of the Ethereum mainnet, a notable milestone.
This performance can be largely attributed to the surge in cryptocurrency investors taking advantage of the network’s cost-effective transaction fees.
According to data from L2Fees, Arbitrum is one of the most economical trading networks, boasting an average fee of $0.26. In contrast, the average transaction fee on the Ethereum network exceeds $5. This may be the reason why Arbitrum’s DEX trading volume has increased significantly.
Although Ethereum’s DEX volume has regained its leading position, this data highlights that layer 2 blockchains have grown rapidly since their inception.
Additionally, according to on-chain data from L2Beat, Arbitrum’s average daily transactions per second is 12.85, making it one of the top three Ethereum-based layer 2 networks. This trails only zkSync Era’s 18.34 transactions per second and Ethereum’s 14.00 transactions per second. This reflects the significant traction Arbitrum has gained in the competitive landscape of layer 2 solutions.
Fixed total value surge
Surging DEX volumes and intensified network activity have led to a surge in the total value of assets locked within the blockchain (TVL). TVL is an important metric for measuring capital invested in blockchain or decentralized finance (DeFi) protocols.
Since the beginning of the year, blockchain has witnessed notable positive net flows exceeding $250 million. This surge led Arbitrum’s TVL to reach $2.64 billion on January 12, an impressive all-time high.
At the same time, Arbitrum’s ARB showed impressive performance, increasing by more than 20% this year. ARB has outperformed major cryptocurrencies such as Bitcoin and Ethereum.
However, the recent broader cryptocurrency market downturn has had a notable impact on the ARB token, with it down approximately 10% to $2.13 at the time of reporting.
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