Arbitrum crosses $2 billion in TVL with rollups, ready to slash ETH gas by 50%

• Ethereum gas cost hit between 100-200 gwei several times this year due to NFT usage boost.
• The launch of Arbitrum and Optimism, alongside other Layer 1 protocols, likely to drive innovation in dApps. 
• Launching on Arbitrum first boosts scalability and reduces cost for apps with fee-sensitive users.

Arbitrum has emerged as a leading scaling solution for decentralized applications, offering 10 to 100x improvements in scalability depending on the transaction. The rising number of smart contracts on optimistic rollups are likely to cut Ethereum gas fees.  

$2 billion flow into Ethereum layer 2 scaling solution Arbitrum

Within the past week, nearly $2 billion poured into Arbitrum due to rising interest in ArbiNYAN, that gained popularity as the first farming platform on the optimistic rollup. 

On September 13, the farming token hit $1.48 billion in total value locked, meaning nearly all funds on the Arbitrum network were redirected to ArbiNYAN for yield rewards. 

After a massive spike in ArbiNYAN’s TVL, the interest in the token dropped substantially. The token plunged nearly 90% within 12 hours, and it is trading at $1.61 at the time of writing. 

With Arbitrum One’s mainnet launch, two decentralized exchanges – Uniswap and SushiSwap – have joined the optimistic rollup. 

The rollup was conceived as a project that would ease the network congestion on Ethereum and reduce the transaction fees. Since its launch on August 31, Arbitrum has facilitated smooth runs for ETH-based projects, lending protocol Aave and decentralized exchange Uniswap.

Nick Chong, digital asset manager at ParaFi Capital, an alternative investment fund focused on blockchain and decentralized finance markets, shared his thoughts on Arbitrum’s growth story:

Chong explains how Ethereum’s gas cost hit between 100-200 gwei since an explosive rise in the number of DeFi, Yield farming and NFT projects on the network. Optimistic rollups like Arbitrum – full-scale – have the possibility of cutting Ethereum’s gas fees in half, depending on transaction size. 

Smart-contract projects that launch first on Arbitrum can further reduce costs and capitalize on the roll-up scalability.

Arbitrum’s adoption and increasing contribution to Ethereum’s daily transaction volume and the optimistic roll-up accounts for over 75% of the layer two solution’s TVL. 

Colin Wu, a Chinese journalist, shared Arbitrum’s growth statistics in a recent tweet:

The challenge posed by Optimistic rollups is the confirmation delay it requires, and this may lead to a slowdown in Arbitrum’s adoption by smart-contract applications. Due to enhanced scalability and compatibility with Ethereum Virtual Machine (EVM), Arbitrum is attracting smart contracts and dApps.