The project launched Aug. 31 and currently holds $2.23 billion in assets in various DeFi projects, up from $238 million on Friday, according to L2Beat, an analytics platform for Layer 2 protocols. For comparison, the rival layer 2 solution dYdX has $329 million locked, while Optimism, another closely tracked project, has $155 million. Polygon, which isn’t tracked by L2Beat, has $4.7 billion locked, according to Defi Llama.
Layer 2 solutions, which work in a similar way to plug-ins to help speed transaction throughput on bigger blockchains, have drawn increasing interest from digital-asset investors this year. This is partly due to congestion on Ethereum, where a frenzy of activity in the fast-growing realm of non-fungible tokens, or NFTs, has driven up the cost of fees to levels some users consider exorbitant.
Polygon’s MATIC token has been one of the hottest in all of cryptocurrency markets this year, increasing 69-fold in price to a market capitalization of $8.3 billion. Arbitrum doesn’t have its own token.
Arbitrum can process transactions at lower cost than Ethereum by handling them on a “sidechain” that uses a technology called “optimistic rollups.” Transactions on these sidechains are then settled in batches on the main Ethereum blockchain.
The number of unique addresses on Arbitrum has also seen an impressive three-fold rise to 70,000 since Friday, while the network’s daily transaction volume has surged above $250,000 in just ten days.
According to the crypto-markets data website CoinGecko, ArbiNYAN is the most significant contributor to Arbitrum-based DeFi projects, with nearly $1.5 billion in assets. Launched just Thursday, ArbiNYAN is a meme-token project designed to bring liquidity and users to Arbitrum. Since the launch, the token has witnessed intense volatility, rising from 0.3 cents to as high as $7 before falling to $1 at press time.
While Arbitrum tops the list of largest layer 2 networks in terms of DeFi collateral locked, it is the seventh-largest project overall for DeFi, just ahead of Fantom and just behind Avalanche, per Defi Llama. Ethereum retains a dominant position, with more than $118 billion in assets, versus $16 billion for second-place Binance Smart Chain followed by $11.3 billion for Solana.
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