Bankless: Arbitrum Season is coming, what are the opportunities worth paying attention to?
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Compilation of the original text: The Way of DeFi
How to Gain Arbitrum Eco Exposure
Arbitrum season is coming.
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Additionally, there are several catalysts that are poised to benefit from enhanced trading capabilities and help drive this trend. First up is Arbitrrum Odyssey, a campaign aimed at encouraging the use of applications on L2. Odyssey should bring users and attention back to the web.
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So far, Arbitrum's ecosystem has been guided organically. Despite the lack of network-wide incentives, Arbitrum is still the largest L2 by TVL at over $2.58 billion. Launching a token will push that number even higher, as it may be used to incentivize liquidity and encourage the migration of more popular, L1-based applications.
While these catalysts have caused the network to become a buzzword, the network’s adoption is still in its early stages — according to Nansen, only 0.45% of all ethereum addresses use Arbitrum.
So, how do you get in touch with this ecosystem?
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1. Pure game: Arbitrum native project
The most direct way to gain exposure to the Arbitrum ecosystem is by investing in native projects.
These early adopters will be the main beneficiaries of the inflow to Arbitrum as it will likely drive growth in TVL, revenue, users and other core KPIs.
There are many Arbitrum-based projects across different sectors that investors can choose from to suit their portfolio composition and risk profile.
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GMX (GMX)
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GMX TVL - Source: DeFi Llama
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Dopex (DPX)
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Dopex TVL - Source: DeFi Llama
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Mycelium (MYC)
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Mycelium TVL - Source: DeFi Llama
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Other projects that need attention
There are many other exciting projects on Arbitrum that investors should keep an eye on, including Umami Finance (UMAMI), a project building a no-release yield vault; Vesta Finance (VSTA), a lending protocol and issuer of the VST stablecoin ; Premia (PREMIA), an options protocol; and Galleon (DBL), a DAO for building structured products.
While these tokens have smaller circulating market caps and less liquidity than the three listed above, they should all benefit from the expected growth of the ecosystem.
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2. Picks and shovels: cross-chain infrastructure
Another way investors can gain exposure to Arbitrum is by investing in"pick and shovel", or infrastructure projects that facilitate adoption across the L2 ecosystem, but are not tied to any particular single rollup.
The most obvious"pick and shovel"It is a cross-chain bridge and an information transfer protocol. While the field has been plagued by security concerns over the past year, these systems remain a critical part of the infrastructure as they allow users to move assets around the network quickly and easily and, critically, bypass optimistic rollups 7-day withdrawal period.
While they may not benefit directly from Arbitrum's growth like native projects built on top of Arbitrum, they are still poised to reap the rewards of expected liquidity inflows into L2, as their revenue is based on fees that are a percentage of transfers between networks .
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Synapse, Hop and Stargate
Synapse (SYN) is a cross-chain messaging protocol. Synapse Bridge enables users to exchange between typical assets (assets that are natively issued on L1 or L2) using AMM. Synapse has facilitated $11.3 billion in bridging volume to date and plans to launch Synapse Chain, an optimistic rollup settlement to Ethereum utilizing Snyapse's cross-chain messaging capabilities. SYN currently has a market cap of $233 million and an FDV of $311 million.
Hop Protocol (HOP) is another Tokenized cross-chain liquidity protocol. Hop, similar to Synapse, uses an AMM to facilitate the exchange between typical assets and has facilitated $2.7 billion in bridging volume to date. HOP currently has a market cap of $5 million and an FDV of $135 million.
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3. Airdrop
Another way investors can gain exposure to Arbitrum is through airdrops.
While Synapse, Hop, and Stargate all have tokens, there are many other projects that have yet to launch tokens and may reward early users and community members with token distribution if/when they do.
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Arbitrum Ecological Token Airdrop
The last way investors can gain exposure to the Arbitrum ecosystem is through airdrop farming. Since it doesn’t require purchasing any tokens, airdrop farming is a great way for risk-averse investors to share in the network’s upside.
Although it has not been officially confirmed, it is certain that Arbitrum will launch a token. Tokens not only provide upside for investors and team members, but if allocated properly, can serve as an incredible tool to incentivize desired behavior and guide an ecosystem. Since other rollup providers such as Optimism, Polygon, ZK Sync, and Starkware have or plan to launch tokens, if Arbitrum does not launch their own tokens, they will be at a competitive disadvantage.
Assuming that tokens are inevitable, Arbitrum's tokens are highly likely to be airdropped to early users (Optimism and Starkware allocated 19% and 9% of tokens to early users, respectively), and should (literally) pay the corresponding proportion.
To maximize airdrop surface area, users should take two approaches. One is to use cross-chain bridges on the network and conduct transactions.
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Optimism Airdrop #1 Standard
For those willing to be more active, the second option is to take the Arbitrum Odyssey. Odyssey is an eight-week event designed to encourage users to interact with protocols deployed on Arbitrum and reward them with custom NFTs (more on this in William Peaster's Metaversal guide).
Although Odyssey started in June, it was delayed by the second week due to network congestion caused by user participation activities. The Offchain Labs team says the event will resume after Nitro is complete -- so, keep an eye on Arbitrum's social media and their Discord!
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Arbitrum Season is coming
Arbitrum is poised to experience significant growth in the coming weeks and months.
Between native DeFi projects, through cross-chain infrastructure and retroactively farming their native tokens, there are many ways for investors to gain exposure to the Arbitrum ecosystem.
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