With the popularity of the Arbitrum ecology, the Optimism ecology is not to be outdone. A battle between red and blue CP is slowly unfolding…
Although both Optimism and Arbitrum use Optimism Rollup, they are still different. The two use different dispute resolution processes to validate transactions, with Optimism employing a single round of fraud proofs performed on the first layer, while Arbitrum employs multiple rounds of fraud proofs performed off-chain. In addition, the EVM compatibility of the two is different. Arbtirum supports all EVM compilation languages, while Optimism only has the Solidity compiler. Although the two Layer 2s were launched at about the same time, these two small design differences laid the foundation for subsequent ecological development.
Arbitrum VS Optimism
Figure 1: Comparison of Arbitrum and Optimism
As shown in Figure 1, with Arbtrium’s fully compatible EVM, many DeFi projects can be easily deployed on Arbitrum, while Optimism set up a whitelist at the beginning of its launch, and only projects on the whitelist can be deployed on Optimism , so from the very beginning, the number of TVL and DApps of Arbtrum has far exceeded that of the Optimism ecosystem, and Arbtrium has occupied more than half of the market share. Optimism announced in December 2021 that the whitelist restrictions would be lifted, and it would be upgraded in March 2022 to reduce transaction costs. After receiving a US$150 million Series B round of financing jointly led by A16z and Paradigm, the optimistic ecology began to officially set sail, and TVL also Gradually grow.
Figure 2: Comparison of Arbitrum and Optimism in daily active users
With the recent market recovery, the transaction demand of DeFi protocols on Arbitrum has increased, and daily active users have gradually soared, increasing by 163% in the past six months. Optimistic daily active users fluctuate greatly. The reason is that Optimism will launch a series of network reward activities. Users who interact with the Optimism network can obtain tokens or NFT. After the rewards end, daily active users will decrease significantly. For example, after the end of the Quests event in January 2023, daily active users have returned to the basic active user level. From this perspective, it can be found that Arbitrum relies on native application development to obtain user retention, while Optimism relies more on network incentives to obtain short-term user retention.
Figure 3: Comparison of Arbitrum and Optimistic Daily Volume and Fees
As mentioned earlier, the trading volume of Arbitrum and Optimistic has increased significantly in the past 6 months, but the growth of Optimistic trading volume has slowed down after the end of the incentive activity in January. In terms of transaction fees, both Arbitrum and Optimism have reduced their fees through network upgrades, and the increase in the number of transactions has also reduced users’ fees, and the transaction fees of the two have gradually converged.
The number of Arbitrum and optimistic ecological projects has also increased by 145% and 235% respectively in the past year. The projects on Arbitrum started earlier, and after a period of operation, many native projects have gained good user holdings, especially the DeFi projects on Arbitrum, which provide Ethereum users with a low-fee, low-latency transaction experience. The projects on Optimism are more migrations of mature projects, and there are fewer native projects. The following will briefly sort out and compare the native projects on Arbitrum and Optimism.
Arbitrum Ecological Project
In 2023, the market as a whole will pick up. Arbitrum is represented by DeFi derivatives, and ecological projects are fully blooming, and the popularity is rising.
Launched in September 2021, GMX is a DEX that supports spot and perpetual contracts. Different from the order shop or AMM model adopted by dYdX or Perpetual protocols, GMX adopts a new “global liquidity model”, that is, users can pass Directly purchase and pledge its liquidity token GLP to provide liquidity to GMX. As a counterparty, GLP liquidity providers can obtain the profits of the losers in the liquidity mining pool, so the price of GLP will rise or fall with the profit or loss of trading users. The advantage of this new global liquidity is that the capacity of the GLP mining pool is larger than that of the trading pair mining pool, and the transaction price is fed by the Chainlink oracle and other DEX average prices, which greatly reduces the impact of slippage.
Treasure Dao (Magic) is a decentralized NFT ecosystem built on Arbitrum. Starting from the resources of the Metaverse, the ecological construction is carried out around the economic mechanism. The tasks of the ecosystem are economically linked through the token MAGIC. The project was established in August 2021. When it was launched, it focused on NFT financialization, supporting users to conduct NFT transactions and loans. Users can obtain token MAGIC mining income by staking Loot, Treasure and other NFT assets or AGLD (Loot community derivative token). MAGIC token is the governance token of Treasure Dao, which runs through the entire ecology of the project. Holding the token MAGIC can have certain governance rights, voting rights and decision-making rights. The Beacon, a game supported and developed by Treasure Dao not long ago, received a good response in the market once it was launched. In the future, with the continuous enrichment and creation of its ecology, we look forward to the performance of its ecological token MAGIC.
Jones DAO is a yield, strategy, and liquidity protocol with a vault that provides one-click access to institutional-grade options strategies. Jones DAO provides vaults for multiple tokens and various risk profiles, through its strategies to generate income for tokens deposited in Jones Vaults. With just one click, users can earn some of the best yields in DeFi protocols. Its strategy unlocks liquidity and capital efficiency for DeFi protocols through yield tokens. The goal of Jones Vaults is to generate yield through a sophisticated strategy where the vault’s token appreciation is denominated in the native vault token, with the goal of accumulating more tokens over time.
Jones DAO primarily targets three types of users: 1. Users who do not want to actively manage their strategies or deploy strategies using a treasury; 2. Users who do not want to lock up their tokens, but instead want to keep them liquid; 3. An agreement to earn extra income on a position.
Radiant Capital is a cross-chain lending protocol launched on Arbitrum and built on Layer0. Users can deposit collateral on one network and achieve seamless lending on another network. Radiant Capital is currently the fastest-growing lending protocol on Arbitrum. It is characterized by multi-chain lending. Simply put, depositing collateral on this chain can lend money on another chain. It has a native cross-chain market, adopts the existing money market model, builds a cross-chain model locally, and is completely operated by its community. The current TVL has reached 485 million US dollars. Radiant is a completely self-made team with no VC funding or seed rounds. The Radiant protocol rewards all fees to the pledgers, so that the pledgers can obtain relatively good returns, most of which are paid in the form of USDC. Radiant’s goal is to consolidate the fragmented liquidity (approximately 22 billion) across the top 10 interaction layers.
Dopex is a decentralized options platform that provides liquidity for option traders through an option mining pool, and enhances the interests of both buyers and sellers of options contracts through the rebate system and arbitrage function. The core function of Dopex is to provide a single-currency pledge option library (SSOV). SSOV allows users to lock tokens within a specified period of time and obtain income on their pledged assets. The user deposits assets into a contract, and the system will sell the user’s deposit to the buyer as a call option, which will be exercised at a fixed price at the expiration of each period they choose. To put it simply, the user deposits assets by selling a call option or a put option, and correspondingly there will be buyers who buy a call or put option for hedging purposes.
The dual-token economic model is adopted in Dopex. DPX is the governance token and the protocol fee token. The fees charged in the protocol mining pool purchase, swap, transaction mining pool fines, and policy vault are denominated in DPX. All fees collected are 15 % will be distributed to DPX holders proportionally after the end of each epoch (period). rDPX is used as Rebate token. In order to eliminate the risk of loss caused by extreme swings, option holders can get rDPX token compensation every epoch. rDPX can be used to mint synthetic assets, or as collateral to further expand asset exposure.
Optimism ecological project
The Optimism ecology started a little later, with fewer native projects, and TVL is also in the early stage, but it has also attracted more and more developers under the encouragement of the ecology Grant.
Velodrome Finance is a liquidity solution for the protocol on Optimism. The TVL on Optimism surpassed other leading projects. The TVL reached 309M US dollars, and the bribery funds hit a new high recently. Velodrome was adapted by the veDAO team from Solidly launched by Andre Cronje’s team. Some modifications were made on this basis. The token design also refers to Solidly’s (3,3) mechanism.
Liquidity providers can get VELO tokens as rewards, and after VELO is locked, they can get NFT governance token veVELO. Holding veVELO can govern the agreement, determine the weight that VELO assigns to each liquidity mining pool, obtain all transaction fees and all bribery rewards, and reduce the dilution of voting rights through rebase. With the increase of bribery and transaction fees, the income of veVELO holders will also be higher, which will lead to an increase in the price of VELO, and the increase in the income of liquidity providers will attract more liquidity, and better liquidity will further increase Increase transaction fee income and form a flywheel effect.
Sonne Finance is a native lending project on Optimism. As of March 9, 2023, its TVL is 39.72M US dollars, and its TVL is second only to AAVE among lending projects. Sonne’s goal is to become the native lending project on Optimism that provides the most competitive incentives in the money market and has the deepest liquidity. Sonne also combines the token economy with Velodrome. Sonne can be used to bribe Velo holders, and the earned VELO will also be distributed to Sonne holders, thereby improving the overall liquidity of Sonne Finance.
Lyra is an options AMM protocol that allows traders to buy and sell crypto options based on liquidity pools. In response to the problems of high free, high risk and low liquidity faced by existing DeFi option agreements, Lyra proposes to reduce the risk of LP liquidity providers and improve the liquidity of automated market makers AMMs through active risk management. Lyra automatic market maker uses the Synthetix protocol to help liquidity providers reduce Delta risk. The Lyra automatic market maker will calculate the overall Delta risk of the agreement, and then actively open orders on the Synthetix platform to hedge to maintain Delta Neutral, so that the impact on option prices when asset prices change is small, reducing risks for liquidity providers.
Pika Protocol is a native decentralized perpetual swap exchange on Optimism, featuring high leverage (up to 100 times), low slippage and low handling fee trading experience. Recently, rebate rewards of OP tokens can be obtained for transactions on Pika, and TVL has increased by 55% in the past three months. The project has not yet issued coins, and it is expected that there may be an airdrop plan.
Collab.Land is a tool widely used by blockchain projects in Discord and TG. It supports any token holders to join Discord and use the Collab.Land robot to verify their membership. It is used to verify whether the user wallet has project assets. It is currently DAO tools and SocialFi products with high usage rates. COLLAB tokens are mainly used for governance and usage within the Collab.Land ecosystem, holders can vote on feature requests, provide bounties, manage trading markets, and more.
Arbitrum and Optimism are currently the two most popular Rollup solutions on Ethereum, and both are very promising Layer 2 protocols. Both protocols have their own advantages and are also regarded as DeFi paradise. Although it lags behind Ethereum in terms of capital volume and daily transactions, it has attracted a large number of projects and users because of its faster transactions and lower fees, and each upgrade can bring users a better experience. However, if they want to achieve long-term success, the two must have their own strong ecology, not just an appendage of Ethereum. Therefore, expansion is also a multi-line war from another perspective. There may be one winner or multiple winners in this war. The ultimate goal is to bring benefits to users and the entire DeFi ecosystem.
The above assets can be traded on CoinEx, and this article does not constitute investment advice.