Key Takeaways:

Key Takeaways:

• Less than a week after launch, the value locked on Arbitrum Bridge is approaching Polygon. Over the past few weeks, Avalanche, Fantom, and Harmony have released a series of liquidity mining plans. Nonetheless, Arbitrum has been able to outperform its EVM-compatible competitors. This is a testament to the level of anticipation the market has for Arbitrum's launch.

• Arbitrum's bridge only had $22 million locked up on Sept. 1, meaning the bridge accounted for only 0.047% of the total TVL of the Ethereum bridge. Over the past two weeks, some speculative yield farming and established protocols have pushed this share up to 32% - a 640x increase in rebridged shares in just 15 days.

• Arbitrum’s takeoff in early September coincided with a sharp drop in the median daily gas price on the Ethereum mainnet. In theory, this makes sense, since an L2 like Arbitrum can scale Ethereum's throughput to a large extent. However, it is difficult to determine whether this is just an exciting coincidence or a causal relationship.

• Market Dynamics

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Market Dynamics

Markets rallied for the second day in a row, with each session (Asia, Europe, North America) opening stronger. CRV is definitely popping today, but other top DeFi tokens are also in the green.

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Busy Arbitrum Bridge

• Ethereum has the most well-capitalized DeFi ecosystem, with over $100 billion in capital locked in smart contracts. Therefore, it makes sense to assess how much of this capital is transferred to other networks.

• Less than a week after launch, the value locked on Arbitrum Bridge is approaching Polygon. Over the past few weeks, Avalanche, Fantom, and Harmony have released a series of liquidity mining plans. Nonetheless, Arbitrum has been able to outperform its EVM-compatible competitors. This is a testament to the level of anticipation the market has for Arbitrum's launch.

• The sharp increase over the weekend brought the total value locked on Arbitrum Bridge to $2.4 billion. Polygon bridge TVL, on the other hand, has been slowly declining and has hovered around $2.5 billion since its peak of $4.6 billion. Of note are Fantom and Avalanche, both of which have done a good job attracting funding.

• Arbitrum’s bridge contract only had $22 million locked up on Sept. 1, meaning the bridge accounted for only 0.047% of the total TVL of Ethereum’s various bridges. Over the past two weeks, some speculative yield farming has pushed this share up to 32% - a 640x increase in bridge share in just 15 days.

• As mentioned above, most of Arbitrum's capital is farming a highly speculative token called NYAN, so this doesn't necessarily indicate that this was driven by quality projects migrating to Arbitrum. However, given the size of the projects that will soon be deployed on Arbitrum, don't naively expect that this won't happen.

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Mainstream currencies account for the majority of bridge assets

• Digging deeper into the breakdown of assets bridged from Ethereum, it's no surprise that WETH/ETH, USDC, USDT, DAI, and WBTC account for nearly 90% of asset value.

• The reason is obvious: these assets on the Ethereum DeFi layer are very liquid, partly due to their large market cap. Most DeFi liquidity pools and yield farming support one or all of these assets, making them the most logical choice for bridging assets and entering new ecosystems.

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Coincidence or explosion of L2 influence?

Arbitrum’s takeoff in early September coincided with a sharp drop in the median daily gas price on the Ethereum mainnet. In theory, this makes sense, since an L2 like Arbitrum can scale Ethereum's throughput to a large extent. However, it is difficult to determine whether this is just an exciting coincidence or a causal relationship.

It’s worth noting that NFTs seem to have lost momentum in recent days – they contributed significantly to the gas price increase from July to September. The slowdown of the NFT craze has undoubtedly played a vital role in bringing gas prices down again.

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DeFi fall?

So from the four charts above, it's clear that the future of L2 looks very promising (albeit with some hiccups). The market may be bullish on DeFi assets, despite the fact that these assets have underperformed in the past six months.

Blue chips such as CRV, SNX, AAVE and COMP have begun to lead the rally, followed by derivative protocol tokens such as PERP and MCB. Despite undoubtedly having the safest product-market fit, DEXs still lag behind the rest of DeFi, highlighting a potential opportunity for investors.

This article is from The Way of Defi, reproduced with authorization.

This article is from The Way of Defi, reproduced with authorization.