The Arbitrum Ecosystem: Innovating on DeFi

Arbitrum’s ecosystem is still in its infancy, launching just over a year ago in August 2021, but it already has established itself as the hub for DeFi innovation. Cheap gas costs, high transaction throughput, and ease of smart contract portability make Arbitrum the go-to place for DeFi protocols and applications.

Although Arbitrum is primarily used for decentralized finance (DeFi), with native projects such as GMX and Camelot accounting for approximately $500M+ in total value locked in smart contracts (TVL), it is also a popular destination for Gaming and NFT projects. Treasure, the popular gaming platform, accounts for $11M+ in TVL, with its NFT marketplace Trove driving upwards of $16M in volume.

This post will highlight Arbitrum’s cornerstone protocols and applications – the projects that provide strong foundational support to the ecosystem. Additionally, it will shine a spotlight on several nascent protocols and applications that are currently seeking grant funding to continue driving innovation and growth.

Cornerstone Projects - DeFi

The 10 leading protocols on Arbitrum, as measured by TVL are GMX, Uniswap, Radiant, Aave, Stargate, Balancer, Camelot, Sushi, Pendle, and Mux.

From these 10 protocols, GMX and Camelot, featured below, are native to Arbitrum.

*Note that Arbitrum DAO is currently administering a short-term incentive program that will distribute up to 50 million ARB from its treasury to active protocols to fund ecosystem growth and drive new activity on the network. You can read about each project that applied on the governance forum here.

GMX

Source: GMX

GMX, Arbitrum’s native protocol for trading spot and leveraged perpetual contracts, made its debut on Arbitrum during the network’s mainnet launch in August 2021. As a non-custodial exchange, GMX has established itself as a clear leader, with $415 million locked in smart contracts (as of the time of writing), the highest of any protocol deployed on Arbitrum.

Since launching, GMX has steadfastly upheld its commitment to both token holders and the broader Arbitrum ecosystem. It was one of the pioneers in promoting the narrative of “real yield”, advocating for the distribution of protocol revenues back to liquidity providers and token holders. GMX has generated over $190M in fees on Arbitrum over its lifetime.

GMX is deeply rooted in the core values that underpin Arbitrum, including a commitment to technical and social inclusivity, security, sustainability, and openness.

Through collaborations with many projects across Arbitrum, GMX has catalyzed the widespread adoption and expansion of Defi. Projects such as Pendle, Abracadabra, Jones DAO, Dopex, Umami, and others, were able to become sustainable by leveraging GMX as a source of yield, liquidity, and trading.

Like all of Arbitrum’s cornerstone protocols, GMX has a thriving and robust community committed to creating projects that bolster GMX. One noteworthy and fun example is a project that harnesses the power of NFTs: GMX Blueberry Club, a collection of 10,000 generative NFTs each representing a blueberry, the icon of GMX. GMX Blueberry Club NFTs can be traded on TofuNFT, an NFT marketplace with approximately 18M in volume on Arbitrum.

Camelot

Source: Twitter

Camelot, with a TVL of $56M, is Arbitrum’s largest native decentralized exchange (DEX). Unlike traditional DEXs, Camelot goes the extra mile – in addition to trading services, it also offers support and advisory for liquidity structuring and emissions management.

Camelot’s comprehensive suite of liquidity products allows for significantly higher fee generation, even for illiquid long-tail tokens. The DEX offers (1) concentrated liquidity pools incentivized by Merkl or automated managers (2) standard XYK pools and (3) custom Nitro pools tailored for less liquid tokens.

By offering tailored liquidity support services, Camelot strives to onboard new protocols and to incentivize new and existing protocols to adopt $ARB as a token pair. Camelot is committed to achieving several strategic objectives: (1) the enhancement of spot liquidity for Arbitrum’s key protocols, (2) bolstering incentive sustainability, and (3) achieving long-term sticky liquidity across a broad range of pools.

Embodying Arbitrum’s values, Camelot is a highly collaborative project that describes itself as an ecosystem-driven platform. It originally launched on Arbitrum through the Launchpad, a DEX fundraising platform that also provides support services such as tokenomics, go-to-market, and liquidity. Since launching, Camelot has worked with Arbitrum native DeFi projects, such as Pendle, Radiant, Dopex, Plutus (and GMX too!), and has brought in new projects e.g, Pendle, Vela, Thales, DMT, Aurora, and Lyra.

Cornerstone Projects - Beyond DeFi

Treasure

Source: Twitter

Treasure is an Arbitrum native interoperable gaming platform that originally began as a Loot derivative. With a TVL of $11M (at the time of writing), Treasure’s vision is to break down the walled gardens of the traditional gaming industry by helping communities bootstrap new decentralized metaverses.

Treasure’s platform provides the base layer for games to build their economies. The flagship game, Bridgeworld, serves as the central metaverse where players must buy legions (character NFTs) and then use treasures (resources) to mine for $MAGIC so they can build infrastructure and equipment.

All games in the Treasure platform are economically linked by $MAGIC, a shared currency. Players earn rewards in $MAGIC and each game also has a unique token. Because Treasure’s ecosystem is open, players can easily move between games, using their assets from one game in another game.

At the heart of Treasure is NFTs. Players can use the Trove marketplace, created by Treasure, to buy character NFTs. As they play across Treasure’s ecosystem of games, including Smolverse, Realm, Battlefly, Tales of Elleria, and many others, players collect NFTs such as Smol Brains, Realm Monuments, Battlefly, and Tales of Elleria Relics.

Treasure even has a DeFi product, MagicSwap, a decentralized automated market maker exchange, to trade in-game assets from the Treasure economy. And the ecosystem is managed by a DAO with a treasury of approximately $21M.

Galxe

Source: Medium

Galxe is building an on-chain credential system that uses NFTs to help the ecosystem grow, boost community engagement, and generate brand awareness. Although not a native Arbitrum protocol, Galaxe has played a foundational role in the network, ever since it kicked off the Arbitrum Odyssey Campaign which, in two weeks, brought 300,000 unique users to Arbitrum, 40,000+ NFT mintings, and $40M in bridged assets.

Galxe’s long-term goal is to build an open and collaborative credential network where NFTs serve as community members’ on-chain credentials and reputations. Today, Galxe’s infrastructure supports a community of curators who contribute credentials to the data network and get rewarded when credentials are used in Galxe’s Application Modules, Credential Oracle Engine, and Credential API. Users pay to use this data which incentivizes curators.

At the heart of the Galxe platform are NFTs. Communities can create their customized NFTs that serve as a loyalty system. Third-party plugins allow community members to connect NFTs with their social media and showcase the NFT using badges.

Gamified NFT campaigns, like the one Galxe ran for Arbitrum, can be tailored to a community’s needs. For example, community members can be rewarded with mystery NFT boxes, NFTs can have a unique foraging feature that allows community members to compete to own NFTs with higher levels of rarity, or community members can farm NFTs for extra rewards based on rarity, or community members can be required to stake governance tokens as they mint NFTs.

Projects can use Galxe to identify long-time contributors - members' NFT holdings are their contribution scores/loyalty points. New projects can use Galxe’s NFT holder profiles to better identify target audiences during bootstrapping.

Galxe is beneficial for both the Arbitrum ecosystem and Arbitrum users.

Protocols and applications can use Galxe to drive new user growth, reward their current community, gamify their engagement, build out their on-chain loyalty program, and create their own Arbitrum CRM. While users can leverage Galxe to further build out their identity/reputation on Arbitrum via on-chain contributions, curate anon-chain resumes, discover the protocols that Arbitrum has to offer, and educate themselves on Arbitrum.

Arbitrum’s Grants Program: Continuing to build out the ecosystem

Arbitrum is chock-full of opportunities for new builders! Between the quadratic funding rounds on Gitcoin (which recently ended) and Questbook’s grants program (which is starting soon), there is plenty of funding available for high-quality projects.

The grants program uses a Delegated Domain Allocator Model and allocates grants across four verticals: developer tooling, gaming, new protocol ideas, education, community growth, and events.

The sections below highlight several projects from each vertical.

Gaming

Flook is the delegated domain allocator for developer tooling. You can read their vision and selection criteria for projects applying to this vertical on the governance forum here.

Satoshi Treasure is an MMO RPG Play to Earn Game with an initial NFT collection of 20 characters.

Fractal Visions is building a creator hub for games. A 2% marketplace fee is used to retroactively reward creators and developers who contribute to the ecosystem.

New Protocol Ideas

Punk Domains is a modular Web3 domain protocol with the ability to issue an unlimited number of domain extensions. For example, the Smol Brains NFT community has the .smol domain through the Punk Domains protocol. The team is developing Iggy, a web3 social template where punk domains are used as usernames and profiles, to make it easy for web3 communities to set up decentralized chats for their communities.

If you have an idea Jojo is the delegated domain allocator for developer tooling. You can read their vision and selection criteria for projects applying to this vertical on the governance forum here.

Developer Tooling

Vue Dapp proposes a frontend framework and library for Vue.js developers. It brings key web3 features to Vue apps, such as integrations with wallets, viewing balances, and transactional history. These features are critical for fast-paced projects that need to quickly integrate blockchain infrastructure.

Stylus is an integrated development environment (IDE) that supports languages other than Solidity, such as Rust, to onboard more developers. The team has developed an official plugin called WELLDONE Code, in Remix’s IDE.

*Juandi is the delegated domain allocator for developer tooling. You can read their vision and selection criteria for projects applying to this vertical on the governance forum here.

Education, Community Growth, Events

Ethereum Mexico is focusing on filling the educational and resource gap in Mexico when it comes to Ethereum and blockchain. It aims to educate individuals about blockchain, disseminate the core values of Ethereum and Web3, provide support and assistance to local Web3 communities, and organize events, workshops, and community gatherings with a landmark event planned in Mexico City in Q4 2023.

*Cattin is the delegated domain allocator for developer tooling. You can read their vision and selection criteria for projects applying to this vertical on the governance forum here. *

Conclusion

Arbitrum is well poised to be at the forefront of DeFi, Gaming, and NFT innovation. Supported by Offchain Labs, a leader in building Ethereum L2 scaling technology, The Arbitrum Foundation, and a DAO, governing The Arbitrum One and Arbitrum Nova networks, Arbitrum is full of opportunities for existing and new builders.

Open Dollar is proud to be a part of this ecosystem, innovating on the inefficiencies of traditional collateralized debt positions (CDPs). Unlike traditional CDPs, where ownership is tied to an account, Open Dollar uses non-fungible vaults (NFVs), which associate ownership of the collateral to NFTs,  unlocking accessibility, composability, management, visibility, and security.

Read more about Open Dollar here:

 

Open Dollar is a DeFi lending protocol built on Arbitrum for borrowing against liquid staking tokens while earning staking rewards and providing CDP liquidity with Non-Fungible Vaults (NFVs).

Try the Open Dollar App today and follow us on our socials.

Written by Rika Goldberg

Subscribe to Open Dollar
Receive the latest updates directly to your inbox.
Mint this entry as an NFT to add it to your collection.
Verification
This entry has been permanently stored onchain and signed by its creator.