The Five Most Popular dApps on Arbitrum One, the Most Popular Layer 2

Since its release in May 2021, Arbitrum One has remained one of the most significant general-purpose Layer 2s on Ethereum. With over $1.5 billion in total value locked, a robust incentives program, and an ecosystem built around real yield protocols, there is much to be excited about now and going forward on Arbitrum. In this article, we’ll look at the top five most popular decentralized applications on Arbitrum, a brief overview of the protocol, and token analysis.

There are many different ways to evaluate the popularity of a decentralized application or dApp. The total value locked, average volume, and platform revenue are robust metrics that can provide insight into a protocol's profitability and indicate a token’s value. On the other hand, the average number of users could tell the general popularity and recognition of a dApp, and provide insight into potential future growth in the retail market. To get the best available overview, we’ll look at the top protocol from the categories of TVL, average daily volume, fees generated, average users, token volume, and one helpful bonus measurement.

Coming in first place in both TVL at a staggering $400 million and 30-day fees with over $2 million is GMX. This decentralized perpetual exchange allows anyone to trade leading cryptocurrencies and tokens with up to 50x leverage. The GMX token acts as the primary governance token for the platform, capturing 30% of the platform's fees. GLP, the liquidity token, encompasses assets like Ethereum, Bitcoin, Chainlink, and Uniswap and represents a passive position against platform traders. GLP earns 70% of the transaction fees when leverage traders suffer losses. GMX stakers can expect an annual return of just above 1%, primarily in ETH. In contrast, GLP offers a slightly superior yearly return of 3%. Since its inception in late 2021, the platform has processed $120 billion in volume and generated $190 million in fees. GMX has carved a niche in the Arbitrum DeFi space, offering invaluable services to its users.

The protocol with the most 30-day volume on Arbitrum One is, to nobody’s surprise, blue-chip decentralized exchange Uniswap, with a whopping $5.73 billion in 30-day volume, according to DappRadar. Uniswap is arguably the most popular DEX in the EVM ecosystem and pioneered the automated market maker (AMM) exchange model. The UNI token governs the Uniswap DAO, which includes deciding where to deploy and fee structures. With deployments on ten different chains, no history of hacks or exploits, and consistent innovation, Uniswap has cemented itself as a DeFi blue-chip and a stable for liquidity provision and high-liquidity token exchanging.

With an absurd 300,000 monthly unique active wallets, Stargate has been the most widely-used dapp on Arbitrum for the past month. Stargate is a bridging protocol that uses LayerZero’s technology to provide composable liquidity, security, and wide support across several smart contract platforms. Even though one metric makes Stargate seem like the most popular Arbitrum dapp, this does not tell the whole story. LayerZero has been one of the most hotly-anticipated airdrops of the past year, and any protocol utilizing it has consequently become the victim, or beneficiary, depending on your outlook, of airdrop farmers using lots of different wallets and low-value transactions in hopes of becoming eligible for future ZRO tokens. Once the LayerZero airdrop releases, Stargate may be unable to keep its massive user base funneling tokens through its platform.

When analyzing the 30-day token trading volumes of primarily Arbitrum-based tokens, Treasure DAO’s MAGIC comes ahead with around $500 million monthly volume. Treasure aims to conglomerate the gaming ecosystem on Arbitrum under its platform. It boasts over 10 supported on-chain games, over 100 thousand players, and 95% of all gaming and NFT transactions on Arbitrum. Treasure’s value-add to these games is its interoperable ecosystem through which users can use assets and currencies in multiple games. Though Web3 gaming has yet to see its mass adoption moment, this category has a lot of excitement. Treasure and MAGIC could be at the forefront of this growing movement.

Since the Arbitrum Foundation gave control of the protocol to the DAO and decentralized its control, many proposed grants and incentives have been offered to bring more builders and users to the platform. Arbitrum’s Short-Term Incentive Program was the largest and most recent, in which ARB token holders and delegates chose 29 projects to receive a share of about 50 million ARB. By finding the most supported grant, we can get an intuition about the project ARB token holders are most excited about and what could provide the most value back to the ecosystem. By a close margin, the winner was Camelot, with 200 million ARB voted in favor of their requested 3 million tokens. Camelot is a decentralized exchange that has aligned itself with the Arbitrum ecosystem since its launch. Along with being efficiently designed and with strong liquidity incentives in GRAIL tokens, it has gained the support of Arbitrum ecosystem projects by quickly listing its tokens and offering GRAIL as LP incentives. GRAIL can be staked for xGRAIL, which offers numerous benefits depending on user need, including dividends, yield boosting, and launchpad token allocations. Its Round Table, or group of official partners, includes many top Arbitrum protocols and represents a promising group centered around the core mission of growing the Arbitrum ecosystem.

As Layer 2s continue to increase adoption and awareness, so do Arbitrum One and its ecosystem projects that lead in the standard DeFi metrics. Of course, nothing is guaranteed in the cryptocurrency industry, but these projects appear well-positioned to be the forerunners of Layer 2 decentralized finance during the next wave of mass adoption.

By Lincoln Murr

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