Arbitrum sees steady growth as airdrop speculation leads to increased earnings

Post Ethereum merge, layer-2 blockchains have been catching the eyes of users and investors alike. Research firm Delphi Digital has been tracking Arbitrum since August and recently shared its analysis in a monthly market report.

According to data, user behavior and historical analysis show multiple trends of rapid growth in transactions, total value locked and daily active users at Arbitrum-based platforms. 

Arbitrum reaches the top 10 in monthly earnings

When projects give away more token incentives than the revenue they incur, they have negative earnings. Token incentives that are higher than the fees a protocol receives are typically a sign that the growth is not sustainable and is, more than likely, wash trading.

Over the last 30 days, Arbitrum has earned $1 million in fees, a 134.41% increase. The increase in fees also increased the 30-day revenue for the Arbitrum protocol by 46.91%. Such growth puts Arbitrum as No. 8 among all decentralized finance (DeFi) protocols, with $240,000 in earnings.

Earnings leaderboard sorted by earnings. Source: Token Terminal

User growth hits 70,000 daily active users as Optimism investors move to Arbitrum

In order for a protocol to receive revenue and earnings, it needs daily active users. Daily active users transacting and interacting with Arbitrum is how fees increase. Over the past 30 days, Arbitrum has witnessed user growth double to more than 70,000, but more recently, user count is back to under 30,000.

Arbitrum 30-day fees and daily active users. Source: Token Terminal

Optimism is another blockchain protocol that is similar to Arbitrum but doesn’t have a token. When Optimism released the OP token, users who were active on the blockchain received airdrops.

Due to the similar launch structure of Optimism, some investors are speculating that Arbitrum will also do an airdrop. This speculation might be why users are trading so frequently on the Arbitrum blockchain. New Arbitrum users are overwhelmingly bridging from Optimism, accounting for 66.9% of all transfers, with Ethereum and BNB Chain only equaling 32% combined.

ETH transferred to Arbitrum. Source: Dune Analytics

Despite the majority of transfers coming from Optimism, the blockchains have a similar number of daily active users. On Nov. 13, Optimism had more daily active users with 31,117, while Arbitrum had 27,714.

Arbitrum and Optimism daily active users. Source: Token Terminal

User and builder behavior on Arbitrum

When new blockchains launch, users need decentralized applications (DApps) to engage with the protocol in a meaningful way. Popular DApps can also increase fees and revenue for the blockchain.

On the Arbitrum blockchain, so far, perpetual exchanges are proving to be popular. Five of the seven top Arbitrum contracts belong to perpetual exchanges. In addition to the popularity of perpetual exchanges, seven of the 15 most gas-consuming contracts on Arbitrum in the past 30 days were originally built on Arbitrum.

Arbitrum gas-consuming contracts broken down by DApp. Source: Token Terminal

Arbitrum is a growing blockchain when analyzing fees, earnings and revenue, but the daily active user growth is starting to contract, even ceding ground to Optimism. Users will want to look at the scaling issue Optimism faced when speculating on the Arbitrum airdrop.