Arbitrum's three moves: Can it regain the discourse power of L2?

When it comes to the king of L2, many people's first reaction is Optimism, but the one that truly initiated the L2 wave is actually Arbitrum. In the first half of 2023, the Arbitrum ecosystem was extremely popular—Large Investors in South Korea were trading crazily on GMX, Degen players were making a fortune through GLP yield farming, and the Base community was collectively trading shitcoins. At that time, Arbitrum was synonymous with L2.

Unfortunately, the good times didn't last long. After the ARB airdrop, the ecosystem's enthusiasm sharply declined, and there are three core issues:

First, being exploited by the freeloaders. Competitors like ZkSync, Starknet, and Linea directly benefited from Arbitrum's airdrop, coming from behind to take the lead. At that time, Arbitrum's L2 business model was essentially very fragile — it was not supported by real demand but rather by the false prosperity propped up by “airdrop farmers.”

Second, most ecosystem developers are “scammers”. A large amount of ARB is allocated to guys who claim to be developers, but in fact, these people are just high-level airdrop farmers. After receiving the tokens, some directly run away, while others are even worse – they vote for themselves with the ARB in hand, misappropriating more resources in DAO governance.

Third, it needs time to settle. After nearly 30 months, the Arbitrum Foundation finally understood - relying solely on airdrops is not enough; we must truly build an ecosystem. Recently, they launched the “DeFi Renaissance Plan” (DRIP incentive program) and pulled out all the stops.

Three Arrows Attack

First Arrow: DRIP Lending Incentive Program

The Arbitrum Foundation subsidizes lending protocols (Aave, Morpho, Fluid, Euler, Dolomite, Silo, etc.) in the ecosystem with ARB to attract users with real money. The effects are also visible — Dune data shows that the first phase of DRIP increased the available borrowing funds from $1.38 billion to $1.67 billion, and the borrowing amount rose from $967 million to $1.17 billion.

But there is an awkward point here: although the absolute numbers are rising, Arbitrum's share in the L2 lending market has only increased from 3.09% to 3.75%, which is a rather average growth. In comparison, Base has risen from 5.04% to 6.64% during the same period, showing a noticeable gap. This indicates that subsidies alone are not enough—what DeFi users really want is that sense of “there might be a big airdrop” expectation, which is more exciting than cash rewards.

Second Arrow: Autonomous PerpDEX Ecosystem

Arbitrum is in a bit of an awkward situation now. Hyperliquid, a mainstream perpetual contract DEX, has put 4.3 billion USDC on Arbitrum (accounting for 69% of the total USDC supply on Arbitrum), but this money's contribution to Arbitrum mainly consists of collecting some toll fees, while all the high-value revenue and ecological dividends are being consumed by Hyperliquid.

The foundation realized a problem: whoever controls PerpDEX controls the future market heat of L2. So they began to incubate their own perpetual contract platforms, such as Variational Protocol and Ethereal Perps. Among them, Variational's OLP mechanism is expected to revive the glorious era of GMX-GLP.

Third Arrow: Partnering with Robinhood to Bet on Tokenization of US Stocks

This move is the most imaginative. Currently, the total value of RWA (real-world assets) on Arbitrum is $1.026 billion, mainly consisting of US Treasuries, European bonds, and tokenized US stocks (such as EXOD). Among them, 615 RWA assets mostly come from Robinhood's tokenized US stock project.

The current tokenization of US stocks has a bottleneck – due to regulatory restrictions, it can only be a hybrid model of off-chain SPV custody + CEX/DEX liquidity pools, resulting in poor liquidity, unclear legal status, and reliance on centralized institutions for settlement. However, the future direction pointed to by this model is very clear: the complete on-chain transformation of global financial infrastructure. This is the race that both the SEC and the Crypto community are betting on.

Summary

Arbitrum's three moves—DRIP incentives, autonomous PerpDEX, and tokenization of US stocks—take care of the present while also laying the groundwork for the future. This time, the foundation is really playing a strong game. The question is whether it can regain the market, which will depend on the rhythm of the market itself.

At least compared to the previous passive beating, Arbitrum finally has the intention to take the initiative.