- Arbitrum’s L2 dominance was challenged by the rise of Base and Optimism, altering the L2 landscape.
- Base surged in TPS and revenue, signaling growing competition and the potential shift in hierarchy.
Throughout the year, Arbitrum[ARB] held a firm grip on the Layer 2 (L2) landscape. However, as Base and Optimism make significant strides, Arbitrum’s position as the L2 leader seems to be wavering.
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Can Arbitrum keep up?
In a surprising turn of events, Base surged ahead, claiming the third position in transactions per second (TPS). This feat outperformed both Arbitrum and Optimism, garnering attention for Base’s growing influence.
Notably, BuildOnBase’s revenue generation in August also exceeded its competitors, with Base generating $2.4 million, Arbitrum $1.05 million, and Optimism $1.1 million.
.@BuildOnBase has become the third-largest chain in terms of TPS over the past day.
Surpassing the likes of Arbitrum and Optimism while generating more revenue for the month of August.
– Base: $2.4M
– Arbitrum: $1.05M
– Optimism: $1.1MStart of a bull cycle? pic.twitter.com/LWAckptnvU
— Emperor Osmo🧪 (@Flowslikeosmo) August 13, 2023
The emergence of Base as a serious contender highlights the evolving nature of the L2 landscape, where new players can swiftly challenge established giants.
Artemis’ data provided a sobering view of Arbitrum’s recent performance, revealing a decline in overall network activity. Moreover, the number of transactions processed on the network witnessed a noticeable drop during this period.
Source: Artemis
This decline in activity raises questions about Arbitrum’s ability to maintain its momentum in the face of emerging competition.
Despite these challenges, Arbitrum has managed to retain a strong foothold in the decentralized finance (DeFi) sector. The protocol’s Total Value Locked (TVL) remained substantial, outpacing many other protocols by a significant margin. Additionally, Arbitrum’s performance in terms of Decentralized Exchange (DEX) volumes showcased its continued relevance and influence.
Source: Artemis
However, even stalwarts like Arbitrum are not immune to the ebbs and flows of the market. Over the past month, the protocol experienced a decline in both revenue and activity. Revenue dipped by 22.4%, while daily active users witnessed a notable decline of 20.2%.
This downturn in revenue and activity raises concerns about Arbitrum’s resilience in the midst of increasing competition.
Realistic or not, here’s ARB’s market cap in BTC’s terms
On the price front, ARB tokens were trading at $1.14 at press time. This value, while stable, prompts a closer look at other metrics that shed light on the protocol’s health.
Network growth data indicated a decline, hinting at a potential waning interest from new participants. Additionally, the velocity of ARB trades registered a decrease, implying that trading frequency had decreased over the period.
Source: Santiment
