Cointime

Download App
iOS & Android

Nansen's Arbitrum Quarterly Report - Q1 2023

Validated Project

Overview

Optimistic Rollups

Arbitrum One is an Optimistic Rollup and one of the many scaling solutions for the Ethereum blockchain. Optimistic rollups assume that the sequencer(s) are not malicious and that transactions are posted correctly. To ensure that transactions are valid, anyone can submit a fraud proof if they identify any invalid transactions within a week. The dispute is then narrowed down to a single line of instruction and executed on the L1 chain to verify correctness. The fraudulent node would have its stake slashed, with its portion going to the winner of the challenge. The process of presenting evidence of an incorrect state transition is called fraud proof. This is the basis of how an Optimistic Rollup like Arbitrum One works, reducing the workload on the main L1 chain, as not all the transactions need to be re-executed and incentivizing nodes to be well-behaved.

Key Developments: Q1 2023

ARB Airdrop

Source: Arbitrum Foundation
  • On Mar 16, the Arbitrum team announced the highly anticipated ARB token airdrop through a teaser video titled “Operation Wen”, utilizing these tokens for decentralizing governance and rewarding users of the protocol.
  • The majority of the supply (56%) would be community-owned, with 12.75% of the initial distribution being airdropped on Mar 23.
  • Offchain Labs partnered with Nansen to design the eligibility criteria for the airdrop utilizing on-chain activity to encompass a wide range of users and reserve tokens for future DAO grants.
  • The airdrop included several Arbitrum projects with DAO treasuries to further engage with smaller sub-communities within the Arbitrum ecosystem.
  • The tokens allocated to investors and team members are locked up for 4 years vesting with a one-year cliff.
  • Check out our in-depth “All for One and One for All” report on how we designed the distribution model and used on-chain metrics to ensure a fair allocation.

Arbitrum Orbit

  • Arbitrum Orbit was simultaneously announced together with the ARB airdrop, allowing developers to launch their own Layer 3 (L3) on top of the Arbitrum ecosystem.
  • This would provide additional, customized block space options for teams that want to leverage Arbitrum's technology.
  • Utilizing the same framework would also allow dApps to be compatible with the broader ecosystem and provide users with a smoother experience.
  • While the aforementioned L3s could be deployed in a permissionless manner, developers would have to submit a DAO proposal for a license to launch their own L2 chain utilizing Arbitrum technology.

Arbitrum Stylus

  • Stylus is a general-purpose programming environment and WASM virtual machine that would be integrated into Arbitrum One and Arbitrum Nova.
  • It would allow developers to deploy programs written in popular programming languages such as C, C++ and Rust.
  • This would decouple the need for developers to know Solidity to continue building on Arbitrum and facilitate the transition to Web3.
  • Stylus would also simplify developing powerful programs and custom precompiles, special smart contracts that excel at executing specific tasks.

Ecosystem

Source: List of Notable Applications on Arbitrum, Nansen Query

Arbitrum One hosts a dynamic ecosystem of dApps, which can be viewed on the Arbitrum One Portal directory. Besides the ARB token airdrop, there have been many new additions to the Arbitrum ecosystem including new token launches on Camelot, migration of Pirate Nation by Proof of Play and Radiant v2.

Radiant v2

  • Radiant Capital, an omnichain lending protocol, announced Radiant v2 which aims to develop a more synergistic relationship between lenders/borrowers with the protocol as well as stricter eligibility criteria for RDNT emissions.
  • In partnership with LayerZero and Stargate, the Radiant team has transitioned the current ERC-20 RDNT token to the LayerZero OFT (Omnichain Fungible Token) format, facilitating cross-chain fee sharing and interoperability across chains.
  • Additionally, Radiant introduced Dynamic Liquidity Provisioning (dLP) in a Radiant DAO proposal, RFP-4.
  • The proposal empowered users who contribute back to the protocol via emissions while normal users would only receive the current market rate of yield, incentivizing users to stake and reward them accordingly.
  • With potentially higher yields from emissions, users would be incentivized to deposit more and maximize their deposits. This will create buying pressure if dLP prices fall to maintain the minimum deposit threshold to qualify for emissions.

Nansen On-chain Data

Daily Transactions

Source: Daily Transactions on Arbitrum

Daily transactions hovered around 300k at the start of the quarter and peaked at ~2.7m following the ARB token airdrop on Mar 23. This overshadowed the market volatility when USDC experienced a temporary de-peg on Mar 11. Gas used on-chain followed a similar pattern as transaction count and spiked on the same day as the airdrop.

Daily Transactions (vs Ethereum)

Source: Daily Transaction on Ethereum vs Arbitrum

While Arbitrum experienced a surge in the number of transactions, Ethereum’s transaction count stayed relatively flat at ~1m daily.

Smart Money Segments on Arbitrum

Source: Smart Money Segments on Arbitrum

After months of speculation and the announcement of the ARB airdrop, various Smart Money addresses demonstrated their expertise in keeping up with the narrative and getting rewarded in the process, notably the “Airdrop Pro” segment.

Following the airdrop, Nansen added the following labels - "Max ARB Airdrop Recipient" and "#k ARB Airdrop Recipient", which could help users to further analyze upcoming narratives. One such wallet (0x274…) is labeled “Airdrop Pro” and managed to earn the maximum airdrop.

Source: ARB Airdrop on Nansen Query

Check out our custom Arbitrum Airdrop dashboard to see what Smart Money has done since the airdrop.

Top Entities by Users and Transactions

Source: Top Entities by Users and Transactions (data excludes unlabelled entities)

With the help of Nansen labels, the top entities by transactions and users are Stablecoins and DEXs (Uniswap, Sushiswap). This could be attributed to trading opportunities when the ARB token was launched, as well as the volatility that was caused by the USDC de-peg.

Closing Thoughts

Amid market volatility, the launch of the ARB token was generally considered a success and was received well by the community. This is a key step towards the goal of decentralizing the network and rewarding users who participated and contributed to the ecosystem. Additionally, the Arbitrum team’s dedication has been evident as new infrastructure improvements, such as Stylus, were deployed. Even after the confirmation and execution of the airdrop, the Arbitrum ecosystem remains one of the most active and innovative in the crypto ecosystem. It will be exciting to see how Arbitrum continues to progress in Q2.

(By Douglas Chia)

Read more: https://research.nansen.ai/article/787/nansen-s-arbitrum-quarterly-report-q1-2023

Comments

All Comments

Recommended for you

  • Putin States Negotiations with Ukraine Currently Impossible

    On October 10, Russian presidential aide Ushakov provided details about the phone call between the leaders of Russia and the United States. Ushakov stated that during the call, Putin elaborated on the measures Russia has taken in response to the terrorist attacks carried out by the Ukrainian armed forces. Putin indicated that Ukraine is attempting to undermine the Russian State Duma elections and is attacking civilians, which has compromised the possibility of immediately resuming negotiations. He also noted that Ukraine's attempts to hinder the advance of Russian troops have no prospects for success, as the Russian military currently holds complete initiative on the battlefield and is continuing to advance. Putin emphasized that due to Ukraine's stance, particularly its efforts to disrupt the Russian Duma elections, it is currently impossible to resume negotiations with Ukraine. Trump has instructed that the message conveyed by Putin during the call be communicated to the Ukrainian delegation. Ushakov mentioned that there has been no specific discussion yet regarding a potential bilateral meeting between Putin and Trump.

  • Telegram Renames Gram Wallet to Money and Launches for All Users

    On October 9, Telegram officially renamed its previously limited-access wallet service 'Gram wallet' to 'Money' and launched it to over one billion users across the platform. 'Money' is an integrated wallet for the Gram token, supporting storage, transfers, and purchases of platform gifts and collectible usernames. Additionally, the accompanying trading platform 'Walt' offers services for over 300 assets, including tokenized stocks, precious metals, perpetual contracts, and wealth management projects. Users can make instant transfers from 'Walt' to the 'Money' wallet without incurring network fees. The official statement also cautions that investing in crypto assets carries associated risks.

  • Blockchain.com Seeks Approval for Prediction Markets and Cryptocurrency Derivatives Trading

    On October 9, the crypto asset platform Blockchain.com submitted an application to the U.S. Commodity Futures Trading Commission (CFTC) seeking to obtain licenses for a designated contract market (DCM) and a futures commission merchant (FCM) to offer event contracts (prediction markets) and cryptocurrency derivatives trading services to U.S. users.

  • US May Seize Approximately $1 Billion in Cryptocurrency Related to Iran This Week

    U.S. Treasury Secretary Bencet stated at the NPolicy Summit held by Newsmax in Washington on Thursday that we may seize $1 billion in cryptocurrency this week, adding, "We know where it is, and we are isolating them." Bencet noted that the Trump administration's approach to Iran has shifted from 'maximum pressure' to 'absolute isolation,' with measures including maritime blockades, restrictions on air travel, and the cutting off of land routes. The UAE and Oman are cooperating with the U.S., which is also working with Pakistan and Turkey to cut off all land routes in and out of Iran.

  • Zcash Development Team Plans to Introduce Quantum-Resistant Signatures in January

    The development team of the privacy cryptocurrency Zcash (ZEC) plans to introduce post-quantum signature opcodes to the network in January next year, supporting hash-based signature technology to defend against potential quantum computing attacks. This solution primarily targets the transparent (public) payment pool, where approximately 70% of ZEC is currently stored. Although the developers have set January as the target deadline, the specific network activation time has not yet been finalized. This upgrade aims to prevent attackers from using existing public keys to reverse-engineer private keys and forge payment authorizations. Additionally, the Zcash node validator Zakura has launched a wallet tool based on Private Information Retrieval (PIR), allowing users to query balances across multiple addresses without revealing the correlation between those addresses to the server. Previously, Ethereum researcher Justin Drake warned that artificial intelligence could accelerate the cracking of traditional encryption algorithms and urged cryptocurrency holders to prepare for potential security threats.

  • BTC Surpasses $83,000

    Market data shows that BTC has surpassed $83,000, currently priced at $83,017.3, with a 24-hour increase of 0.66%. The market is highly volatile, so please ensure proper risk management.

  • Central Committee and State Council: Comprehensive Implementation of 'AI+' Initiative

    On October 9, the Central Committee of the Communist Party of China and the State Council issued the 'Opinions on Developing New Quality Productive Forces.' The opinions mention the comprehensive implementation of the 'AI+' initiative. This includes promoting the transformation of traditional industries through artificial intelligence, accelerating the development of new-generation intelligent terminal applications such as smart connected new energy vehicles, AI smartphones and computers, and humanoid robots. It aims to speed up innovation in digital intelligence technologies like artificial intelligence, break through foundational theories and core technologies, and strengthen the efficient supply of computing power, algorithms, and data. The strategy involves tailored approaches based on local conditions and industry-specific policies to layout national pilot bases for AI industry applications and high-value application scenarios, vigorously promoting the application of AI across various sectors. Additionally, it emphasizes the establishment of a technology monitoring, risk warning, and emergency response system to ensure that artificial intelligence is safe, reliable, and controllable.

  • U.S. Government-Related Wallet Deposits 17,733 BTC and 750 WBTC to Coinbase Prime

    On October 9, according to monitoring by Lookonchain, wallets associated with the U.S. government have deposited 17,733 BTC (worth $1.48 billion) and 750 WBTC (worth $62 million) into Coinbase Prime over the past three days. According to tagging data from Arkham, these wallets currently hold cryptocurrency assets valued at $25.4 billion, with Bitcoin alone valued at $25.3 billion.

  • ETH Falls Below $2500

    Market data shows that ETH has fallen below $2500, currently priced at $2499.87, with a 24-hour decline of 2.55%. The market is experiencing significant volatility, so please ensure proper risk management.

  • ETH Surpasses $2500

    Market data shows that ETH has surpassed $2500, currently priced at $2500.13, with a 24-hour decline of 2.21%. The market is experiencing significant volatility, so please ensure proper risk management.