By George Ward
Daily transactions on the Ethereum Layer 2 protocol, Arbitrum, have hit a new all-time high over the past week as the platform processed nearly a million transactions on February 20. In addition, the number of active addresses has also jumped significantly over the same period.
Dominating Layer 2
Being the leading Ethereum Layer-2 scaling solution, Arbitrum has witnessed increased activity on its network in the last seven days. Accordingly, the Optimism rollup records two new all-time highs in the same timeframe.
Furthermore, Arbitrum processed a whopping 927,023 transactions on Monday alone, a record high for the network. In addition, this is nearly the same number of transactions Ethereum facilitated on the same day, 1,059,640.
The network also saw a $2.7 billion weekly trade volume in the past seven days, as revealed by DefiLlama’s data. On February 16, the Arbitrum network recorded a $502.22 million inflow from several decentralized exchanges, a record daily high for the network.
These performances positioned Arbitrum as the second most active blockchain protocol last week behind Ethereum, which has a weekly transaction volume of $13.17 billion. However, most transactions occurred on UniSwap, with $1.6 billion in trading volume.
Meanwhile, SushiSwap, Trader Joe, Camelot, Curve, and KyberSwap added over $1 billion. The network also recorded a new all-time high regarding active wallets on Monday.
A total of 117,798 active addresses are reportedly interacting with other multiple decentralized applications (dApps) on Arbitrum. Regarding total value locked (TVL), Arbitrum has $1.18 billion, which is only behind Ethereum with $10.33 billion and Binance Smart Chain with $3.14 billion, as revealed by data from DefiLlama.
The Flipside
Despite the positives, the increased activities on Arbitrum might have to do with airdrop farming. The same scenario happened with the Optimism Network after it revealed the Optimism Quests.
The activity includes a list of tasks that users must complete and be rewarded in non-fungible tokens (NFTs). Upon completing the Quests, activities on Optimism declined unexpectedly and suddenly.
As an Optimism rollup, Arbitrum may face such a situation despite Ethereum’s co-founder, Vitalik Buterin, stating that the protocol would be relevant in the future. However, in the long run, general-purpose validity rollups are expected to overtake Optimism as the leading technology to scale Ethereum.
Experts in the Layer 2 scaling ecosystem believe the latest development is exciting. Additionally, the team behind the project and users would be able to use Ethereum with low fees and fast transaction processing time.
The Ethereum network has seen unprecedented changes in recent years, especially after the September 2022 Merge, signaling the transition from the proof-of-work (PoW) to the proof-of-stake (PoS) consensus algorithm.
However, the network is still bracing for more updates, with the next in line being the Shanghai update scheduled for March, which will allow staking withdrawals.