The Arbitrum Layer 2 network has been such a resounding answer to the challenges faced on the Ethereum mainnet. Today, you can execute various EVM-compatible smart contracts on the Arbitrum chain – the decentralized and secure way, albeit at a significantly lower cost and faster rate. For this reason, we are seeing new DeFi projects being launched on the network more regularly.
In this piece, we’ll look at the best protocols on Arbitrum, highlighting their best features and various use cases.
With a TVL of $1.01 billion, GMX is the largest decentralized spot and perpetual exchange on the Arbitrum chain. This Layer-2 decentralized exchange offers low swap fees and rich liquidity, guaranteeing zero slippage during trades. Unlike traditional order book models that operate trading pairs, GMX provides liquidity to execute trades via its multi-asset GLP (GMX Liquidity Provider).
With the GMX platform, you can trade various cryptocurrencies, including ETH, BTC, USDC, USDT, FRAX, DAI LINK, and UNI, with up to 30x leverage. But that’s not all – there is also the GLP token, which is more or less an index of all tokens available on the Arbitrum network. The price of this GLP token is determined by dividing the total value of the assets in the multi-asset pool by its total supply.
When users purchase GLP, they are basically providing liquidity for other users to trade at low fees. Interestingly, users playing the role of ‘liquidity provider’ are rewarded for doing so. Currently, holders of the GLP token are being rewarded (from the platform’s revenue fees) in ETH at a 27.70% APR.
Being one of the decentralized pioneer exchanges on the Arbitrum network, it is easy to see why Zyberswap ranks high on this list. This DeFi protocol has always set the pace in the market, boasting a TVL of over $166 million. Zyberswap offers the lowest transaction fees of all DEXs on the Arbitrum ecosystem, making it a terrific and cost-effective platform for cryptocurrency trading.
Zyberswap operates on an automated market-maker (AMM) model, which enables it to exchange crypto assets at the lowest possible cost. With staking and yield farming showing great promise on the fast-rising Arbitrum network, Zyberswap offers a platform for users to earn a passive income on their crypto assets. In addition, this DEX platform is dedicated to building a strong and highly-connected community where members (users) contribute and vote for significant changes through the Governance Voting process.
Zyberswap has its own native token (ZYB), which currently trades at a little over $12 per CoinMarketCap. This token’s distribution is based on a fixed supply, linear emission model, with burning mechanisms to reduce overall supply now and then.
SolidLizard, a fork from Solidly, is another top DeFi protocol built on the Arbitrum chain. Solidly is a decentralized exchange that initially operated on the highly scalable Fantom blockchain before moving to the Ethereum network. This DEX is renowned for it’s ve(3,3) governance model, which is now seen on SolidLizard.
SolidLizard also utilizes Olympus’s anti-dilution mechanism to curtail token dilution. The ve(3,3) governance system enables users (liquidity providers) to lock their $SLIZ token (SolidLizard’s native token) and earn a ve token – otherwise known as $veSLIZ, which they can use to cast their votes. Besides the token’s governance capacity, $veSLIZ holders receive weekly $SLIZ emissions, 50% of the trading fees, and bribes.
Interestingly, the incentives and voting might of a ve token are proportional to the amount of $SLIZ tokens locked and the length of the lockup period. That said, it is worth noting that the maximum duration of the $SLIZ lockup is four years.
According to data from DeFiLlama, SolidLizard boasts a total value locked of $116.09 million; this is an impressive achievement, considering that the protocol only launched this year.
Radiant is a DeFi money market protocol on the Arbitrum chain. It is designed to ease the cumbersome lending and borrowing process across multiple chains. On Radiant, users can deposit any major asset on any significant chain and borrow various assets across numerous chains.
The protocol’s primary goal is to consolidate the fragmented liquidity across the top ten alternative layers. Radiant was built on the Arbitrum chain to create an ecosystem that offers interest-bearing opportunities while maintaining top-notch security. Currently, this protocol has a total value of $95.78 million locked on the Arbitrum network.
Radiant leverages RDNT – its native utility token – for its lending program. Lenders who provide liquidity to the platform receive a portion of the platform transaction fees paid in RNDT tokens.
For many DeFi enthusiasts, Synapse is the largest and leading cross-chain decentralized exchange – and it’s easy to see why. Since launching in August 2021, this protocol has consistently reached $1B in monthly bridging volume. The Synapse protocol features several smart contracts and supports more than a dozen EVM-compatible chains, including Arbitrum.
The standout feature of the Synapse protocol is the multi-chain bridge, which enables users to move assets between 16 different networks. Ethereum, Arbitrum, BNB Chain, Avalanche, Polygon, and Optimism are notable chains on this DEX. Synapse boasts a $213.64 million TVL across all chains, with $89.96 million on Arbitrum – its biggest TVL on a single chain.
Besides bridging and trading, Synapse also offers staking services, which typically involve users providing liquidity to pools on the platform. Liquidity providers receive rewards in SYN tokens – the protocol’s native token. However, it is worth noting that not all tokens generate rewards, as staking some coins on Synapse may lead to a penalty.
Camelot is another decentralized exchange based on the Arbitrum network. This platform is widely regarded in the DeFi space due to its ecosystem-focused and community-centric approach to liquidity provision. Camelot operates on an AMM model that can facilitate both stable and volatile trades.
Camelot is a fast-rising project that adds more sheen to the all-shiny Arbitrum chain. One of the major highlights of this DEX is its native liquid token called GRAIL. This token is one of the most valuable DEX assets, with a daily trading volume of $14.63 million. There is also the xGrail token, which is the non-transferable governance token.
Furthermore, Camelot helps new protocols take off on the Arbitrum network. It does this by providing the necessary tools required to launch, bootstrap liquidity, and maintain the growth of the protocols. Camelot employs the permissionless approach, enabling new projects to utilize the protocol however they want, without any intervention from the protocol’s team.
7. Jones DAO
Jones DAO is a yield, strategy, and liquidity protocol for options built on the Arbitrum network. This DeFi protocol helps maximise yield for users and protocols who do not want to actively manage their options investments and treasury assets. It does this by implementing high-level and fully-optimized options strategies on the holdings in its vaults.
Jones DAO is built on Dopex and provides vaults for various assets and risk profiles. Users who do not want to keep their holdings in Dopex SSOVs for an entire epoch can lock them in Jones DAO vaults, which ensures their deposits remain liquid. Jones DAO has a TVL of $41.73 million as of this writing, per data from DefiLlama.
Furthermore, Jones DAO possesses its governance token – JONES, which has various use cases. This token can decide specific protocol issues, like integrating new vaults, distribution of incentives, liquidity rewards, etc.
8. Vela Exchange
Vela Exchange is another leading community-driven protocol in the decentralized finance space. With an innovative Arbitrum-based framework, this permissionless decentralized exchange aims to transform the world of DeFi trading. Vela edges towards this by offering its users a platform that executes transactions faster, at a lower cost, and within a more secure network.
Vela operates an on-chain order book perpetual exchange, which allows users to open trading positions against synthetic assets with up to 100x leverage. This exchange features a stablecoin vault backed by USDC, and you must deposit this stablecoin to use the trading platform. Another feature that is impossible to miss is VELA – the native token of the Vela Exchange ecosystem.
The VELA token can be obtained through various means, such as providing liquidity on certain DEXs, buying on supported exchanges, acquiring and vesting eVELA, and via some platform rewards. VELA holders can stake this token to participate in the platform’s teased program. According to CoinMarketCap, VELA is currently priced at $5.72, with a daily trading volume of over $4.5 million.
Options trading can be a pretty complicated venture, especially for newcomers. Fortunately, protocols like Dopex are being designed and built to help maximize profits for options traders and minimize losses for options writers. So, it doesn’t matter what side of the trade you are on; you are bound to gain from using this protocol.
Dopex is a decentralized options protocol built on the Arbitrum blockchain to ease the process of options trading by maximising liquidity, capital efficiency, and minimal fees. This platform features a rebate system that caters to losses based on exercised options for every epoch. The rebate amount paid to option writers in the protocol’s rebate token rDPX depends on their percentage losses.
Furthermore, Dopex has a TVL of $32.18 million across four chains, including Avalanche, Arbitrum, BSC, and Ethereum. The bulk of this value is locked on the Arbitrum network, which has a TVL of $32.18 million.
Plutus is an inventive governance aggregator native to the Arbitrum chain. This DeFi protocol is dedicated to maximizing the liquidity and rewards of its users while also aggregating governance behind its PLS token. The PLS token is a valueless governance coin with the sole function of governing the protocol.
Dubbed the ‘Layer 2 governance black hole, PlutusDAO aims to become the go-to platform for protocols with veTokens (vote escrowed tokens). Plutus is in business with various notable DeFi projects, including Dopex, Jones DAO, and Sperax. This DeFi protocol helps other projects enhance their services through its two primary products, plsAssets and plvAssets.
According to data from DeFiLlama, PlutusDAO has a total value of over $27 million locked on the Arbitrum network.
The Arbitrum chain is serving its purpose, proving to be a capable scaling solution for the Ethereum mainnet. This article shows that this Layer 2 network is home to various exciting projects, ranging from decentralized exchanges and money-market protocols to NFT ecosystems.
Undoubtedly, the Arbitrum chain will continue to expand while welcoming new and innovative protocols on its network in the coming years. But, in the meantime, you can check out its already existing protocols, which are well worth your time.
[Editor’s Note: This article does not represent financial advice. Please do your research before investing.]
This article is done by our freelance writer, Opeyemi Sule
Featured Image Credit: Chain Debrief