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Academy Industry Analysis Article
DeFi Digest Uniswap SushiSwap DEX DeFi

Arbitrum draws interest from Uniswap, SushiSwap and Maker

2021.06.03 Matthew Lam

Layer-2 scaling solutions are the hottest topic in DeFi today — with Arbitrum currently leading the discussion.

This week, the decentralized finance sector recovered, with the total value locked in DeFi protocols rising from $58.35 billion to $62.19 billion, as of the time of this writing. Additionally, the total borrowing volume surged 8% to $16.76 billion. Aave led the market with a 15% share of the sector's total value, and led the lending sphere with a 36% market share.

Trading in decentralized exchanges cooled down this week as average weekly trading volumes dropped 28% to $7.76 billion. At the same time, SushiSwap regained its leadership as the largest liquidity pool, with a TVL of $2.01 billion.

CategoryKey statisticsAmountWeekly % change
OverallTotal value locked (USD)$62.19 billion8%
Market dominance (%)Aave (15%)
LendingTotal borrowing volume$16.76 billion8%
Market dominance (%)Aave (33%)
DEXsWeekly avg. trading vol.$7.76 billion-28%
Market dominance (%)Uniswap (26%)
Yield farmingLargest liquidity poolSushiSwap ($2.01 billion)
Uniswap is the leading DEX with a 26% market share. Source: DeFi Pulse and DeBank

Arbitrum launches mainnet beta

Developed by Offchain Labs, Arbitrum is a Layer-2 scalability technology built for the Ethereum blockchain. Using Arbitrum technology, the actual computation and storage of smart contracts are performed off-chain. Each on-chain transaction in Arbitrum contains only the transaction result and the call actions of the smart contract. With the reduced on-chain transaction workload, Offchain Labs claims gas fees on Arbitrum can be reduced by more than 50x.

Offchain Labs announced the beta launch of Arbitrum One on May 29 — the mainnet Ethereum Layer-2 blockchain built using the Arbitrum technology. The mainnet is currently only open to developers, and the Arbitrum team received over 250 access requests from various developer teams. To offer a better user experience for the Ethereum ecosystem, Arbitrum has also partnered with Etherscan to provide block-explorer services and enabled access for blockchain development platform Alchemy to provide better developer tools for its builders.

Decentralized exchanges race to onboard Arbitrum

Decentralized exchanges — such as Uniswap and 1inch — are the top gas consumers within the Ethereum ecosystem. To offer a smoother trading experience, DEXs are seeking to introduce Layer-2 scalability solutions to lower the gas fees paid by traders.

Uniswap was the first DEX to put the discussion of Arbitrum on the table. Initiated by Compound founder Robert Leshner, the Uniswap community passed a governance proposal to deploy Uniswap V3 on Arbitrum. 

According to Uniswap inventor Hayden Adams, the team is working on interface support and is planning to deploy Arbitrum. While Layer-2 scalability technology brings fast transaction finality and low transaction fees, Adams warned in his tweet thread that serious battle-testing of Layer-2 technologies is required before they can support the current scale of Uniswap's network activities.

As the main rival of Uniswap, the SushiSwap community suggested integrating the protocol with the Arbitrum testnet back in February. Although the community has not yet proposed a governance forum, the official SushiSwap Twitter recently hinted about its planned Arbitrum deployment. SushiSwap core developer "0xMaki" claimed to confirm the Arbitrum deployment, but he did not reveal further details.

MakerDAO community proposes Arbitrum integration

The MakerDAO community also explored Layer-2 scaling technologies as part of the project's future road map. In March, Maker first onboarded Optimism, a Layer-2 scalability solution to reduce gas costs on the protocol's pooled ETH. The protocol also enables an Optimism–DAI bridge, which allows users to swap their DAI for Optimism's oDAI.

In building a multi-chain ecosystem for Maker, some in the MakerDAO community suggested the protocol integrate with Arbitrum, as a facet of the protocol's road map. As the architecture of Arbitrum has some similarities to Optimism, the community suggested that similar functionalities be deployed on Arbitrum, as in the above case of Optimism. The Arbitrum proposal is being discussed in the community, but the Maker team has not yet confirmed its deployment.


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Disclaimer: This material should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in investment transactions. Trading digital assets involve significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.

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