Analysis of the Layer2 Competitive Landscape between Arbitrum and Optimism

Many people believe that Arbitrum's strategy of using airdrop expectations to attract more users is a wise one. From a short-term tactical perspective, this view seems reasonable. However, from a more macro ecological development perspective, this approach may miss the best strategic opportunities.

The Missed Golden Opportunity of Arbitrum

Within half a year of launching its token economy on a certain trading platform, Arbitrum had the best opportunity to launch its own token economy but unfortunately missed it. Prior to that, Arbitrum had over 55% of the total value locked (TVL), while the certain trading platform only had about 5%, which is roughly one-tenth of Arbitrum's.

After a trading platform launched its token economic incentives, data from the platform shows that its TVL has reached 57% of Arbitrum, developing rapidly. In addition, its ecological projects have also begun to flourish. For example, SNX and Perp have shifted their focus from Ethereum L1 to this platform, and some native projects like Velodrome are gradually building a user base.

From the perspective of historical total trading volume, active users, and various other indicators, a certain trading platform is narrowing the gap with Arbitrum.

If Arbitrum had launched its tokenomics in the past six months, it could significantly boost the development of projects within its ecosystem, greatly increase its TVL, and generate strong appeal. In this case, it could greatly suppress the rise of a certain trading platform.

A certain trading platform has gained a window of opportunity for over half a year, and this window is still ongoing. The past landscape dominated absolutely by Arbitrum (similar to the leaders in the NFT market and DEX field) has now evolved into a dual stronghold pattern of Arbitrum and a certain trading platform.

The advantages of Arbitrum are not eternal.

Currently, there are some excellent native projects on Arbitrum, such as GMX and the MAGIC ecosystem. Additionally, projects like GNS and RDNT are also gradually developing. Overall, the user experience is good. However, these advantages may not last forever.

Arbitrum employs off-chain execution with multi-round fraud proof technology, which indeed has its unique advantages compared to the on-chain execution with single-round fraud proof of certain trading platforms, and migrating Ethereum L1 projects to Arbitrum is more convenient. However, these technical barriers do not constitute an insurmountable moat. After the implementation of EIP4844 at the end of the year, these advantages may gradually diminish.

In addition, a certain trading platform's bedrock is about to be launched, and its modular L2 network will gradually unfold in the future. Currently, a well-known exchange has joined its ranks and launched an Ethereum L2 network testnet based on its technology stack. As modular L2 is gradually rolled out, it will attract more project participants. Looking at the future landscape, a certain trading platform occupies a favorable position.

A certain trading platform is also actively researching zk-Rollup technology, which may be upgraded based on the existing ecosystem when the technology matures.

In addition, a certain trading platform has transformed some speculators into users within the ecosystem through a meticulously designed airdrop mechanism. From the perspective of this mechanism's design, the team includes experts who are very knowledgeable about communities and economic mechanism design. This should not be underestimated.

If a modular L2 of a certain trading platform performs well, along with other technological iterations, where does Arbitrum's sustainable competitive advantage lie? It is important to note that the Layer2 track is still in its early stages, and there is no absolute king yet.

a lesson from the past

A certain NFT trading platform has not introduced a token economic mechanism for a long time, and initially, its market share was not significantly affected, peaking at over 90% market share. Its dominance is even stronger than that of leaders in the DEX field. Everything seems great, and not launching a token incentive mechanism seems to lead to success.

However, the rise of emerging platforms has disrupted all of this. The bidding mechanism of the new platforms, combined with the token economic mechanism, has had a huge impact on the original platforms. If the original platforms do not subsequently introduce a token economy, losing their leadership position will become a reality. Of course, to some extent, the new platforms have also learned from the experiences and lessons of their peers, which can be regarded as an innovative iteration built on the efforts of predecessors.

Arbitrum is shining brightly today, everything seems wonderful, and new projects and users keep joining. However, changes in anything do not happen overnight. Crises often arise during times of prosperity, so it is crucial to stay vigilant even in times of stability.

Arbitrum needs to consider projects within the ecosystem.

The development of Arbitrum cannot be separated from the contributions of the two native projects GMX and MAGIC. It is now time to provide more traffic and ecological incentives for these projects. Only in this way can we continue to promote each other and form a larger, more sustainable ecological network.

If Arbitrum remains stagnant, it would not be surprising for GMX and MAGIC to launch their own exclusive L2 chains on a certain trading platform in the future. Anything is possible in the future.

Arbitrum's historic opportunity

Regarding L2, I have been paying attention to it since three years ago, and I have always believed that it is one of the biggest opportunities in the crypto sector. One of the greatest kings in the crypto field could emerge from this area. Arbitrum occupies an excellent position, and if it can seize this opportunity, it may stand out among many L2s and become one of the kings.

Even if the Zk EVM technology gradually matures in the future, Arbitrum also has the opportunity to migrate its ecosystem there. While technical barriers are important, the ecological network and resilience are even more valuable.

I sincerely hope that Arbitrum can seize this historical opportunity and become the king of L2. Before truly achieving community governance, everything depends on the decisions made by the Arbitrum team. A single thought could determine the historical landscape of future L2.

Risk Warning: The above analysis is based solely on a partial observation of technology and market trends, and may not be accurate. Please be sure to maintain independent judgment and implement risk control.