Analysis of Layer 2 Competitive Landscape: The Battle Between Arbitrum and Optimism

The practice of Arbitrum attracting users through long-term airdrop expectations may seem reasonable from a tactical perspective, but from the larger ecological development standpoint, this may have missed the best strategic period.

Arbitrum missed the best opportunity

Within half a year of a well-known L2 project launching its token economy, Arbitrum could have seized the best opportunity to launch its own token economy, but unfortunately missed it. At that time, Arbitrum had over 55% of the TVL ratio, while the L2 project had only about 5%.

Currently, the TVL of this L2 project has reached 57% of Arbitrum, and it is developing rapidly. Its ecosystem projects are also gradually growing, with some DeFi projects shifting their focus from Ethereum L1 to this platform, and some native projects are also gradually attracting users.

From the historical total transaction volume, active users, and other data, this L2 project is narrowing the gap with Arbitrum.

If Arbitrum could have launched its token economic mechanism in the past six months, it might have significantly enhanced its ecosystem projects and TVL, suppressing the rise of competitors. However, competitors have gained over six months of opportunity, transforming the landscape originally dominated by Arbitrum into a situation of dual strength.

The advantages of Arbitrum are not eternal.

Arbitrum currently has some excellent native projects, such as GMX and the MAGIC ecosystem, as well as gradually developing projects like GNS and RDNT. However, these advantages may not last forever.

The off-chain execution multi-round fraud proof technology adopted by Arbitrum indeed has its unique aspects, and migrating Ethereum L1 projects to Arbitrum is relatively easy. However, these technical barriers do not constitute an insurmountable moat. As EIP4844 is implemented by the end of the year, these advantages may gradually weaken.

Meanwhile, competitors are actively promoting technology upgrades and ecosystem expansion. Their modular L2 networks are about to be launched, attracting several large trading platforms to join the ranks. In the long run, competitors are in a favorable position.

In addition, competitors have successfully converted some speculative users into ecosystem users through meticulously designed airdrop mechanisms, demonstrating their team's strength in community operation and economic mechanism design.

If the modular L2 of competitors and other technological iterations succeed, Arbitrum's sustainable competitive advantage will face challenges. It is worth noting that the Layer 2 track is still in its early stages, and no absolute king has emerged yet.

Learn from the NFT market experiences

A well-known NFT trading platform has long not launched a token economic mechanism, and initially did not experience a significant impact on its market share, even occupying over 90% of the market share during its peak. However, the rise of emerging platforms has disrupted this pattern. The new platforms, combining innovative bidding mechanisms and token economics, have had a tremendous impact on the original platforms.

This case reminds us that market dynamics can change dramatically in a short period of time. Although Arbitrum is currently thriving, crises often arise during times of prosperity, making it crucial to remain vigilant.

Arbitrum needs to consider ecological projects

The development of Arbitrum is inseparable from the contributions of native projects like GMX and MAGIC. It is now time to provide these projects with more traffic and ecological incentives to achieve mutual benefits and form a larger, more sustainable ecological network.

If Arbitrum stagnates, these projects may launch exclusive chains on other L2 platforms in the future, and this possibility should not be overlooked.

Arbitrum's historic opportunity

Layer 2 is one of the biggest opportunities in the crypto space, with the potential to give rise to industry giants. Arbitrum currently occupies a favorable position, and if it can seize this opportunity, it may stand out among many L2s and become one of the leaders.

Even if the Zk EVM technology matures gradually in the future, Arbitrum will also have the opportunity to migrate its ecosystem. While the technical threshold is certainly important, the ecological network and resilience are even more valuable.

The decisions made by the Arbitrum team will significantly influence the future landscape of L2. It is hoped that Arbitrum can seize this historical opportunity and achieve a leading position in the L2 field.

It is important to note that the above analysis is based solely on current market observations and does not represent an inevitable future trend. Investors should maintain independent judgment and implement proper risk control.