Did Arbitrum Miss the Best Opportunity? Analysis of the Layer 2 Competitive Landscape

Many people believe that Arbitrum's strategy of attracting users through airdrop expectations is a wise move. While it seems reasonable from a short-term strategy perspective, it may miss the best strategic opportunity from the long-term ecological development standpoint.

Arbitrum once had an excellent opportunity to launch its token economy. Before Optimism launched its token economy, Arbitrum held over 55% of the TVL share, while Optimism had only about 5%. However, Arbitrum failed to seize this opportunity.

Optimism has developed rapidly after launching its token economic incentives. Its TVL has now reached 57% of Arbitrum. Several projects such as SNX and Perp have shifted their focus from Ethereum L1 to Optimism. Some native projects like Velodrome are also gradually attracting users. From various indicators such as trading volume and active users, Optimism is narrowing the gap with Arbitrum.

If Arbitrum had launched a token economic mechanism in the past six months, it could have significantly boosted its ecological projects and TVL, and suppressed the rise of Optimism. Today, the Layer 2 landscape has shifted from Arbitrum being the sole leader to a situation where two rivals coexist.

Arbitrum currently has some excellent native projects, such as the GMX and MAGIC ecosystems, as well as GNS and RDNT. The off-chain execution and multi-round fraud proof technology it employs has clear advantages over Optimism's on-chain execution and single-round fraud proof, and migrating Ethereum L1 projects to Arbitrum is more convenient. However, these technological advantages are not insurmountable barriers.

Optimism is about to launch the Bedrock upgrade and a modular L2 network. A well-known trading platform has joined its ranks, launching an Ethereum L2 network testnet based on the OP Stack. Optimism is also actively researching zk-Rollup technology, which may lead to upgrades based on the existing ecosystem in the future.

Optimism successfully converted some users into ecosystem participants through a clever airdrop mechanism. This indicates that its team possesses excellent community operation and economic mechanism design capabilities.

A certain NFT trading platform has not launched a token economic mechanism for a long time and once held over 90% of the market share. However, the emergence of the new platform Blur, which combines an innovative bidding mechanism with a token economy, has had a huge impact on it. This reminds us that the market landscape can change dramatically in a short period of time.

Arbitrum should provide more support for projects within its ecosystem. Native projects such as GMX and MAGIC have made significant contributions to the development of Arbitrum. Only through mutual promotion can a more sustainable ecological network be formed. Otherwise, these projects may consider launching exclusive chains on other L2s in the future.

Arbitrum is currently at a critical juncture. The L2 sector is still in its early stages, and there is no absolute king yet. If Arbitrum can seize this opportunity, it is expected to stand out among many L2s. Even as zk-EVM technology gradually matures in the future, Arbitrum will have the chance to migrate its ecosystem. While technological barriers are certainly important, the ecological network and resilience are even more valuable.

The future development of Arbitrum depends on the decisions made by its team. A single decision could impact the historical landscape of the entire L2 ecosystem. We look forward to Arbitrum seizing this historic opportunity to become a leader in the L2 space.