The Evolution of the Arbitrum Ecosystem: From Decentralized Finance to Institutional-Level Applications

In recent years, Arbitrum has not only continued to scale but has also entered a unique stage of ecological exploration, initiating an unprecedented development process. This evolution has redefined the boundaries of cryptocurrency technology adoption, from the native phase of Decentralized Finance, to gradual institutional entry, and finally to the emergence of a preliminary financial system.

Core Insights

Arbitrum has entered the mature stage of its ecosystem, forming a comprehensive segmented market layout in the DeFi field. Currently, it has achieved several key milestones:

• Spot DEX: Cumulative trading volume ranks first in L2, reaching $534.2 billion
• Perpetual Contracts: Total trading volume hits a new high of $802 billion.
• Lending Services: Liquidity depth exceeds $1.2 billion, which can enhance productivity scale through credit.
• RWA-Fi: Scale growth to a historical peak of $262.5 million, covering 20 assets.

The self-sustainable growth of Arbitrum is reflected in strong user growth, deep liquidity, and the ongoing activity across various business lines.

The Diversified Evolution of the Perpetual Contract Ecosystem

In the third quarter of 2021, Arbitrum laid the foundational framework for a perpetual contract DEX in the early stages of the virtual automated market maker (vAMM). Today, user growth has entered a stable and mature phase, with high user retention rates clearly evidenced in the daily trading volume trends:

• Since the third quarter of 2023, the daily trading volume has achieved an approximately 3-fold increase (from 1 billion USD to 4 billion USD)
• Cumulative trading volume reached 802.5 billion USD

The perpetual DEX ecosystem has achieved diversified evolution, with professional players continually emerging:

• Native cryptocurrency interest rate derivatives (centered around centralized exchange funding rates)
• Ultra-high leverage trading (leverage up to 1000 times)
• Diversified asset allocation coverage (Forex/Stock Index/Commodities)

The ecosystem shows a trend of high user engagement and product innovation running in parallel, confirming its sustainable characteristics of self-sustenance and dynamic evolution.

Rapid Growth of RWA-Fi

As of the third quarter of 2024, the total locked value (TVL) of Arbitrum's RWA-Fi sector accelerated to a historic peak of $262.7 million. Supported by a diverse and growing global base of fund participants, this trend further solidifies Arbitrum's position in the enterprise-grade tokenized Decentralized Finance space.

It is worth noting that a certain platform's tokenized EU government bond product has taken the lead in the market, accounting for about 32% of the market share, surpassing competing products from other well-known financial institutions. This indicates that institutional adoption is no longer just a theoretical stage.

Diversified Development of the Ecosystem

The Arbitrum sub-ecosystem is showing an increasingly diverse range, spanning RWA integration and Decentralized Finance native innovations. This fusion meets various needs:

• Institutional allocators seeking compliant revenue-generating assets (such as government bonds, credit bond markets)
• Crypto-native users pursuing permissionless leverage, structured products, or long-tail yield strategies.

Arbitrum is becoming a comprehensive ecosystem, attracting capital from various fields, from Decentralized Finance to traditional finance. The adoption rate of its technical framework is rising rapidly:

• 83 official ecological system partners
• 41 mainnet launched (32% growth since April 2024)
• 21 test nets + 21 in development
• The total locked value (TVL) of the Arbitrum ecosystem (excluding ArbitrumOne) exceeds $320 million.

Institutional Favor and Infrastructure Development

Arbitrum is gaining increasing favor from large institutions, a trend supported by the dual validation of actual application demand and infrastructure level.

• Globally renowned funds are building RWA-Fi liquidity.
• Multiple projects are bridging real-world capital to the blockchain.
• The ultimate issuance network of traditional finance has begun to take shape.

The conclusion is already very clear: Arbitrum is becoming the preferred infrastructure for real-world institutional deployments.

The Rise of MEV Phenomenon

The surge of the MEV phenomenon marks the ecosystem's transition to the next stage of mature development. Arbitrum's Timeboost auction mechanism introduces an efficient and fair competition model, perfectly replicating the proposer-builder separation (PBS) model of the mainnet:

• The usage rate has been quite high since its launch less than two months ago.
• 1.42 million DAO revenue (annualized approximately 8.5 million)
• Over 60% of transaction fee revenue comes from Timeboost

Early signs of MEV atomic arbitrage realization have already appeared, mainly concentrated in high-volume trading pairs. The next stage of maturity will be marked by long-tail assets occupying a larger share of MEV flow.

The Timeboost fast track currently accounts for about 5% of the total transaction volume and shows a stable upward trend. More importantly, the trading volume footprint:

• Currently, approximately $175 million in daily trading volume comes from MEV arbitrage.
• The average daily trading volume over the past month was approximately $900 million, of which about 21.8% came from the Timeboost fast track.

This indicates that MEV has become the core engine driving substantial trading volume, marking a new phase in the profitability mechanisms at the protocol layer.

Development of InfoFi Applications

Arbitrum has garnered attention as the core ecosystem embracing the InfoFi narrative, with a recent leaderboard integrated with a certain platform being a prominent reflection of this. The project comes with a 3-month incentive of 400,000 $ARB tokens (approximately $124,000).

The innovative form of InfoFi on the second layer is taking shape: a certain project positions itself as a decentralized consensus hub, integrating social collaboration and incentive design. Although the details are still unclear, early signs indicate that it is implementing a niche market entry strategy targeting specific protocols.

Conclusion

Arbitrum has broken through the critical point and is transitioning from Decentralized Finance to a new phase of broader on-chain applications. Its depth of maturity and evolution dynamics are clearly visible, carving out a unique path of development.