Arbitrum Stylus - A World of New Opportunities
Emerging Innovations and Collaborative Potential
As Arbitrum is being overlooked in the current depths of this bear market, I thought it was about time I did one of my customary Arbitrum articles as Stylus recently was released which seems to be my duty as self-proclaimed Chief Resident Arbitrum Degen.
While Base currently is the talk of the town in regard to L2s, we tend to forget that Arbitrum has been the market leader for a long time even though the local peak from an activity standpoint was around the ARB airdrop.
So in this article, we will look into the implications of Arbitrum Stylus and what currently is going on in the Arbitrum ecosystem.
Quick Arbitrum Stylus Overview
Stylus is an upgrade on Arbitrum Nitro that adds a second coequal virtual machine to the EVM that executes WASM (WebAssembly) instead of EVM bytecode. The core value proposition of this upgrade is that you can now build smart contracts with different languages such as Solidity, C, C++, and Rust.
For people who are bullish on the long-term prospects of Solana, which is an ecosystem with very talented developers. These developers can easily tap into Arbitrum stylus and build smart contracts by using a coding language they are familiar with in the form of Rust. It will also make it easier for protocols on Solana to deploy on Arbitrum as a 2nd chain when they think it's time to expand. And anyone who has been here for a while knows that protocol's expanding to Arbitrum normally leads to a positive price action. If Solana is here to stay, projects building on Arbitrum can be built with a Solana expansion in mind and be active on two different L1s if successful.
While this gets ignored in a bear market as the market has chopped people up, there are exciting times ahead when things start picking up again.
Ecosystem Activity
It is no surprise that there is a new governance proposal that caught steam that discussed charging the ecosystem with ARB incentives after the previous proposal by Camelot got rejected after much controversy. After large discussions, the community came to the conclusion to boost the ecosystem with 50M ARB which will have a potential effect on the ecosystem as a whole.
Thus, let’s take a look at some interesting upcoming protocols:
Tapioca is a decentralized omnichain money market that has been long anticipated within the Arbitrum ecosystem as a direct competitor to Radiant. Tapioca’s value proposition is to launch an omnichain decentralized stablecoin that can be minted through the CDP model. You’ll also be able to deposit yield-bearing assets that will pay off your loan over time while still being able to take the stablecoin called USD0 to different DeFi opportunities cross-chain.
The protocol is still in Beta but will be launching soon so definitely worth keeping your eyes on.
Dolomite is a decentralized margin protocol paired with a DEX that allows for high capital efficiency. The protocol reuses liquidity on the platform to provide higher yields for the end user. For example, if you deposit a token on Dolomite as borrowing supply, this same asset can also be earning swap fees on top of its lending yield to amplify the yield. You can also stake assets directly through the platform and then borrow against them for additional capital efficiency and autonomy.
The protocol is still in an early phase and haven’t launched their token yet.
Parallax is a decentralized yield-optimizing protocol that operates vaults to facilitate yield farming strategies. They operate auto-compounding vaults that can be accessed on Arbitrum while being able to operate strategies on the mainnet (and other chains?). Making it cheaper for people with smaller capital to take part in yield farming strategies on the Ethereum mainnet. The protocol is putting a lot of emphasis on LSTfi and plans to build out a cohort of strategies tailored to that segment of the market.
The protocol is still in beta but recently launched its token called PLX.
Empyreal aims to democratize access to blockchain development through their SDK, by doing so they hope to bridge the gap between getting talented developers to grasp the complexity of building exciting applications on-chain. Their current product offering consists of the Oasis privacy Layer and the ability to easily use off-chain & on-chain data in their apps.
The token of the protocol is called EMP and can be staked for the revenue the protocol generates by charging people who use their services.
Hyperliquid is a decentralized perpetual exchange that operates as an Arbitrum L3. It provides near-instant settlement as it benefits from operating on its own appchain and offers you up to 50x leverage on your trades. The order book is fully transparent and is gaining increasing popularity as it has provided an avenue to trade perps of popular altcoins.
Ecosystem Activity
While Arbitrum has been lagging for a long time amongst L2s (basically since the ARB airdrop), Optimism and Base have been dominating the mindshare. However, it is clear that the trend is shifting based on the last week as it looks like the ARB incentive program will pass.
Wouldn't surprise me to see a rotation as on-chain activity is scarce at the moment.
If incentives start to be distributed, users have to acquire the tokens and use certain protocols to receive those incentives which naturally boosts activity in the ecosystem. Show me the incentive and I'll show you the outcome. - Charlie Munger
ARB eco season? The stablecoin flow indicates that it could be possible which is worth tracking. A clear increase in volume over the last period is worth noting.
Don’t forget that EIP-4844 will launch towards the end of the year which tends to be forgotten by short-term thinkers. It is another strong catalyst for L2s which is being overlooked at the moment.
Key Takeaways
Arbitrum Stylus
Stylus, an upgrade on Arbitrum Nitro, brings a coequal virtual machine to execute WASM, expanding smart contract development possibilities with languages like Solidity, C, C++, and Rust.
Solana and Arbitrum Collaboration Prospects
Solana's talented developer community can now easily adapt and expand projects onto Arbitrum and vice versa, fostering collaboration and activity across both platforms.
Growing Ecosystem Activity
The Arbitrum community is witnessing the rise of a new governance proposal focusing on reinvigorating the ecosystem with ARB incentives
Emerging Protocols in Arbitrum Ecosystem
Tapioca: A much-awaited decentralized money market introducing an omnichain stablecoin
Dolomite: A decentralized Margin trading protocol promising higher capital efficiency and greater yields through integrated margin and DEX features.
Parallax: A yield-optimizing protocol offering cost-effective yield farming strategies on Ethereum's mainnet with a focus on LSTfi strategies.
Empyreal: Aiming to democratize blockchain development through their SDK, fostering the creation of on-chain applications.
Hyperliquid: A novel decentralized exchange on Arbitrum L3 offering transparent and leveraged trading opportunities.
Possible Upturn in Arbitrum Activity
Recent trends indicate a potential resurgence in Arbitrum's popularity and activity, spurred by a probable approval of the ARB incentive program.
Anticipated Developments and Market Opportunities
The upcoming launch of EIP-4844, a strong catalyst for Layer 2 solutions, signals promising prospects for Arbitrum and other L2s, currently underestimated in the market landscape.
That’s all I got for this article, hope September isn’t too harsh on you, and thanks for reading this as always.
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