Last Updated on February 29, 2024 by Ameer Hamza
In the last weeks, Arbitrum One’s Total Value Locked (TVL) has increased by an astounding 15.9%, making it the first Layer 2 (L2) network to cross the $10 billion TVL threshold.
This accomplishment comes after an event on December 15, when a spike in Bitcoin Ordinals-inspired inscriptions caused a sequencer stop, resulting in a two-hour partial outage on Arbitrum One.
Arbitrum One Emerges as Leading Ethereum Layer 2 Network by Total Value Locked
Based on data from L2Beat last week, the overall TVL for Ethereum Layer 2 networks was $20.82 billion, with 48.03% of the total coming from Arbitrum One. This is a major contribution. However, in the past few days, it has dropped by 2.89% to $9.79 B.
With 30.9% of its assets invested in Ethereum (ETH), 23.68% in its native governance token, ARB, 29.66% in stablecoins, and 15.76% in other assets, Arbitrum presently has a diversified asset portfolio.
Arbitrum One’s Infrastructure: A Trustworthy Foundation for DeFi
Arbitrum One’s success can be due to its capacity to duplicate the Ethereum user experience at much-reduced transaction costs. Approximately 470 decentralised applications (dApps) are currently launched on the network as a result of this cost-effectiveness.
The ARB token’s introduction as a governance token has been a major factor in the platform’s expansion. By enabling holders to actively engage in the platform’s development and policy decision-making processes, governance tokens encourage increased user engagement throughout the ecosystem.
The Arbitrum One network also features an operational proof system that has been deployed, a well-established Security Council, and the ability to receive fraud evidence from at least five external actors. Moreover, in the event of an unpopular upgrade by actors with more centralization than a security council, the platform provides a 7-day departure window without depending on a permissioned operator.
Arbitrum One on Upward Trajectory After Outage
On December 15, Arbitrum One experienced a disruption that the dashboard classified as a “major outage.” An inquiry was launched to determine the underlying reason and provide a solution.
Prior to the disruption, l2beat indicated that Arbitrum’s layer-2 network had completed over 22.29 million transactions, and DefiLlama data showed that the network had a total locked value of $2.3 billion.
There have been other disruptions to Arbitrum than the one that happened on December 15. A sequencer problem in June 2023 brought the DeFi Layer 2 network to a complete stop for more than an hour. The problem resulted in the sequencer reverting batches on-chain, which eventually caused the sequencer to run out of Ether (ETH). The problem was fixed by developers, who also manually refilled the sequencer and brought the Layer 2 network back up.
As the first Layer 2 network to achieve $10 billion TVL, Arbitrum One’s pioneering status is further cemented by its recent rise in Total Value Locked. Its strong infrastructure and governance token has allowed it to dominate Ethereum’s Layer 2 TVL market despite occasional disruptions, indicating a bright path for DeFi developments and user involvement.