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

In recent years, Arbitrum has not only continued to expand its capacity but has also entered a unique phase of ecological exploration, participating in a game that few can engage in. This evolution has redefined the boundaries of cryptocurrency technology adoption, from the native stage of Decentralized Finance to the gradual entry of institutions and the emergence of a nascent financial system.

Arbitrum has entered the mature stage of its ecosystem, establishing a comprehensive segmentation layout in the Decentralized Finance sector. Currently, it has achieved several key milestones:

• Spot DEX: L2 cumulative trading volume reached $534.2 billion, maintaining the top position.
• Perpetual Contracts: Total trading volume reached a record high of $802 billion.
• Lending Services: Liquidity depth exceeds 1.2 billion USD, productivity scale can be enhanced through credit.
• RWA-Fi: Increased to a historical peak of $262.5 million, covering 20 assets.

Arbitrum's self-sustainable growth is reflected in three aspects: user growth, liquidity depth, and the continuous activity of various business lines.

In the third quarter of 2021, during the early stage of the virtual automated market maker (vAMM) dominated by GMX and Gains Network, Arbitrum established the foundational structure for perpetual contract DEX. 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)
• Total trading volume reached 802.5 billion USD

Since then, the perpetual DEX ecosystem has achieved diversified evolution, with professional players continuously emerging:

• Rho Protocol: Develop native cryptocurrency interest rate derivatives
• Aark Digital: Provides ultra-high leverage trading services
• Ostium: Covers multi-asset allocation

The ecosystem shows a parallel trend of high user stickiness and product innovation, confirming its sustainability through self-generation and dynamic evolution.

As of the third quarter of 2024, the total value locked (TVL) in Arbitrum's RWA-Fi sector has grown to a historic peak of $262.7 million. The support from a diverse and growing global pool of fund participants further solidifies Arbitrum's position in the enterprise-level tokenized Decentralized Finance space. Notably, the $EUTBL issued by Spiko Finance is now leading the EU government bond tokenization market, commanding approximately 32% market share, surpassing other competitors. This indicates that institutional-level adoption is no longer just a theoretical concept.

As institutional giants lead the trend, the diversity of the Arbitrum sub-ecosystem is increasingly growing, spanning RWA integration and Decentralized Finance native innovations. This convergence meets a variety of needs:

• Institutional allocators seeking compliant revenue-generating assets
• Crypto-native users chasing permissionless leverage, structured products, or long-tail yield strategies.

Arbitrum positions itself as a comprehensive ecosystem that attracts capital from various fields, from Decentralized Finance to traditional finance. Arbitrum's Orbit and Stylus are becoming the core engines for multi-domain growth, providing the capability to build dedicated chains for vertical scenarios across industries. This aligns with the "application chain theory," which posits that customization and flexibility are crucial for optimizing infrastructure.

The adoption rate of this technical framework is rapidly increasing:

• 83 official ecosystem partners
• 41 mainnet launched (32% growth since April 2024)
• 21 testnets, 21 in development
• The total locked value (TVL) of the Arbitrum ecosystem (excluding ArbitrumOne) exceeds 320 million USD.

Arbitrum is increasingly favored by large institutions, a trend supported by the dual validation of actual application demand and infrastructure-level development. Global funds are building RWA-Fi liquidity, while infrastructure providers are working to bridge real-world capital to the blockchain. The ultimate issuance network of traditional finance is beginning to take shape, with some projects building institutional-level settlement layers and compliant chains suitable for the banking system.

The surge of the MEV phenomenon marks the ecosystem's progress towards the next stage of mature development. Arbitrum's Timeboost auction mechanism introduces an efficient and fair competition model, perfectly mirroring the proposer-builder separation (PBS) model of the mainnet. Since its launch less than two months ago, the usage has been quite high, bringing considerable revenue to DAOs. We have observed early signs of MEV atomic arbitrage monetization, primarily concentrated in high-volume trading pairs.

The Timeboost Fast Track currently accounts for about 5% of the total transaction volume on Arbitrum and maintains a steady upward trend. Approximately $175 million in daily trading volume comes from MEV arbitrage, accounting for 21.8% of Arbitrum's average daily trading volume over the past month. This indicates that MEV has become the core engine driving substantial trading volume, marking a new phase in the profitability mechanism of the protocol layer.

In the InfoFi application aspect, Arbitrum has gained attention through the Yapper leaderboard integrated with Kaito. The innovative form of second-layer InfoFi is taking shape, with Yapyo positioning itself as a decentralized consensus hub, merging social collaboration with incentive design.

In summary, Arbitrum has broken through the critical point and is entering a new stage of transitioning from Decentralized Finance to broader on-chain applications. Its maturity depth and evolutionary dynamics are self-evident, proving that Arbitrum is on a unique development path.