5 opportunities on Arbitrum right now🔥
Our favorite market opportunities on Ethereum's most popular Layer 2
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Dear Bankless Nation,
Last September we published the Essential Guide to Arbitrum—one of Ethereum’s leading scaling solutions that had just launched on mainnet.
It was new and exciting, but at the time, there wasn’t really much to do. You could bridge over and use some of the leading DEXs like Uniswap, Balancer, and Sushi. That was it.
It was early.
Fast forward to today, and the ecosystem has grown rapidly. There’s now over $6B in value locked across all Layer 2s, and Arbitrum represents over $4B of it—over 60% market share!
The network is also steadily approaching 1M unique addresses (still early!!)
There’s more liquidity, more infrastructure, and more opportunities. Less than 9 months later and there’s now a vibrant ecosystem of applications on Arbitrum.
Low fees. More opportunities.
So today we’re revisiting the best opportunities on Arbitrum.
I wonder—could this make you eligible for an airdrop someday? 🤔
Best Opportunities on Arbitrum
Arbitrum One is currently the most popular layer 2 scaling solution for Ethereum, offering a range of L2 adventures and the best liquidity - at least for now.
This Bankless tactic covers a handful of the hottest Arbitrum opportunities you can consider trying today!
Goal: Explore cool Arbitrum projects
Effort: 1 hour
ROI: Up to 60% APR at current rates
Riding the rise of Arbitrum in style
The state of Arbitrum
Per L2BEAT, there’s currently $6.7B worth of total value locked (TVL) across all of Ethereum’s most advanced scaling solutions. Accordingly, Arbitrum’s nearly $4B TVL at the moment means the scaling solution currently accounts for over 50% of the market share.
While the size of Arbitrum’s user base is still dwarfed by the size of Ethereum’s, the Nansen Arbitrum dashboard indicates that the upstart L2 hosted an impressive ~150k unique active addresses over the last month and hosted nearly 50M addresses since its inception. For comparison, the Optimism L2 hosted ~40k addresses on the month and over 24M addresses to date.
With regard to the L2’s roadmap, the creators of the scaling solution recently announced AnyTrust Chains, which will operate along Arbitrum and offer ultra low-cost transactions, and the nearing of Arbitrum Nitro, which will optimize the L2’s network and drastically lower its transaction fees even further.
Arbitrum Starter Pack
Here are some resources you can use to help you more easily navigate the Arbitrum ecosystem.
Arbiscan: Block explorer for analyzing Arbitrum transactions.
Arbitrum One Portal: Application scanner to keep up to date with new DeFi and NFT projects.
Chainlist: Tool to add the Arbitrum network to your MetaMask wallet.
5 🔥 opportunities on Arbitrum right now
Below, I’ve curated a handful of what I consider to be the most compelling opportunities for adventurers on Arbitrum at the moment.
1. Get exposure to blue-chip NFTs via NFTI
What you need to know
In Feb. 2022, Scalara (previously Pulse Inc.) revealed the methodology for the Scalara NFT Index, or NFTI. Within a matter of days, someone used the methodology to launch the index through the index-tracking protocol Kuiper.
NFTI offers potential returns on the floor price performances of top NFT collections. Specifically, the index serves as an automated, weighted basket of xTokens from NFT liquidity protocol NFTX. In addition, NFTX’s inventory staking program provides NFTI holders with additional yields unrelated to price performances.
Initially, NFTI tracks the CryptoPunks, CrypToadz, Chromie Squiggles, Cool Cats, Doodles, Meebits, and World of Women collections. Investors can now use a single ERC20 to get exposure to these blue-chip NFT projects on any budget. In comparison, investing in these collections by simultaneously paying their full floor prices would amount to hundreds of ETH right now.
Previously, the vast majority of blue-chip NFT liquidity has been siloed on Ethereum, so NFTI’s arrival on Arbitrum makes it possible to enjoy fast and inexpensive L2 transactions around some of the biggest NFT projects for the first time ever.
How to access NFTI
Top up your Arbitrum wallet with ETH for gas if you haven’t already.
Then head to the ETH-NFTI pool on Uniswap V3’s Arbitrum deployment.
Use the “Swap” UI to input how much NFTI you’d like to trade for and complete the transaction with your wallet. Beware of high slippage!
That’s it! You can hodl NFTI while you’re long and want exposure to its collections, or you can sell through the same Uniswap V3 pool whenever you’re ready to take your money off the table.
2. Invest with Yearn’s L2 Curve Tricrypto vault
What you need to know
In Feb. 2022, the team behind the leading DeFi yield aggregator Yearn announced the protocol’s deployment to Arbitrum. Notably, this deployment marked the first L2 that Yearn supported.
The Yearn team decided to trial Arbitrum first because of the L2’s low costs, its confidence-inspiring TVL stats, and its compatibility with direct deposits/withdrawals via major crypto exchanges like Binance and FTX.
Yearn’s inaugural offering on Arbitrum is a Curve Tricrypto vault. Curve’s Tricrypto pool contains WBTC, WETH, and USDT, and depositors to this pool can take their liquidity provider (LP) tokens to Yearn’s vault to boost their earnings through an automated, Curve-centric DeFi strategy.
How to access the Curve’s L2 Tricrypto vault
Make a deposit to Curve’s Tricrypto pool on Arbitrum.
With your ensuing LP tokens, head back to the Curve Tricrypto vault page.
Use the “Deposit” UI to input how many crvTricrypto LP tokens you want to supply.
Complete an approval and then a deposit transaction, and you’re in. Right now the vault is generating ~7.4% APY.
3. Provide liquidity on Stargate Finance
What you need to know
Stargate, an “omnichain” bridging protocol, is the first project to launch atop Layer Zero, an interoperability solution that can make it easy for disparate blockchains to directly communicate with each other.
Stargate currently supports a series of stablecoin pools across multiple blockchains that are compatible with the Ethereum Virtual Machine (EVM). These chains include Arbitrum, Avalanche, BSC, and beyond.
By adding liquidity to Stargate’s liquidity pools, users stand to earn a small cut of every transfer made through Stargate. Additionally, it’s possible to stake Stargate LP tokens to earn further rewards denominated in STG, the native token of the protocol.
How to access Stargate’s Arbitrum staking opps
Add some USDC or USDT to your Arbitrum wallet for LPing with.
Then head to the Stargate Pool page and connect your wallet.
Click on the Arbitrum USDC pool or the Arbitrum USDT pool option and make your desired deposit amount.
With your new LP tokens, navigate to the Farming page and click on the staking opportunity that applies to you. Input how many LP tokens you want to stake and then complete the staking transaction.
Voila! That’s how to join Stargate’s Arbitrum farms. Note the USDC and USDT farms are offering ~10% APY and ~9% APY respectively at the moment.
4. Stake on GMX to earn up to 47% APR at current rates
What you need to know
GMX is a decentralized spot and perpetual exchange presently live on Arbitrum and AVAX. At the heart of the protocol lies a multi-asset pool, through which LPs can earn revenues via market making and supporting leveraged trading.
The eponymously named GMX token is the protocol’s native governance and utility token. Holders can stake GMX to earn escrowed GMX (esGMX) rewards and ETH earnings from swap fees over time.
GMX’s other central token, GLP, is the protocol’s native liquidity provider token. Simply put, GLP is an index of assets spanning the tokens that exist in GMX’s foundational multi-asset pool, and it’s possible to stake GLP to earn ETH and esGMX rewards.
How to access GMX or GLP staking
Go to the GMX Buy page and follow the instructions to acquire your desired amount of GMX or GLP.
If you buy GLP, you’re already done because your GLP is automatically staked upon the purchase. You can then track your earnings or unwind your position through the GMX Earn page. Note, GLP staking is generating 47% APR (27% in ETH + 20% in esGMX) right now.
For GMX stakers, follow up by going to the GMX Earn page and connecting your wallet.
Then scroll down to the GMX staking UI and slick “Stake” to complete the transaction with your wallet. Keep in mind that GMX staking is presently yielding 28% APR (11% in ETH + 17% in esGMX).
5. Earn up to 60% APR on Vesta liquidity mining
What you need to know
Similar to Liquity, Vesta is a “zero interest” lending protocol.
Yet while Liquity exists on Ethereum and only supports ETH collateral, Vesta is built on Arbitrum and supports multiple collateral types like ETH, renBTC, gOHM, and GMX.
The native dollar-pegged stablecoin of the protocol is VST, while the project’s native governance token is VSTA. In an effort to bootstrap liquidity around VSTA, the Vesta team is currently running a liquidity mining program centered on the ETH-VSTA pool on Balancer’s Arbitrum deployment. Accordingly, users can stake their LP tokens from this pool back on Vesta to earn 42% APR in VSTA rewards + 17% APR in BAL rewards right now.
How to access Vesta liquidity mining
Supply liquidity to the VSTA-ETH pool on Balancer.
Then go to Vesta’s Liquidity Mining page and click on the VSTA-ETH option, which will bring up the UI depicted in the image above.
Input how many VSTA-ETH LP tokens you want to stake, and then press “Stake” and complete the transaction with your wallet. Just keep in mind that your accrued staking rewards could be counteracted by impermanent loss in the underlying VSTA-ETH pool.
Pioneering The Frontier
The projects described above are pioneering around Arbitrum’s frontier and offer compelling opportunities for L2 adventurers to explore today.
They all come with risks, though they typify how the era of rapid and inexpensive DeFi and NFT activities is already upon us — the world’s just in the process of catching up.
🔥 Check out NFTI, Yearn, Stargate, GMX, and Vesta on Arbitrum!
👀 Also check out our previous How to get ready for L2 tokens tactic
William M. Peaster is a professional writer and creator of Metaversal—a new Bankless newsletter focused on the emergence of NFTs in the cryptoeconomy. He’s also recently been contributing content to Bankless, JPG, and beyond!
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Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.
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