Although it has only been released for a few months now, Arbitrum is mentioned a lot. As the second largest layer 2 solution, Arbitrum has amassed a huge network of assets and users for the Arbitrum ONE mainnet.
However, the platform has not yet been accepted by the mainstream market. This is considered necessary to solve the current layer 1 problems. On the other hand, Binance’s announcement on 11/19 could have done just that.
Binance and Arbitrum
Binance recently announced the successful integration of the Arbitrum ONE mainnet, allowing users to deposit ETH on layer 2 Arbitrum One. For now, notifications regarding deposits only and withdrawals will be activated at another date.
This news is not only great for driving Ethereum adoption, but also an opportunity for Arbitrum to expand further as Wrapped ETH (WETH) is currently dominating on the Arbitrum and Ethereum bridge.
With WETH dominance near 50% TVL, there is only 50% space left for other ERC-20 tokens on the bridge. However, compared to 2 months ago, the distribution of assets has increased significantly.
In August, LINK dominated significantly, up to 88% of TVL. However, since the beginning of September, USDC, USDC and WETH have taken that position.
Apart from the 50% TVL controlled by WETH, tokens such as DPX, USDC, USDT, SPELL, WBTC and RDPX make up the majority of the remaining 50% (45% TVL in total).
However, Arbitrum still has a long way to go and there are many more ERC-20 tokens to add to the network. Oddly enough, this month hasn’t been so great for a layer 2 solution.
TVL overall has barely gained for the month and has dropped $700 million in the last week. Additionally, the number of ERC 20 withdrawals and deposits in 24 hours has been reduced to just 24 and 54 respectively.
Furthermore, another issue related to Arbitrum that remains unresolved is gas fees. While transactions are much cheaper than layer 1 Ethereum ($8.50), Arbitrum charges $3.50 per transaction, according to data at the time of writing.
Therefore, Arbitrum needs to consider solving this problem as soon as possible.
Therefore, perhaps this announcement will be the necessary impetus as Binance is proof that Arbitrum is growing in popularity and hence attracting more investors.