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Arbitrum went live yesterday, spurring several popular “blue-chip” DeFi tokens to join the newly available network.
Offchain Labs, the startup behind the Ethereum scaling solution, announced the general release of Arbitrum One, the project’s beta version, yesterday.
Though the launch is significant, the developer team will still be able to “pause the system” if any unanticipated issues arise, according to Offchain Labs. This also implies that the transaction capacity has been set to the same level as Ethereum. “In the following months and weeks, we will continue to analyse network traffic, improve stability and speed, and progressively increase our transaction ceiling over time,” said Offchain Labs.
Arbitrum uses a method known as “optimistic rollups” to reduce congestion and fees while interfacing with Ethereum.
Users travel to a second layer instead of executing actions on Ethereum, hence the term layer 2. They can spend, send, loan, and borrow money here for a fraction of the cost. All of these transactions are then “rolled up” and resolved in a single transaction on Ethereum at the end of their activity.
Arbitrum prompts rise of DeFi tokens
The cautious launch was met with a rally for various decentralized finance () projects that have integrated Arbitrum.
DeFi is a crypto subset that tries to imitate many traditional financial services, such as lending and borrowing, but without the use of a centralised institution, such as a bank or broker.
Aave, for example, allows users to earn interest by depositing several cryptocurrencies on the platform. And, because the protocol has already been merged with Arbitrum One, the scaling solutions’ expansion across all of crypto appears to have resulted in an increase in the value of Aave’s native token, AAVE.
The token is currently worth $398.28, having reached a high of nearly $410 earlier this morning.
Uniswap, DeFi’s most popular decentralised exchange, also had a strong surge following the Arbitrum news. The protocol’s native token, UNI, rose from $26.53 to a local high of $30.47. At press time, UNI is trading hands at $29,94.
These two projects aren’t the only ones to have made the layer-2 leap. The Arbitrum One Portal shows dozens of different crypto projects that have integrated the solution.
And as more projects port over, the current DeFi experience will be replicated one-for-one on a much cheaper, faster, and more efficient version of Ethereum.
Well, one day at least.