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Despite the fact that the price of its native token fell by more than 90% in 24 hours, more than $1 billion in Ether remains locked in the ArbiNYAN yield farm.
Layer-two rollup network on Ethereum Arbitrum One is starting to witness substantial growth, with its total value locked (TVL) increasing by about 2,300% in the last week.
According to L2beat, an analysis platform comparing layer-two protocols, Arbitrum’s TVL tagged an all-time high of $1.5 billion on Sept. 11 as DeFi degens hurried to invest in the network’s early agricultural DApps.
Arbitrum was deployed on mainnet by Off-chain Labs on August 31 following a $120 million fundraising round. Since then, Ethereum transaction costs have risen to near-record highs, causing liquidity to migrate to layer-two scaling solutions and competing layer-ones.
Arbitrum presently controls 65.7 percent of the capital locked on layer-two networks, with 14.6 percent held by the second-layer decentralised exchange dYdX.
Much of Arbitrum’s growth can be attributed to the ArbiNYAN yield farm, which lured investors with multi-thousand percentage returns for staking its native token.
However, bullish sentiment surrounding ArbiNYAN appears to have been short-lived, with its native token shedding more than 90% of its value in less than 12 hours. At the time of writing, NYAN was trading at just roughly $0.60 after sinking as low as $0.45, with current prices down 92% from its Sept. 12 peak of $7.85 according to Defined.
Despite hype for ArbiNYAN appearing to have fizzled out fast, the rapid migration of liquidity onto Arbitrum impacted the wider DeFi ecosystem.
One savvy DeFi farmer noted that the sudden withdrawal of roughly 200,000 Ether (ETH) (worth $660 million) from Curve’s stETH pool since ArbiNYAN’s launch had created an arbitrage opportunity through slippage.
A substantial portion of the wealth moving to Arbitrum appears to have come from so-called “Ethereum killers.”
According to Dune Analytics statistics released on social media on Sept. 12, although Arbitrum’s TVL increased by over 2,300 percent, the TVL of bridges to Solana, Fantom, and Harmony decreased by 58 percent, 36 percent, and 62 percent, respectively, the same week.
The Arbitrum bridge TVL absorbed the Solana bridge TVL
Arbitrum (Ethereum Layer 2) is the Solana killer pic.twitter.com/SpP8bpOrR8
— James Spediacci ⟠🦇🔊 (@JamesSpediacci) September 12, 2021
Funds withdrawn from Arbitrum back to the Ethereum mainnet take seven days to process.
All of Ether deposited will remain on Arbitrum for the seven-day period until it is available for withdrawal. At the time of writing, DefiLama reports there is still $1.55 billion locked into ArbiNYAN despite the collapse of the NYAN token price.