Prysmatic Labs

Arbitrum transaction activity rockets 550% since August: Delphi Digital

Following the Nitro upgrade, activity on Arbitrum has surged and has nearly two-thirds of the transaction activity seen on the Ethereum base layer.

Ethereum layer-2 scaling solution Arbitrum has seen a massive surge in activity since its Nitro update in August, having just clocked around 62% as many transactions as the Ethereum base layer.

In a Nov. 1 report, crypto research firm Delphi Digital noted that as of the week ended Oct. 24, Arbitrum’s number of total transactions has increased by 550% since August, citing data from Dune Analytics.

This week, @arbitrum had ~62% as many transactions as Ethereum L1. pic.twitter.com/DyuDNAjRGz

— Delphi Digital (@Delphi_Digital) November 3, 2022

In an earlier Tweet, Delphi Digital initially phrased Arbitrum as accounting for 62% of all transactions on Ethereum, which they later clarified was “incorrect phrasing.”

Arbitrum is an optimistic roll-up built by blockchain development firm Offchain Labs, aimed at scaling Ethereum smart contracts. It uses Optimistic Rollup technology to bundle large batches of transactions off-chain from Ethereum smart contracts and decentralized applications before submitting them to Ethereum.

A number of well-known protocols use Arbitrum, such as decentralized exchanges SushiSwap, Uniswap and GMX, lending protocol Aave and liquidity transport protocol Stargate. According to L2Beat, at the time of writing it has a current total-value-locked (TVL) of $2.59 billion.

Delphi analysts noted that weekly active users had spiked on Arbitrum, having grown 125% since Oct. 10 to reach a new high of 282,000 in the week ending Oct. 24.

The analysts also suggest that much of the surge in activity is likely driven by speculators trying to boost their on-chain activity in the hope of receiving a larger airdrop for a native token which has been hinted at by Offchain Labs co-founder Steven Goldfeder.

On Aug. 31 the Arbitrum One mainnet upgraded to Nitro, which Offchain Labs claimed in an April 7 post would result in reduced transaction costs while increasing network capacity, adding:

“While Arbitrum today is already 90–95% cheaper than Ethereum on average, Nitro cuts our costs even further.”

The low fees have resulted in various players from within the crypto ecosystem wanting to integrate with Arbitrum One, and on Nov. 1 decentralized finance (DeFi) optimization tool Furocombo, capital raising protocol Aelin and insurance protocol Y2K Finance each announced they were live on the popular scaling solution.

On Oct. 13 Offchain Labs announced they had acquired one of the core development teams behind the Ethereum Merge, Prysmatic Labs, which it hopes will enable greater communication and collaboration between developments on both layers.

Offchain Labs acquires Ethereum core dev team Prysmatic Labs

Through the deal, Offchain Labs hopes to build a sustainable future for Ethereum, through greater communication between teams developing on both layers and direct collaborations.

One of the core development teams behind the Ethereum Merge, Prysmatic Labs, has been acquired by Offchain Labs, the developer of the Ethereum layer-2 network Arbitrum.

Announced in an Oct. 13 blog post by Offchain Labs, the deal’s financial terms were not disclosed, but it was noted Prysmatic Labs chose to join Offchain Labs “for many reasons,” but mainly because of the two companies’ alignment in their core beliefs.

Prysmatic Labs co-founder Raul Jordan said the move will “build a unified team stronger than the sum of its parts.”

“Merging with Offchain Labs made perfect sense to us as an Ethereum team because we develop software extensively in Go, are fully incentive-aligned with the success of Ethereum, and are focused on shipping quality software for others to use,” Jordan said.

Offchain Labs claims the future of Ethereum relies on layer 1 for consensus and data availability and layer 2 for execution and scalability, and its acquisition of Prysmatic Labs is a step toward combining experts in these two areas.

Despite the Prysmatic Labs team officially joining Offchain Labs, their “work will continue uninterrupted,” and their work in Ethereum node client software will continue to be developed under Offchain’s umbrella.

They are still developing Prysm as a fully open-source and neutral consensus client and bringing EIP-4844 data-sharding to production.

The post ends by teasing possible future collaborations between the two teams.

“There are several other joint initiatives that we plan to work on together, furthering both L1 and L2 development.”

Prysmatic Labs is one of the core engineering teams behind the Merge and built Prysm, the leading Ethereum consensus client that’s now powering Ethereum’s proof-of-stake consensus.

Offchain Labs is a venture-backed and Princeton-founded company developing Arbitrum, a suite of scaling technologies for Ethereum, with two live chains, Arbitrum One and Arbitrum Nova.