- The number of transactions on the Arbitrum network has started to decline.
- GMX and Gains Network helped Arbitrum become the fourth largest ecosystem.
The Arbitrum [ARB] network has become the fourth-largest DeFi ecosystem, namely due to the success of two protocols: Gains Network [GNS] and GMX. These protocols have aided Arbitrum in flipping Ethereum in terms of overall transactions.
.@arbitrum now has the 4th largest DeFi ecosystem with more than $2B of TVL.@GMX_IO leads the ecosystem, but a rising star has been capturing attention. ?@GainsNetwork_io has the 4th highest protocol earnings in crypto over the past 6 months: ?⬇️https://t.co/T4vLP8sSAc
— Delphi Digital (@Delphi_Digital) March 1, 2023
Read GMX’s Price Prediction 2023-2024
Arbitrum: What goes up…
However, the number of transactions on the network fell after crossing the one million transaction threshold. The decline in transactions on the Arbitrum network led many to believe that Arbitrum may have reached its peak in terms of transaction activity, and would not be able to garner the same amount of activity on the network any time soon.
Source: Dune Analytics
For Arbitrum to constantly observe an exorbitant number of transactions on its network, the network’s dApps would have to perform consistently.
dApps such as Gains Network and the GMX protocol have been in constant competition for prominence in the Arbitrum space.
However, at press time, the Gains Network was facing some challenges. According to Dapp Radar, the number of unique active wallets on the Gains protocol declined by 25.57% over the last week, subsequently causing the volume on the network to reach $4.3 million – a 36.39% reduction.
However, the Gains Network may have a chance of outperforming GMX in the future, as it usually asks for lower fees from its users.
Source: Dapp Radar
Even though Gains Network offers lower fees to its users, GMX still managed to outperform the protocol in terms of trading volume on its network.
One reason for the same was the high number of traders on the network, which surged from 56,770 to 60,320 over the last week. If the number of traders on the network continued to grow further, it would help increase activity on Arbitrum.
Source: Dune Analytics
Token activity falls
Even though the number of traders on the GMX protocol increased, GMX’s token activity on the Arbitrum network declined. This was showcased by the decreasing number of daily active addresses on the network. Another factor indicating falling token activity would be the declining velocity, which suggested that the frequency with which the GMX token was being traded fell.
Realistic or not, here’s GMXs market cap in BTC’s terms
Source: Santiment
The decline in the GMX token activity could be a concerning factor.
Overall, it remains to be seen how Arbitrum recovers from the decline in its transactions. Protocols such as Gains Network and GMX will play an instrumental role in the network’s future.
