Arbitrum and Optimism: Who Will Win The L2 War? - Nansen's Weekly Alpha Leak

Arbitrum and Optimism: Who Will Win The L2 War? - Nansen's Weekly Alpha Leak

Nansen covers the heated rivalry between Arbitrum & Optimism, as well as some odds & ends

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GM explorers!

Welcome to The Map and the Territory, Nansen’s weekly alpha leak newsletter where we try to cut through the noise – the headlines, the tweets, and the mania – with onchain data in an effort to surface actionable signal.

This week we’re taking a look at a simmering rivalry between competing Layer 2 networks: Arbitrum and Optimism. Both scaling solutions are hovering around $1 billion in Total Value Locked (TVL), and have enjoyed recent surges in activity, users, and buzz. Let’s take a look at how you can use Nansen to analyze these networks!

Layer 2 Playgrounds

It’s a weird market! Even seasoned traders are struggling to make sense of it.

Ethereum is on the move, up roughly 20% on the week, while other majors labor to keep up. Alts, meanwhile, are a grab-bag, with unexpected names like Celsius and Nexo counting among the few who’ve managed to outpace ETH on a 7-day basis. It’s an idiosyncratic bid, with the overwhelming majority of the market’s attention focused on The Merge and the LSD (Liquid Staking Derivative) trade.

Want to track how top-performing wallets are playing the LSD trade? Sign up for a Nansen account today!

However, there are a handful of ecosystems that are managing to outperform – specifically, two scaling solutions for Ethereum: Arbitrum and Optimism, both of which have seen native projects surge in recent weeks.

The networks have long been entangled in an unofficial rivalry, with both teams boasting different technical solutions to the same problem. They raced to be first to market, and now are engaged in a back-and-forth battle for TVL with a different leader seemingly by the week. More importantly, though, the rivalry is also stoked by loudmouth CryptoTwitter investors and ecosystem projects – everyone is worried that only one L2 will emerge victorious, and no one wants to be left holding a bag.

Optimism Daily Transactions Dashboard

So what’s the tale of the tape? While Nansen’s watchful eye has yet to cast its full gaze over Optimism, there’s a number of promising metrics the platform tracks that point to Optimism’s growing health. For starters, the number of transactions is extremely choppy – a chart that’s to be expected from a young chain experiencing brief bursts of farming and NFT minting activity – but ultimately on an uptrend.

Top Bridge Accounts Dashboard

Likewise, for the moment Optimism is enjoying more 7 day volume on its cross-chain bridge – well over 33% more. However, there’s a worrying trend at play for OP boosters – the volume is moving solidly in Arbitrum’s favor as volumes are down a staggering 78% for Optimism and up 25% for Arbitrum – possibly the “hot ball of money” rotating to Arbitrum as OP is experiencing a pullback after a torrid run.

On Arbitrum, we have a much clearer picture of activity, including a cohort of fast-moving Smart Money buyers into key ecosystem projects.

Take, for instance, staked GMX:

Staked GMX Top Depositors Dashboard

The top depositors list includes a pair of Smart LPs, as well as none other than Arthur Hayes. We covered how funds and Smart Money have been battling it out over GMX in a previous newsletter with massive buys and sells, but recently it’s been more of a steady uptrend with two Smart Money addresses staking in the last two weeks.

It’s a similar picture for Radiant. After an initial rush to farm the RDNT token (and a brutal subsequent dump), the token is bouncing back in volume, price, and number of transactions.

RDNT Token God Mode Dashboard

Perhaps more importantly, the Smart Money is betting on a turnaround, with two Smart Money addresses buying a significant ownership percentage for the first time in the past week.

RDNT Top Balances Dashboard

In all, while it might seem that the two ecosystems are passing liquidity back and forth as traders chase ponzis and new yield farms, the reality is that between the peaks and valleys there’s a steady uptrend for both ecosystems across several key measurables. While there might be only one winner in the future, for now both L2s are promising destinations for intrepid explorers.  

Odds And Ends

This week’s edition of Office Hours spotlighted Nansen’s Scouts program, which is a great way for young Web 3 talent to expand their skillset and get their foot in the door of the industry (while earning some cash in the process). Check out our notes, courtesy of our intern Kate. Additionally, she put together some notes on this week’s Nansen Unsupervised – an especially fun episode featuring a gaggle of well-known industry ‘interns.’ Give it a look!

Office Hours Intern Notes

That’s it for this week, explorers. As always reach out with comments, questions, or critiques at


The authors of this content and members of Nansen may be participating or invested in some of the protocols or tokens mentioned herein. The foregoing statement acts as a disclosure of potential conflicts of interest and is not a recommendation to purchase or invest in any token or participate in any protocol. Nansen does not recommend any particular course of action in relation to any token or protocol. The content herein is meant purely for educational and informational purposes only and should not be relied upon as financial, investment, legal, tax or any other professional or other advice. None of the content and information herein is presented to induce or to attempt to induce any reader or other person to buy, sell or hold any token or participate in any protocol or enter into, or offer to enter into, any agreement for or with a view to buying or selling any token or participating in any protocol. Statements made herein (including statements of opinion, if any) are wholly generic and not tailored to take into account the personal needs and unique circumstances of any reader or any other person. Readers are strongly urged to exercise caution and have regard to their own personal needs and circumstances before making any decision to buy or sell any token or participate in any protocol. Observations and views expressed herein may be changed by Nansen at any time without notice. Nansen accepts no liability whatsoever for any losses or liabilities arising from the use of or reliance on any of this content.

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