With the rise of Ethereum and the upcoming Cancun upgrade, ARB continues to break historical highs, and other L2 solutions are also gaining momentum. The native governance token of ARBITRUM, ARB, has continuously broken new highs. According to OKX market data on January 3, at the time of writing, ARB briefly surpassed $1.94, marking a 10.33% increase in 24 hours. Since December, ARB has risen by 60%. The ARBITRUM community has passed two proposals, AIP-1.1 and AIP-1.2. The daily trading volume of the OP mainnet has increased by 20%, from 354,000 transactions to 431,000 transactions. The Cancun upgrade is anticipated. EIP-4844, co-authored by Ethereum researchers DANKRAD FEIST and Ethereum co-founder VITALIK BUTERIN, is a core component of the Cancun upgrade. METIS is an Ethereum Layer 2 scaling solution developed based on OPTIMISTIC ROLLUP, founded in 2018 by ELENA SINELNIKOVA, KEVIN LIU, and YUAN SU, focusing on Layer 2 scaling and general infrastructure projects. ZKFAIR is the first ZK-L2 based on POLYGON CDK and CELESTIA DA, with technical support provided by LUMOZ RAAS. STARKNET, alongside ARBITRUM, OPTIMISM, and ZKSYNC, is considered one of the four major solutions. TAIKO is a decentralized Ethereum equivalent ZK-ROLLUP that inherits Ethereum's security while providing lower transaction fees. MANTA is the first public chain built on CELESTIA's ETH L2, raising $60 million in funding.

As Ethereum rises and the Cancun upgrade approaches, ARB continues to break new highs, and other L2s are also starting to gain momentum.

Written by: Luccy

Arbitrum's native governance token ARB continues to break new highs. According to OKX market data on January 3, at the time of writing, ARB briefly surpassed $1.94, marking a 10.33% increase in 24 hours. According to L2BEAT data, Arbitrum's total value locked (TVL) exceeds $20 billion, making it the largest L2 Rollup.

ARB has risen by 60% since December. On July 7, 2023, the Arbitrum community passed two proposals, AIP-1.1 and AIP-1.2. AIP-1.1 proposed to lock the remaining 700 million ARB tokens in a "smart contract-controlled lock" for four years. AIP-1.2 aimed to modify several governance documents in the Arbitrum ecosystem, including lowering the threshold of ARB tokens required to propose improvements on-chain from 5 million to 1 million.

The surge in ARB prices was initially due to a large unlock, followed by a subsequent decline. However, since hitting a low of $0.74 on September 11, the price has shown signs of improvement. In terms of timing, ARB's price increase closely followed that of OP. According to The Block data, from the fourth quarter of 2023, Arbitrum's daily transaction volume increased by 38% from 670,000 to 926,000 transactions. OP's daily transaction volume also increased by 20%, from 354,000 to 431,000 transactions. After reaching a record high of $4.10, OP has been trading near its peak.

As the second-largest Optimistic Rollup by TVL, OP has surged by nearly 69% weekly, consistent with its TVL exceeding $5 billion. Despite criticism of Optimism's lack of decentralization, its market success with OP-Stack seems to be able to reverse the situation. However, a more reasonable market trend is that the success of OP-Stack will further expand, and where OP-Stack falls short, there will naturally be other contenders.

The focus of OP-Stack's implementation is to achieve a shared Sequencer. The more alliances OP has in the future, the greater the benefits it can capture through the Sequencer. Conversely, it will also face greater interests from multiple parties, becoming a new constraint beyond technology, solidifying Optimism's position as a leader.

As part of the Ethereum ecosystem, it is evident that one of the major factors driving ARB's trend is ETH. As an essential part of the Ethereum L2, ARB's movement is likely closely related to ETH. If ETH loses momentum, ARB may also slow down. Similarly, if ETH moves towards $2500, many crypto researchers expect ARB to rise to $2.

In addition to ETH's impact, ARB's surge is also driven by market expectations for Ethereum Improvement Proposal (EIP) 4844 and Vitalik's celebration of Arbitrum achieving the first phase of Rollup.

Cancun Upgrade Expectations

On December 22, The Daily Gwei founder and EthHub co-founder @sassal0x announced on social media that Ethereum developers will implement EIP-4844 on January 17, and the next major Ethereum upgrade, Dencun, will go live on the Goerli testnet.

EIP-4844, co-authored by Ethereum researcher Dankrad Feist and Ethereum co-founder Vitalik Buterin, is the core content of the Cancun upgrade, aimed at improving the performance of Ethereum's L1+L2 and addressing gas fee issues as a mid-term transitional solution.

EIP-4844 will adopt the original danksharding, a concept named after Feist, aimed at increasing the total number of transactions Ethereum can handle. Danksharding is a complete implementation of Rollup extension, which will provide Ethereum with a large space for compressing transaction data for Rollup dumps. It introduces a new transaction type (blob carrying transactions) to reduce Ethereum's transaction fees.

Compared to the full node storage structure of calldata, Blob is designed to be temporarily stored by some nodes, significantly increasing the data submission limit to the mainnet for Layer2, expanding its TPS. Additionally, due to its temporary nature, data storage efficiency will increase, and data storage costs will decrease. The enhancement of DA capabilities is due to one month of temporary storage, which is more than sufficient to handle the 7-day fraud proof window of OP-Rollup.

This means that EIP-4844 can increase Rollup's TPS while reducing gas fees. In simple terms, after EIP-4844, Rollup no longer needs to compete with ETH's native applications for block space, which is bullish for L2.

Rollup Phase One

In March 2023, the official announcement of the first Rollup to enter the first phase was made by Arbitrum.

At the end of the year, Vitalik gave a positive assessment of Arbitrum on Warpcast, stating, "This is real decentralized progress. I hope to see ten Rollups enter the first phase next year and achieve a certain degree of sequencer decentralization." A few hours after the comment was posted, ARB's price rose by 22%.

Being in the first phase of Rollup means that Arbitrum has met all five requirements for complete decentralization. According to L2BEAT data, at the time of writing, Arbitrum is the only L2 that has completed all five requirements for the first phase.

According to Vitalik's preliminary proposal on the Ethereum Magicians forum, the five requirements are as follows: 1. Deploy a complete and fully functional proof system; 2. Have at least 5 external participants who can submit fraud proofs; 3. Users can exit without the help of authorized operators; 4. If a more centralized participant than the Security Council implements unnecessary upgrades, users have at least 7 days to exit; 5. The Security Council is properly established.

It is worth noting that on December 29, the Arbitrum ecosystem game Layer3 Xai will distribute the first season's airdrop, which has already taken a snapshot of Xai Odyssey legends and pioneers, as well as Sentry Node Key holders.

Undervalued with High Potential

In addition to ARB, the rise of Ethereum and expectations for the Cancun upgrade are also driving up other L2 tokens. On December 27, according to OKX market data, Layer 2 project tokens experienced a general rise, with OP rising by 19.38% in 24 hours, MATIC by 18.34%, and METIS by 17.1%.

In addition to well-known projects such as Starknet and zksync, there are also undervalued projects with high potential such as Metis and ZK Fair.

Metis

Metis is a Layer 2 scaling and general infrastructure project founded by Elena Sinelnikova, Kevin Liu, and Yuan Su in 2018, based on Optimistic Rollup. Its native token METIS surged from $20 to $90 in just two weeks.

On December 18, MetisDAO announced the establishment of the Metis Ecosystem Development Fund (Metis EDF). With the establishment of Metis EDF, a fund of up to 4.6 million METIS will be used to promote project deployment, product development, and builder rewards in the ecosystem.

Currently, projects in the Metis ecosystem include the DEX Hermes, which is positioned as a high capital efficiency AMM, providing users with low-cost, near-zero slippage trading, and the first DEX on the Metis network, NetSwap, for swap transactions.

Hummus Protocol is a single-sided AMM built on Metis, allowing users to swap stablecoins with minimal loss. Its native token is HUM. Users can stake stablecoins to earn HUM and use the staked HUM rewards to increase the yield of staked stablecoins. The background of the Metis project has also brought native meme coins to the chain, such as meme VMUM and BARSIK.

According to the official blog post, Metis is expected to become the first decentralized sequencer Optimistic Rollup early next year, and the distribution of the ecosystem development fund will take place one week after the launch of the decentralized sequencer. With the launch of the decentralized sequencer and the incentives from the ecosystem fund, new projects in the Metis ecosystem are still worth looking forward to.

ZK Fair

ZK Fair is the first ZK-L2 based on Polygon CDK and Celestia DA, with technical support from Lumoz RaaS. ZK Fair is a completely fair launch, community-driven, aiming to solve the pain points of high L2 valuations, multiple PUAs, and high user participation thresholds.

On the day the ZK Fair testnet went live, over 30,000 users joined the community and interacted on the testnet. Its innovative economic model has been a focus of community attention. ZK Fair uses USDC as the fee token, with its native token being ZKF, with a total supply of 10 billion. All tokens will be distributed to the community through airdrops. 25 billion will be airdropped to community users, including Polygon zkEVM, zkSync, Linea, Scroll, ZKSpace interaction addresses, Lumoz point holders, Ordinals community, and more. Users can now check the community airdrop amounts on the official website zkfair.io. No more ZKF tokens will be issued in the future. When the 10 billion ZKF tokens are all released and in circulation, users will be able to participate in the airdrop through Owlto Finance, the first cross-chain bridge to support the ZK Fair mainOn December 8th, Taiko announced the launch of a community education initiative on Galxe, consisting of three main tasks: creating an account-driven wallet using Particle, establishing a .taiko domain, and reading official articles and participating in quizzes. Users who complete the tasks will be eligible to receive loyalty points.

Taiko is currently fine-tuning the new design and Rollup contract codebase. Once completed, this will be deployed as Taiko's Alpha-6 testnet, featuring a four-layer proof system. In the upcoming A6 testnet, Taiko will implement a 24-hour cooldown period for all levels. Ultimately, Taiko's primary goal is to combine the advantages of Controversial Rollup with Optimistic Rollup and ZK-Rollup.

Manta, the first public chain built on Celeasita's ETH L2, raised $60 million. It airdropped 5% of the token supply and provides native yields for ETH and stablecoins.

Manta has launched a liquidity incentive program called New Paradigm within its ecosystem, similar to the recent Blur's Blast liquidity staking. The basic logic is that all rewards amount to 3% (basic reward) + 2% (additional reward) + 1.5% (ecological reward) = 6.5%. Users stake ETH or USDC to receive blind box fragment rewards, which can be exchanged for blind boxes. NFTs obtained from the blind boxes can be exchanged for future token airdrops.

As early as January 2024, users can exchange the obtained NFTs for token rewards. After 69 days of receiving token rewards, users can unlock and withdraw their staked ETH and USDC from the Manta ecosystem. Currently, an invitation link is required to access the activity page.

Cryptocurrency News: ARBITRUM, EIP-4844, and L2 Tokens Surge Amid Ethereum Rally and Upcoming Upgrade