The surge in Arbitrum’s daily volume likely stems from the upcoming Ethereum upgrade dubbed Dencun, not the memecoin frenzy experienced by other blockchain networks. 

Arbitrum, a layer 2 scaling solution for Ethereum, has taken the lead in daily volume on decentralized exchanges (DEX) for the first time in Arbitrum’s history, according to the most recent data from crypto analytics firm DefiLlama. 

Over the past 24 hours, the total value of transactions made on Arbitrum by crypto users stands at $1.83 billion, taking the lead from base layer blockchain Ethereum, which has a 24-hour volume of $1.44 billion. In fact, the combined 24-hour volume of Solana, Binance Smart Chain, Polygon, Avalanche, Optimism and zkSync Era is less than that of Arbitrum’s.

The historical leader in 24-hour volume has been Ethereum, though its seat on the throne has been challenged recently. Solana, a layer 1 blockchain that implements proof-of-history, surpassed Ethereum’s daily DEX volume for several days in December 2023. Now, less than a month later, Arbitrum has taken the lead. 

“It’s not an easy feat, there’s a lot of chains and not many have been able to do that, even if it’s just temporarily,” said Martin Lee, content lead at on-chain metrics firm Nansen, to Unchained via Telegram. “While it’s an impressive achievement, ideally, I’d want to see this trend continue over a longer time horizon before putting any weight behind it. We’ve seen moments where chains get massive spikes in activity but few manage to maintain it.”

Dencun’s Impact 

The spike in Arbitrum’s volume likely stems from the upcoming Ethereum upgrade known as Dencun, Lee noted. Set to be activated on several testnets this month, Dencun is the first major upgrade to Ethereum since Shapella in April of last year, which enabled stakers to withdraw their ETH. The newest upgrade includes EIP-4844, also known as proto-danksharding, which is designed to scale Ethereum in a decentralized way. 

“Proto-danksharding reduces the cost of posting large amounts of data to Ethereum and thereby lowers the operational cost of rollups,” wrote Galaxy’s vice president of research Christine Kim in a research report last June. “EIP 4844 is considered a boost to Ethereum scalability because it makes Layer-2 networks built atop Ethereum more cost-effective,” the report said. 

In addition, Carlos Mercado, data scientist at blockchain data firm Flipside Crypto told Unchained over Telegram that “Arbitrum over the last few weeks has been preparing for Arbitrum Orbit, their competitor to the Optimism ‘Superchain’ thesis,” a network of chains that all share Optimism’s open-source development stack.

Notably, the surge in Arbitrum’s daily DEX volume is not from the recent memecoin frenzy that has gone viral on other Layer-1 networks such as Bitcoin, Solana, and Avalanche. Memecoins “never took off” on Arbitrum, according to Nansen’s Lee.

ARB, the native governance token for the Arbitrum ecosystem, has slid roughly 11% in the past 24 hours, but has gained nearly 27% in the past seven days to change hands at $1.86, according to CoinGecko.

Disclosure: Arbitrum is a sponsor of Unchained.