It has historically paid to be early in DeFi — literally. Traders (including yours truly) are betting that will also be the case on Arbitrum and Optimism.
DeFi has long fostered a culture of rewarding early adopters, with a great example being last year’s massive Uniswap airdrop in which the decentralized exchange airdropped 400 UNI tokens to every user that had swapped tokens on the platform. Those who held onto the airdrop, worth $1,200 at the time, are now sitting pretty with tokens valued at close to $10K.
And while DeFi may have started on Ethereum, its explosive growth and resulting network congestion and high transaction fees have led to the rapid expansion of numerous competing Layer-1 blockchains, sidechains, and Layer-2 scaling solutions.
As these projects compete for users and liquidity, Defiers have a great opportunity to qualify for potential retroactive airdrops by interacting early with various protocols that have not issued tokens yet but may do so in the future.
On September 10, users of the Ethereum – Avalanche bridge were airdropped $GB tokens worth $2K at the time.
Last week, derivatives trading protocol dYdX airdropped over $1B in tokens to past users.
So, I decided to spend the weekend expanding my DeFi footprint in pursuit of potential future airdrops by checking out Arbitrum and Optimism, two competing Layer-2 solutions using Optimistic Rollups that are yet to issue tokens.
While there’s no guarantee that either of the projects will issue or airdrop any tokens, the low opportunity cost makes this a great time to try out these networks.
Here’s a step-by-step guide to getting started on Arbitrum and Optimism.
If you’re already familiar with DeFi on Ethereum, you’ll find this pretty simple. For those Defiers newly joining us, please check out our DeFi 101 content before attempting to proceed.
Warning: There is a 7-day delay in withdrawals from Arbitrum and Optimism. Please keep that in mind before transferring assets.
Step 1: Add the Arbitrum One network to your MetaMask wallet. You can do this manually by following this guide and entering the below parameters, or automatically in Step 2.
Step 2: Head over to the Arbitrum Bridge. If you didn’t add the network in Step 1, click on “Add/Switch to Arbitrum Network” and you’ll be prompted to add it to MetaMask.
Enter the amount of ETH you wish to transfer, and confirm the transaction. It took around five minutes and $11 in gas fees for my deposit to become available on L2.
You have arrived on Arbitrum.
While the ecosystem is still in its infancy, there are some yield farming opportunities.
I decided to start with Balancer while investigating more exotic options. There are currently two incentivized pools that offer BAL token rewards to liquidity providers (LPs).
Sushiswap is also live on Arbitrum, offering SUSHI rewards to LPs.
Optimism (Optimistic Ethereum)
Optimism is another Layer-2 scaling protocol for Ethereum and its TVL has been growing steadily since Uniswap V3 launched there in July.
There aren’t many DeFi protocols active on Optimism yet, apart from Uniswap and Synthetix, which moved SNX staking over in January. We can expect TVL to rise once more projects start to woo Defiers with token incentives.
Lyra, the options trading protocol spun off from Synthetix, launched on OE on August 25. They’ve launched a new Liquidity Mining program that will reward users who provide liquidity to the sUSD/DAI pair on Uniswap, starting today.
A major announcement is expected from Optimism this week. Could it be a token?
Just in case, I decided to bridge some ETH to Optimism.
Step 1: Add the Optimism network to MetaMask. I used Chainlist, a handy tool for connecting to EVM-compatible chains.
Step 2: Head to the Optimism Bridge and connect your MetaMask wallet to the Ethereum network. Enter the amount of ETH you wish to transfer and confirm the transaction.
You are now ready to DeFi on Optimism.
The deposit transaction was confirmed in approximately 10 minutes but was slightly more expensive than Arbitrum at $24. Both deposits were sent using a gas price of 37 gwei, so expect to pay a bit more.
Useful Cross-Chain Tools
- Hop Protocol is a cross-chain transfer protocol that is useful for moving assets across L2s/sidechains without going through Ethereum, thus saving fees. We took a FirstLook in June.
- Teleportr is a cheaper, more centralized bridge to Optimism, useful for smaller transactions.
- cBridge from Celer Network is another cross-chain bridge that supports a wide variety of blockchains.