Over $1 billion worth of Ether remains locked in the ArbiNYAN yield farm, despite the native token’s price collapsing by more than 90% in less than 24 hours.
Rollup network at layer two of Ethereum Arbitrum One is experiencing significant growth, with its total value locked (TVL) increasing by nearly 2,300 percent in the last week.
According to L2beat, a platform that analyses layer-two protocols, Arbitrum’s TVL hit a record high of $1.5 billion on Sept. 11 as DeFi degens rushed to invest in the network’s early farming DApps.
Arbitrum was launched to mainnet by Off-chain Labs on Aug. 31 following a $120 million funding round.
Since then, Ethereum transaction fees have risen to near-record levels, resulting in a migration of liquidity to layer-two scaling solutions and competing layer-one solutions.
Arbitrum currently controls 65.7 percent of all capital locked on layer-two networks, followed by the second-layer decentralised exchange dYdX, which controls 14.6%.
A large portion of Arbitrum’s growth can be attributed to the ArbiNYAN yield farm, which enticed investors with multi-thousand percent returns for staking its native token.
However, the bullish sentiment surrounding ArbiNYAN appears to have waned, with its native token losing more than 90% of its value in less than 12 hours.
At the time of writing, NYAN was trading at approximately $0.60, having fallen as low as $0.45, representing a 92 percent decline from the stock’s Sept. 12 peak of $7.85, according to Defined.
Despite the appearance of waning interest in ArbiNYAN, the rapid migration of liquidity to Arbitrum had an effect on the broader DeFi ecosystem.
One astute DeFi farmer noted that the abrupt withdrawal of approximately 200,000 Ether (worth $660 million) from Curve’s stETH pool following the launch of ArbiNYAN created an arbitrage opportunity via slippage.
Arbitrum also appears to have received a sizable portion of capital from so-called ‘Ethereum killers.
‘Dune Analytics data shared on social media on Sept. 12 indicated that while Arbitrum’s TVL increased approximately 2,300 percent, the TVL of the bridges to Solana, Fantom, and Harmony decreased by 58%. That same week, 36%, 62%, and 62%, respectively.
The Arbitrum bridge TVL absorbed the Solana bridge TV
Arbitrum (Ethereum Layer 2) is the Solana killer pic.twitter.com/SpP8bpOrR8
— James Spediacci ⟠(@JamesSpediacci) September 12, 2021Funds withdrawn from Arbitrum back to the Ethereum mainnet take seven days to process. All of Ether deposited will remain on Arbitrum for the seven-day period until it is available for withdrawal.
At the time of writing, DefiLama reports there is still $1.55 billion locked into ArbiNYAN despite the collapse of the NYAN token price.
