Arbitram’s TVL has managed to reach highs amid ARB’s price swings.

Arbitrum, a layer 2 network built on the Ethereum blockchain, is showing strong performance as the new year opens. In particular, the platform has seen significant changes in its trading volume and its native token, ARB.

Indeed, this positive movement shows a promising direction for Arbitrum in the early stages of the year.

Arbitrum's rich DeFi ecosystem

According to the data on the chain, the volume of transactions of decentralized exchanges (DEX) on the Arbitrum network has surpassed other blockchains, including Binance Smart Chain, Solana and Polygon, in the last week. Incredibly, on January 5th, the volume of DEX on Arbitrum briefly surpassed that of the Ethereum mainnet, reaching a significant level.

This success can be largely attributed to crypto investors taking advantage of the network's cost-effective transaction fees.

According to data from L2Fees, Arbitrum is one of the most economical networks to trade with an average fee of $0.26. On the contrary, the average transaction fee on the Ethereum network is more than $5. This may be the reason why DEXes on Arbitrum have seen a significant increase in trading volume.

While the Ethereum DEX volume has regained its leading position, this data shows the rapid growth of Layer 2 since its inception.

Additionally, on-chain data from L2Beat shows Arbitrum's average daily transactions of 12.85 per second puts it among the top of the three Ethereum-based Layer 2 networks. It only tracks zkSync Era 18.34 transactions per second and Ethereum 14.00 transactions per second. This reflects the intense pressure Arbitrum has experienced in the competitive landscape of Layer 2 solutions.

Total cost of locked skyrockets

The increasing volume of DEX and high network activity has led to an increase in the total value (TVL) of the assets locked in the blockchain. TVL is a critical metric for measuring capital deployed on a blockchain or decentralized finance (DeFi) protocol.

Since the beginning of the year, the blockchain has seen a significant positive net flow of more than 250 million dollars. This increase pushed Arbitram's TVL to a record high, reaching $2.64 billion on January 12.

Similarly, Arbitrum's ARB performed impressively, growing more than 20% this year. ARB has outperformed major cryptocurrencies such as Bitcoin and Ethereum.

However, with the recent broader crypto market crash, the ARB token has been significantly impacted, dropping approximately 10% to $2.13 at the time of reporting.