Fees on Ethereum’s Layer 2 scaling solution Arbitrum One rose higher than on the underlying Ethereum mainnet for more than five hours on Wednesday. While this was only temporary, it runs counter to the main goal of such a scaling solution, which is to offer cheaper (and faster) transactions.
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On Wednesday morning, the transaction fees to perform a token swap on Arbitrum spiked to nearly $10, about double the cost of a swap on Ethereum, per on-chain data. The higher-than-expected fees on Arbitrum were caused by increased user activity. The fees on Arbitrum have since come back down and are now sitting at around the $2 mark.
Per its official blockchain explorer called Arbiscan, the Layer 2 network experienced a 45% increase in daily transactions in the last few weeks. The network also touched a record high of more than 287,000 transactions on Monday.
The heightened activity has, in part, resulted from an incentivized user campaign called Arbitrum Odyssey, a 2-month promotional campaign. In this, Offchain Labs, Arbitrum’s development firm, promised NFT rewards to users who interact with various Arbitrum-based DeFi protocols. Airdrop farmers — those who try to be qualified for future airdrops — are speculating that these NFTs will later give access to an token airdrop, but this is by no means guaranteed.
Arbitrum is a Layer 2 solution that leverages a technology called Optimistic Rollups. This result in an off-chain computation network that lest it achieve faster and cheaper transactions while still deriving security from the main Ethereum blockchain. With over $2 billion in total value locked, Arbitrum leads the Layer 2 market ahead of others like Optimism, Boba and Metis, that all rely on the same scaling technology.
© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Vishal Chawla is a reporter who has covered the ins and outs of the tech industry for more than half a decade. Prior to joining The Block, Vishal worked for media firms like Crypto Briefing, IDG ComputerWorld and CIO.com.
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