The Return of L2 Kings? The Three Arrows and Breaking Points of the Arbitrum Renaissance

Although Optimism is the first TGE L2, Arbitrum is the true pioneer of the L2 wave. In H1 2023, Korean Whales were live streaming contract trading on GMX, while DeFi Degens used GLP Lego combinations for Yield Farming, and grassroots communities banded together to hype ancient cat and dog Meme coins. Arbitrum was one of the most prominent zones in the spring market of 2023.

However, this ecological prosperity, as splendid as a blooming flower, quietly came to an end after the epic TGE and airdrop of the Arbitrum native token ARB.

Looking back at this point in time in November 2025, there are three main reasons that led to this situation.

–The enormous positive externality generated by the epic airdrop of Arbitrum has been seized by competitors ZkSync, Starknet, and Linea;

–At that time, the core business model of the king-level L2 was not naturally organic, nor was it self-sustaining, but rather highly dependent on the false prosperity created by airdrop farmers.

–The airdrop is allocated too much to ecological developers, most of whom are well-disguised senior airdrop farmers. After receiving the airdrop, most of these developers lie flat, while a portion uses the large amount of ARB they hold to vote in DAO governance to allocate more ARB to themselves.

The best solution to the above problem can only be time.

After nearly 30 months of accumulation, the Arbitrum Foundation believes the time is ripe to launch the DeFi Renaissance Incentive Program (DRIP) to reactivate the vitality of the Arbitrum ecosystem.

The first arrow of the Arbitrum Foundation is to use the ARB incentive subsidy from the first season of DRIP to attract on-chain users with real money by utilizing the yield earnings of DeFi lending protocols (Aave, Morpho, Fluid, Euler, Dolomite, Silo, etc.).

According to Dune dashboard data (

However, in the above L2 market share ratio of DeFi lending protocols, Arbitrum's market share only increased from 3.09% to 3.75%. In comparison, Base's market share increased from 5.04% to 6.64% during the same period.

It can be seen that, in terms of the attraction to on-chain DeFi lending Degen, the subsidies in real money are still somewhat inferior to the expectations of airdrops with the possibility of massive gains.

The second arrow of the Arbitrum Foundation is to incubate new PerpDEX Variational Protocol and Ethereal Perps that are highly coupled with the ecosystem.

Arbitrum has a special relationship with today's PerpDEX Hyperliquid, which has bridged $4.59B USDC into Arbitrum, accounting for 69.08% of the total USDC supply on Arbitrum.

However, this $4.59B USDC contribution to Arbitrum's revenue only comes from transfer gas fees, while other high-value revenues and positive externalities are captured by Hyperliquid.

In this new version environment where PerpDEX rules the world, the Arbitrum ecosystem needs its own PerpDEX. The OLP mechanism of Variational Protocol has the potential to replicate the glory of GMX's GLP from back in the day.

The third arrow of the Arbitrum Foundation is to deeply bind with Robinhood to aggressively promote the tokenization of US stocks.

Currently, the Arbitrum RWA asset scale is $1,026.53M, mainly composed of tokenized US Treasuries, tokenized European bonds, and tokenized US stocks EXOD. There are 615 RWA assets, mainly the tokenized US stocks issued by Robinhood.

Due to current regulatory restrictions, the structure of tokenized US stocks consists of off-chain SPV custody + CEX/DEX liquidity pools. This leads to issues such as insufficient liquidity, unclear legal status, and reliance on centralized entities for clearing and settlement in this stage of tokenized US stocks.

But whether it's the rapid advancement of Arbitrum x Robinhood's US stock tokenization or Solana's new narrative of ICM, they both point to a future vision set by the SEC Project Crypto: the complete blockchainization of global financial infrastructure.

In summary, the three arrows of the Arbitrum Foundation - the DRIP program, incubating Variational, and staking U.S. stock tokenization, focus on the present while pointing towards the future.

The Arbitrum Foundation is really making moves this time.