Arbitrum, a leading layer-2 scaling solution for Ethereum, exemplifies this approach by forming key alliances that enhance its ecosystem and broaden its reach.

What is Arbitrum

Arbitrum is a layer-2 protocol that improves Ethereum’s scalability and reduces transaction costs without compromising on security. By offloading most of the transaction processing off-chain and only settling on-chain, Arbitrum offers a more efficient and cost-effective way to interact with Ethereum-based applications.

Significant Partnerships and Collaborations

Chainlink

• Role
  Integration of Chainlink’s decentralized Oracle network to ensure accurate and reliable data feeds.
• Impact
  Enhances the security and reliability of smart contracts on Arbitrum by providing tamper-proof and up-to-date data from external sources.

 The Graph

• Role
  Utilization of The Graph’s indexing and querying protocol to facilitate efficient data retrieval.
• Impact
  Simplifies the development of decentralized applications (dApps) on Arbitrum by enabling easy access to blockchain data.

Uniswap

• Role
  Deployment of Uniswap, the largest decentralized exchange (DEX), on Arbitrum.
• Impact
  Provides users with a fast and cost-effective trading experience, fostering increased activity and liquidity within the Arbitrum ecosystem.

Sushiswap

• Role
  Integration with Sushiswap, another leading DEX, to offer diverse trading options.
• Impact
  Expands the DeFi capabilities on Arbitrum, giving users access to more decentralized finance tools and services.

Aave

• Role
  Collaboration with Aave, a prominent decentralized lending and borrowing platform.
• Impact
  Brings lending and borrowing services to Arbitrum users, enhancing the utility and attractiveness of the platform for DeFi enthusiasts.

Balancer

• Role
  Partnership with Balancer, a decentralized asset management platform and automated market maker.
• Impact
  Introduces flexible liquidity pools and advanced financial instruments, catering to the sophisticated needs of DeFi users on Arbitrum.

Why These Partnerships Matter

These collaborations are not just about adding names to a list; they signify a strategic approach to building a robust and comprehensive ecosystem. Each partner brings unique strengths that complement Arbitrum’s capabilities, collectively contributing to a more powerful and user-friendly platform.

1. Enhanced Functionality
   By integrating with top-tier DeFi protocols, Arbitrum offers a wide array of services and tools, making it a one-stop solution for users.
2. Improved User Experience
   Reduced transaction fees and faster processing times provide a seamless experience, attracting more users and developers.
3. Increased Adoption
   Strategic alliances with industry leaders help in promoting Arbitrum as a reliable and efficient layer-2 solution, driving its adoption across the blockchain community.

Looking Ahead

As Arbitrum continues to expand its network of partnerships and collaborations, the platform is well-positioned to remain at the forefront of the DeFi revolution. By fostering innovation and building a diverse ecosystem, Arbitrum is set to deliver significant value to its users and solidify its role as a leading layer-2 solution.

Arbitrum’s journey is a testament to the power of strategic partnerships in driving technological advancement and ecosystem growth in the blockchain space.

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What is Arbitrum?

Arbitrum is a Layer 2 scaling solution for Ethereum, designed to improve the speed and reduce the cost of transactions on the Ethereum network. By offloading most of the computational work from the main Ethereum chain, Arbitrum allows for faster and cheaper transactions while maintaining the security and decentralization of Ethereum.

Key Advantages of DeFi on Arbitrum

1. Scalability
Arbitrum significantly increases the transaction throughput compared to Ethereum’s Layer 1, enabling DeFi projects to handle more transactions without congestion.

2. Lower Fees
Transaction fees on Arbitrum are substantially lower, making it more cost-effective for users to interact with DeFi applications.

3. Security
By leveraging Ethereum’s security through roll-up technology, Arbitrum ensures that all transactions are secure and verifiable.

4. Interoperability
Arbitrum maintains compatibility with existing Ethereum smart contracts, allowing developers to port their applications to Arbitrum without extensive modifications easily.

Notable DeFi Projects on Arbitrum

Several innovative DeFi projects have chosen Arbitrum as their operational base, taking advantage of its unique benefits to provide enhanced services to their users. Here are some of the noteworthy projects:

1. Uniswap V3
   One of the leading decentralized exchanges, Uniswap V3, has deployed on Arbitrum to offer faster and cheaper trading experiences. This integration allows users to swap tokens with minimal fees and delays.
2. Aave
   Aave, a decentralized lending protocol, uses Arbitrum to provide more efficient lending and borrowing services. Users can deposit and borrow assets with reduced transaction costs, making the lending process more accessible and lucrative.
3. SushiSwap
   Another major decentralized exchange, SushiSwap, leverages Arbitrum to enhance its trading platform. The reduced fees and increased speed on Arbitrum benefit traders looking for a seamless and cost-effective experience.
4. Balancer
   Balancer, a decentralized automated market maker (AMM), has also adopted Arbitrum. This allows users to create and manage liquidity pools with lower gas fees and quicker transaction times.

The Future of DeFi on Arbitrum

The integration of DeFi projects on Arbitrum is a significant step towards a more scalable and efficient decentralized financial ecosystem. As more projects migrate to or launch on Arbitrum, users can expect a proliferation of innovative services that leverage the platform’s advantages. The continuous development and improvement of Arbitrum’s infrastructure promise a thriving future for DeFi applications, offering enhanced user experiences and broader adoption.

In conclusion, Arbitrum’s contributions to the DeFi space are substantial, providing a scalable, secure, and cost-effective environment for decentralized financial applications. As the DeFi ecosystem continues to grow, Arbitrum’s role in shaping the future of finance becomes increasingly pivotal, heralding a new era of accessible and efficient financial services.

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Specifically, Chainlink Price Feeds help provide robust price data for wstETH, rETH, and cbETH — a necessary component for building a composable stable pool purpose-built for large volume trades of staked ETH tokens.

Balancer initial integration involves the use of the following Chainlink Price Feeds: 

• wstETH/ETH
• rETH/ETH
• cbETH/ETH

Balancer chose Chainlink as its go-to Oracle solution because its infrastructure is seamless to integrate and time-tested in production. Chainlink already helps secure leading DeFi protocols responsible for tens of billions of dollars in smart contract value, maintaining robust security and high availability even amidst unexpected events, such as exchange downtime, flash crashes, and data manipulation attacks via flash loans.

“As staking continues to garner adoption, it has become crucial for DeFi protocols like Balancer to secure their protocols with the right oracle solution. We’re very excited to support Balancer’s LST composable stable pools, which are pioneering the financial rails needed for mass LST adoption, with this integration.” — Chainlink

Natively, tokens staked in Ethereum are locked and cannot be traded or used as collateral. The introduction of liquid staking tokens (LSTs) unlocks the inherent value that these tokens hold, enabling them to be traded and used as collateral in DeFi protocols. This is a key factor for composability, adoption, and liquidity — and with $20B+ in total value locked (TVL) to date in liquid staking protocols, LSTs represent an exciting development for Ethereum’s DeFi ecosystem.

In this emerging paradigm shift to LSTs, Balancer’s LST composable stable pool (containing a mixed pool of wstETH, rETH, and cbETH) is a key facilitator. From a user’s perspective, the pool helps provide highly efficient stableswap liquidity that meticulously maintains concentration around the peg to minimize arbitrage opportunities and slippage. This is particularly important for large-volume trades.

Balancer also uniquely incentivizes liquidity through this design by redirecting a portion of the LST yield as voting incentives for the same pool. This model leverages voting markets to unlock a self-sustaining, circular flywheel in which the pool sustains its own incentive program.

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This incentive strategy will see ARB paired 1:1 as direct liquidity mining incentives with any voting incentives. Placed on the Aura finance voting market up to a maximum of 10k ARB per round. This means that on top of the portion of BAL incentives protocols participating in this voting market receive (which have historically been greater than the voting incentives placed), the Balancer DAO will also match voting incentives with direct ARB Liquidity Mining incentives.

The full structure is outlined below.

• 10-round duration, aligning with Aura’s two-week cycle of voting incentive allocations.
• Max of 100k ARB per round. Any unspent ARB returns to the treasury.
• Each pool can have a max possible allocation of 10k ARB per round to prevent one or two pools from taking the majority share of this program.
• On each Wednesday/Thursday after Aura’s gauge voting snapshot, ARB will be allocated to each Arbitrum pool according to bribes placed in the most recent round on a 1:1 USD basis, subject to ARB caps mentioned above.
• This ARB will be emitted over two weeks.
• All voting markets are included — projects can choose where to bribe at their discretion. Bribes placed by Balancer under BIP-19 also count.
• Balancer Maxis will publish a spreadsheet detailing the ARB allocation every two weeks and allow at least 24h for community feedback before execution. They will make a forum thread for this purpose.

In collaboration with Aura Finance, Balancer Technology now provides one of the most efficient liquidity layers to fuel growth for Arbitrum participants.

Balancer is an ecosystem of diverse, active, and vigorous microcosms humming away in synchronicity. With the launch of Aura onto the network and an ARB incentive sprinkled into the mix, a newfound energy source is primed to fuel further growth and prosperity on Arbitrum. Efficient liquidity flywheels, protocol-protocol symbiosis, and exhilarating technological developments; get ready for the next stage in Balancer’s evolutionary Arbitrum journey.

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The Ethereum Upgrade or “Merge” is on the horizon, eliminating the need for energy-intensive mining and instead will secure the network using staked ETH. There’s a surplus of coverage surrounding one of the most significant upgrades in the history of Ethereum. So a quick refresh is sufficient.

Staking Post Merge

While faster transaction speeds and lower energy consumptions are benefits of the awaited Merge, staking is one of the most anticipated features of the upgraded Ethereum network.

Current requirements to stake are pretty steep at 32 ETH. However, there are several projects, such as Rocket Pool and Lido Finance, that are creating solutions for users with fewer ETH to be able to participate.

The ETH 2.0 upgrade was targeted to occur in June with community projections of 12% to 15% APYs for staking post Merge. The date has since changed, with metrics pointing to slightly lower staking yields once the Merge takes place.

11.5 million ETH, or 9.5% of Ether’s circulating supply, is lock within the staking contract. While the growth of the amount of ETH staked makes the network more secure, it also means that the rewards received for protecting the network decrease proportionally.

Factors affecting staking APYs post Merge

• Amount of ETH staked
• Ethereum fees
• Percentage of fees burnt

Wrapping stETH creates a DeFi-compatible version of the stETH token, which allows for easier integrations with DeFi protocols, including Balancer. Through Balancer, users can provide wstETH as liquidity to the respective Pool to earn trading fees and additional incentives.

For context, Lido is the largest liquid staking protocol. By allowing traders and LPs to tap into Lido’s $6.32 Billion TVL. Balancer is a top destination for liquid-staked ETH liquidity, facilitating between Ether and Staked Ether to offer liquidity for stakers securing the Ethereum Network.

Recently, Lido joined the L2 ’22 Summer by launching stETH on Layer 2 networks Optimism and Arbitrum. Users can stake ETH with lower fees and use stETH assets across DeFi.

Balancer’s technology is deployed across L2s, including Arbitrum and Optimism, further strengthening its offerings for liquid-staked ETH liquidity and is equipped to support Lido’s launch of wstETH on Layer 2’s.

How exactly can Balancer users earn further yields on staked ETH?

Through MetaStable Pools

MetaStable Pools are great for tokens with highly correlated, but not hard-pegged, prices. Because of this, MetaStable Pools are especially well suited to handle pegged tokens that gradually accumulate fees.

Rate Providers

Wrapping rebasing tokens, such as stETH, makes them compatible with Balancer, but knowing the exchange rate between the underlying rebasing token and the wrapped token is necessary to facilitate Stableswap trades. Rate Providers are contracts that provide an exchange rate between two assets. These exchange rates can come from any on-chain source. For a Direct Balance Query like stETH, the wstETH rateProvider has a getRate() function that calls wstETH’s own stEthPerToken() function.

What differentiates Balancer from other DEXs are rate providers, which update the price of wstETH as it earns staking yield. By using rate providers, through MetaStable Pools, both Lido and RocketPool LPs can collect that yield instead of arbitragers.

Balancer wstETH/ WETH Pool

The wstETH/WETH Pool, with Lido Finance, allows users to stake their ETH — without locking assets or maintaining their own infrastructure. The wstETH/WETH Pool solves problems associated with initial ETH 2.0 staking: illiquidity, immovability, and accessibility. By making staked ETH liquid, users can stake ETH with any amount.

The wstETH/wETH Stable Pool TVL remained the largest at the end of the quarter, with over $200 Million in TVL.

Balancer’s rETH/WETH Stable Pool

ETH staking protocol, RocketPool lowers both the capital and hardware requirements for staking on ETH 2.0. Balancer’s rETH/WETH Stable Pool TVL has grown considerably in the past few months. Mere speculation, this growth could be attributed to the pending September Merge date to PoS.

Currently, Balancer holds the most rETH liquidity over other major DEXs.

Protocol Fees

Balancer applies the Protocol fee, which currently sits around 50%, to the staking yield making Balancer the optimal destination for liquid-staked ETH. A large part of Balancer’s revenue is directly ties to the fees earned on ETH staking yields.

ABOUT Balancer

Balancer Protocol allows for automated portfolio management, turning the concept of an index fund on its head. Instead of paying fees to portfolio managers, you collect fees from traders who rebalance your portfolio by following arbitrage opportunities.

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While Balancer Labs continues to innovate with technology, ORB will work to scale global utilization of Balancer Protocol and grow its ecosystem.

Every idea starts with a problem. The Balancer was simple. How does the Protocol decentralize influence and decision-making without sacrificing efficiency? The success of a protocol is only as strong as the entities that contribute to and support its growth and evolution. Out of this problem came the creation of Orb.

Furthermore, Orb is an experienced and passionate team of professionals who are dedicated to propelling Balancer’s growth. Orb’s mission is to scale global utilization of the Balancer Protocol.  Continue to cultivate the Balancer ecosystem for the next decade of innovation in DeFi.

“We are excited about the launch and funding of Orb Collective, an independent entity created by a team of former Balancer Labs and Balancer DAO contributors dedicated to propelling Balancer Protocol’s growth. As a service provider to the Balancer community, which voted to grant us this honor, we look forward to continuing to work with the amazing partners who have made the Protocol great and to grow the Balancer ecosystem beyond its current reach.” Jeremy Musighi, CEO of Orb.

ORB BELIEF

Furthermore, Orb believes that a protocol’s success emerges from a strong interdependent relationship between its core technology and its ability to promote usage of the technology. Moreover, if one side fails, the project cannot make the intended impact on the world.

Orb presents a solution for promoting the growth of Balancer Protocol through a tightly aligned mix of partnerships, marketing, integrations, design, and people operations work.

BALANCER AT ITS CORE

In the Web3 universe, Balancer is a star. The guiding force around which all other entities in its star system revolve. Orb Collective, formerly members of Balancer Labs and Balancer DAO. It is also fully funded by the DAO orbits around Balancer. This is where the inspiration for the name came from. Orb is one syllable, conjures strong mental imagery, is memorable, resonates emotionally, and contains an inherent sense of suspense and futurism.

“As I was part of the process of hiring most of these top talents at Balancer Labs I can second that Orb Collective is vital to the growth and expansion of Balancer Protocol. It’s really hard to find such people today and we are lucky to have them interested in still working with Balancer as they leave Balancer Labs.” Fernando Martinelli, Balancer Labs CEO.

In addition, the formation of Orb is a major step in Balancer’s path towards full decentralization. Balancer Labs will also continue pushing innovative technology. On the other hand, Orb Collective will work hard to scale the utilization of the Balancer Protocol. It will also continue the growth of the Balancer ecosystem.

ABOUT ORB COLLECTIVE

Orb presents a solution for promoting the growth of Balancer Protocol. Through a tightly aligned mix of partnerships, marketing, integrations, design, and people operations work. Orb’s mission is to scale global utilization of Balancer Protocol.

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ABOUT BALANCER

Balancer is a community-driven protocol, automated portfolio manager. A liquidity provider, and a price sensor that empowers decentralized exchange. The automated portfolio management of tokens on the Ethereum blockchain and other EVM compatible systems.

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