Bessie Liu

A cryptocurrency linked to a cost of living index is now available to select users on Ethereum scaling solution Arbitrum.



DeFi protocol Nuon announced in a blog post that it would be gradually rolling out its <a href="https://blockworks.co/news/what-are-flatcoins-and-are-they-a-better-inflation-hedge">NUON flatcoin</a> over the course of a month-long trial.&nbsp;



Once operations are confirmed to run smoothly, the cryptocurrency will be available to all users for permissionless minting via added collateral.



The protocol has chosen this “guarded launch” approach to minimize financial risks and repercussions.



“The guarded launch means that the WebApp will be alternating between Open and Closed states so as to better manage and control the launch and protest user’s funds,” the company said in a <a href="https://nuon.fi/blog/launch-release-note-and-faqs/" target="_blank" rel="noreferrer noopener">blog post</a>.



<h2>What is a flatcoin?</h2>



Flatcoins operate similarly to stablecoins, but rather than being pegged to the value of an asset — such as the US dollar or gold — it is pegged to an independent measure of the cost of living and its purchasing power remains “flat.”&nbsp;



The concept of this type of cryptocurrency is not entirely new. It has been discussed by the likes of Brian Armstrong and Vitalik Buterin, who <a href="https://www.youtube.com/watch?v=GUhDXUA4mfQ&amp;ab_channel=Coinbase" target="_blank" rel="noreferrer noopener">noted</a> in a podcast in August last year that “there is value in having some kind of cryptoasset that is intentionally designed to be as stable as possible.”



In the case of Nuon, its flatcoin is designed to hedge against inflation by recalibrating its daily value to account for the rising cost of living, <a href="https://truflation.com/methodology" target="_blank" rel="noreferrer noopener">using</a> the Truflation Index as an <a href="https://www.blockworksresearch.com/glossary#oracles" target="_blank" rel="noreferrer noopener">oracle</a>.



<h2>Stability and design&nbsp;</h2>



Nuon maintained its peg through what the team calls a “triple redundancy mechanism” where the protocol incentivizes users to “mint or burn NUON.”



If the price goes above the peg, the liquidation ratio drops, creating an incentive for users to mint more and sell the token. On the other hand, when the price of the token dips, the liquidation ratio increases, urging users to increase collateral or burn NUON to maintain safe collateral.



That means minters will have to have a reason to risk their collateral and watch the liquidation ratio closely.



Nuon CEO Stefan Rust acknowledges the risk but remains optimistic.



“Our vision for Nuon — inflation-proof money — is ambitious to say the least,” Rust said.



The mechanics differ from the failed <a href="https://blockworks.co/tag/terra">Terra USD</a> design in that NUON is only minted from collateral. In theory, that should put a buffer for the arbitrage mechanism to keep the peg.



Just as decentralized protocols are the answer to risks posed by centralized currencies, and over-collateralization is the answer to maintaining value in the face of market instability, inflation-proof flatcoins are the solution to preserving value over time.”



<hr class="wp-block-separator">
Get the day’s top crypto news and insights delivered to your email every evening.&nbsp;<a href="https://cms.blockworks.co/newsletter/?source=end" target="_blank" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a>&nbsp;now.
 
Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from&nbsp;<a href="https://blockworks.co/newsletter/research" target="_blank" rel="noreferrer noopener">Blockworks Research&#8217;s Daily Debrief</a>.
 
Can&#8217;t wait? Get our news the fastest way possible.&nbsp;<a href="https://t.me/blockworks_news" target="_blank" rel="noreferrer noopener">Join us on Telegram</a> and follow us on <a href="https://news.google.com/publications/CAAqBwgKMPyTxgswn6_dAw" target="_blank" rel="noreferrer noopener">Google News</a>.
<hr class="wp-block-separator">

‘Flatcoin’ Targets Inflation With Collateral-backed Arbitrum Stablecoin

Ethereum layer-2 rollups Arbitrum and Optimism have seen an uptick in their daily transactions over the past few months. Ethereum, meanwhile, is seeing a slight downtrend.



Arbitrum and Optimism are optimistic rollups designed to reduce the cost of transactions for the use of Ethereum dapps.



Both platforms have seen an uptick in daily active users recently, <a href="https://dune.com/blockworks_research/l2-comparison-dashboard" target="_blank" rel="noreferrer noopener">data compiled</a> by Blockworks Research shows, with Optimism recently overtaking Arbitrum for daily active addresses and transactions per day.​​



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The flippening no one is talking about 👀 Optimism overtakes Arbitrum for Daily Active Addresses and Transactions per day. Very interesting <a href="https://t.co/YdQVJr1xaV">pic.twitter.com/YdQVJr1xaV</a>&mdash; Westie 🟪 (@WestieCapital) <a href="https://twitter.com/WestieCapital/status/1612837614414880772?ref_src=twsrc%5Etfw">January 10, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Martin Lee, data journalist at Nansen, told Blockworks that as time goes by, these ecosystems are becoming more developed — which may be one of the reasons as to why they are seeing a spike in active users and transactions.



​&#8221;DeFi protocols GMX for example is one of the key protocols driving Arbitrum’s active users and transactions,” Lee said. “Sushiswap’s activity on Arbitrum is seeing an increase as well due to the recent spike and revival of MAGIC,” a gaming-related token.



The number of transactions on Arbitrum has been steadily increasing since its <a href="https://blockworks.co/news/arbitrum-upgrades-to-nitro-ahead-of-ethereum-merge">Nitro upgrade</a> in August, <a href="https://pro.nansen.ai/multichain/arbitrum" target="_blank" rel="noreferrer noopener">information</a> on blockchain analytics platform Nansen shows. 



This upgrade, which was completed prior to the <a href="https://blockworks.co/tag/ethereum-merge">Ethereum Merge</a>, increased Arbitrum’s throughput capacity by more than 7-to-10 times that of the Ethereum mainnet — hastening transaction speeds and reducing costs and requirements to run nodes.



These improvements may also be the reason why many new projects have decided to launch on Arbitrum.&nbsp;



Some of the most recent projects that have been onboarded to the network include: <a href="https://twitter.com/bebop_dex/status/1610656560870723588" target="_blank" rel="noreferrer noopener">Bebop DEX</a>, which specializes in one-to-many and many-to-one token trading; automated money flow provider <a href="https://twitter.com/caskprotocol/status/1611022614985854977" target="_blank" rel="noreferrer noopener">Cask Protocol</a>; on chain-asset management platform <a href="https://camelotdex.medium.com/camelot-welcomes-factor-to-the-round-table-34fb994c3d5f" target="_blank" rel="noreferrer noopener">Factor</a>; and NFT platform <a href="https://twitter.com/opensea/status/1611486589087109124" target="_blank" rel="noreferrer noopener">OpenSea</a>. 



In the case of Optimism, Lee says that, “we’re seeing a similar trend where DeFi protocols are one of the key drivers of adoption of the chain — Perpetual Protocol, Velodrome, Pika Protocol. Another key driver for both chains is Galxe, the on-chain identity and credentials project.&#8221;&nbsp;



The ecosystems also have the two highest total value locked (TVL) across all layer-2 networks, with Arbitrum having a TVL of <a href="https://l2beat.com/scaling/tvl" target="_blank" rel="noreferrer noopener">$2.34  billion</a>, making up over 52% of the entire market share. Optimism has a TVL of <a href="https://l2beat.com/scaling/tvl" target="_blank" rel="noreferrer noopener">$1.27  billion</a>, totaling almost 30% of the entire market share, <a href="https://l2beat.com/scaling/tvl" target="_blank" rel="noreferrer noopener">according to L2beat data</a>.



Arbitrum does not yet have its own governance token, but Optimism’s OP token <a href="https://blockworks.co/news/ethereum-layer-2-token-prices-up-double-digits-this-year">has posted double-digit gains</a> since the start of 2023.



<hr class="wp-block-separator">
Get the day’s top crypto news and insights delivered to your email every evening.&nbsp;<a href="https://cms.blockworks.co/newsletter/?source=end" target="_blank" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a>&nbsp;now.
 
Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from&nbsp;<a href="https://blockworks.co/newsletter/research" target="_blank" rel="noreferrer noopener">Blockworks Research&#8217;s Daily Debrief</a>.
 
Can&#8217;t wait? Get our news the fastest way possible.&nbsp;<a href="https://t.me/blockworks_news" target="_blank" rel="noreferrer noopener">Join us on Telegram</a> and follow us on <a href="https://news.google.com/publications/CAAqBwgKMPyTxgswn6_dAw" target="_blank" rel="noreferrer noopener">Google News</a>.
<hr class="wp-block-separator">

Arbitrum and Optimism Transactions Now Exceed Ethereum Mainnet

Sebastian Sinclair

The “crypto dominoes” are falling, sending shockwaves rippling across the landscape, including in decentralized finance, a ranking European Central Bank official opined Wednesday during a <a href="https://www.bis.org/review/r221207d.pdf" target="_blank" rel="noreferrer noopener">keynote speech</a>.



The statement from executive board member — and <a href="https://blockworks.co/news/crypto-needs-taxation-ecb-board-member-says" target="_blank" rel="noreferrer noopener">crypto skeptic</a> — Fabio Panetta, particularly within the decentralized finance (DeFi) sphere, only speaks to half the story.



While it&#8217;s apparent that crypto has experienced a number of “painful bankruptcies” that have underscored just how interconnected major firms had become, activity across competing protocols supporting DeFi applications has yet to drive entirely off a cliff.



DeFi has emerged as a silent hero as users lose faith in the endless fraud and failures among centralized crypto institutions, Jehan Chu, founder of Hong Kong-based trading and investment firm Kenetic, told Blockworks.



“Though regulation looms…increasing mindshare is giving DeFi its chance to shine and prove it has long-term advantages over centralized systems,&#8221; Chu said.



Peering across the sector, one may be forgiven for thinking most projects or protocols in the budding sector appeared lifeless.&nbsp;



Monthly trading volume across decentralized exchanges has fallen each period beginning from the middle of the year. That’s before volume spiked in November on the back of an industry-wide panic — courtesy of FTX.



In June, total decentralized exchange volume clocked around $95 million, data from <a href="https://dune.com/queries/4494/8769" target="_blank" rel="noreferrer noopener">Dune Analytics</a> shows. That figure fell to a low of around $44 million in October before November’s spike. 



December&#8217;s data stands at roughly $8 million, hinting at a weaker-than-average showing of user trading activity for the month so far.



Still, data from DeFiLlama <a href="https://defillama.com/">shows</a> the total value locked (TVL) in DeFi protocols hovers at February 2021 highs — a period in which DeFi had just begun to pick up in earnest.



At that particular peak, DeFi’s protocols contained roughly $54 billion in value before skyrocketing to an all-time high of around $244 billion just 10 months later. It’s still down by about 77% from its peak to stand at roughly $55 billion TVL at the time of writing.



<figure class="wp-block-image"><img decoding="async" src="https://lh5.googleusercontent.com/G_zjPBdsiUZT8xd1JbAza6W49XnzsH0IMljaNAvuQGIadGaUIPkOn_JAaXURny3SDznB-EyKM0meCRj7LxUKbyJRGlFjv15m5AClE_CX1aDaTzdLyXgAW3S3yHmt7yxrruRoGdj98hktXy9KA749VFKfC0XRFTHXa102duoF78OcSwa32XkmTDt72T0-CQ" alt=""/><figcaption class="wp-element-caption">Dune Analytics dashboard by nascent data analyst Howard Peng </figcaption></figure>



Meanwhile, <a href="https://dune.com/Howard_Peng/multi-chain-on-chain-data" target="_blank" rel="noreferrer noopener">activity on Ethereum layer-2s</a> Optimism and Arbitrum — considered the two largest by adoption to date — show both total transactions per day and active addresses have trended upward since the end of August, albeit in a see-saw fashion.



On Aug. 28, Arbitrum and Optimism&#8217;s active addresses stood at roughly 27,000 and 10,000, respectively. Today, those figures have more than doubled to 56,000 and 36,000, data show. 



Daily <a href="https://arbiscan.io/chart/tx" target="_blank" rel="noreferrer noopener">transactions on Arbitrum</a> have jumped more than 480% from July 10 lows of around 58,800 to 338,400. <a href="https://optimistic.etherscan.io/chart/tx" target="_blank" rel="noreferrer noopener">Optimism’s</a> has spiked more than 546% from 55,600 to 349,800 over the same period.



<a href="https://dune.com/blockworks_research/l2-comparison-dashboard" target="_blank" rel="noreferrer noopener">Contracts deployed</a> — which show how many users are engaging and executing tasks on both networks — reveal Optimism’s data has exceeded most other weekly periods in the last 90 days, while Arbitrum continues to chug along nicely.



Individuals appear to be more interested in “free money” included in airdrops during crypto winter, so there’s a focus on Arbitrum, which has not yet launched a token, a spokesperson for on-chain data analytics firm CryptoQuant told Blockworks.



“As alternatives to layer-1s, and having success in protocols such as GMX and Magic naturally increase the interest in layer-2s,” they said.



As the year comes to a close, interest in DeFi remains strong, a counterpoint to the contraction trends seen in metrics like <a href="https://blockworks.co/news/more-delistings-of-blockchain-etfs-could-be-coming" target="_blank" rel="noreferrer noopener">capital flows out of crypto-focused funds</a> from traditional institutions.



<hr class="wp-block-separator">
Get the day’s top crypto news and insights delivered to your email every evening.&nbsp;<a href="https://cms.blockworks.co/newsletter/?source=end" target="_blank" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a>&nbsp;now.
 
Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from&nbsp;<a href="https://blockworks.co/newsletter/research" target="_blank" rel="noreferrer noopener">Blockworks Research&#8217;s Daily Debrief</a>.
 
Can&#8217;t wait? Get our news the fastest way possible.&nbsp;<a href="https://t.me/blockworks_news" target="_blank" rel="noreferrer noopener">Join us on Telegram</a> and follow us on <a href="https://news.google.com/publications/CAAqBwgKMPyTxgswn6_dAw" target="_blank" rel="noreferrer noopener">Google News</a>.
<hr class="wp-block-separator">

DeFi Sector Warms Under Crypto Winter Sun

Arbitrum, a layer-2 rollup for Ethereum, has seen its network activity spike to new heights as anticipation mounts for an airdrop.



The buzz has boosted the total value of digital assets <a href="https://defillama.com/chains" target="_blank" rel="noreferrer noopener">locked</a> on the network (TVL) by more than 13% over the past month. Arbitrum’s TVL is $1.05 billion as of press time, eclipsing Ethereum rival Solana and even direct competitor Optimism.



Not to mention, transactions have shot up more than 550% since the launch of its <a href="https://cms.blockworks.co/arbitrum-upgrades-to-nitro-ahead-of-ethereum-merge/" target="_blank" rel="noreferrer noopener">Nitro</a> network upgrade in August, now representing 62% as many weekly transactions as the Ethereum blockchain, research firm <a href="https://members.delphidigital.io/reports/arbitrum-activity-accelerates-after-the-nitro-upgrade?utm_campaign=Delphi%20Daily&amp;utm_medium=email&amp;_hsmi=232144614&amp;_hsenc=p2ANqtz--LGURJ-CGaB1NEozwzZarcrJ7o4CQ32PdJMTWGG8aJjiXnysmw0oe6cnL7qUwsR9SkU7kar3RmW0fmzGLJyOgB0VSkag&amp;utm_content=232144614&amp;utm_source=hs_email" target="_blank" rel="noreferrer noopener">Delphi Digital</a> reported earlier this week. Before the surge, Arbitrum handled just 9% of Ethereum activity.



That has coincided with a spike in unique wallet addresses, which <a href="https://arbiscan.io/chart/address" target="_blank" rel="noreferrer noopener">topped out</a> at over 1.66 million for the first time on Monday. It should be noted that figure counts multiple addresses owned by individuals.



“Much of the activity is likely from speculators trying to boost their on-chain activity in the hopes of receiving a larger airdrop,” Delphi said.



Arbitrum hosts many of DeFi’s popular decentralized applications including exchange liquidity pool <a href="https://cms.blockworks.co/tag/curve-finance/" target="_blank" rel="noreferrer noopener">Curve Finance</a>, decentralized exchange Uniswap and lending protocol Aave.



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="514" src="https://cms.blockworks.co/wp-content/uploads/2022/11/Screen-Shot-2022-11-02-at-10.02.42-1024x514.png" alt="" class="wp-image-36544" srcset="https://cms.blockworks.co/wp-content/uploads/2022/11/Screen-Shot-2022-11-02-at-10.02.42-1024x514.png 1024w, https://cms.blockworks.co/wp-content/uploads/2022/11/Screen-Shot-2022-11-02-at-10.02.42-300x151.png 300w, https://cms.blockworks.co/wp-content/uploads/2022/11/Screen-Shot-2022-11-02-at-10.02.42-768x386.png 768w, https://cms.blockworks.co/wp-content/uploads/2022/11/Screen-Shot-2022-11-02-at-10.02.42-1536x772.png 1536w, https://cms.blockworks.co/wp-content/uploads/2022/11/Screen-Shot-2022-11-02-at-10.02.42-2048x1029.png 2048w, https://cms.blockworks.co/wp-content/uploads/2022/11/Screen-Shot-2022-11-02-at-10.02.42-428x215.png 428w, https://cms.blockworks.co/wp-content/uploads/2022/11/Screen-Shot-2022-11-02-at-10.02.42-470x236.png 470w, https://cms.blockworks.co/wp-content/uploads/2022/11/Screen-Shot-2022-11-02-at-10.02.42-389x195.png 389w, https://cms.blockworks.co/wp-content/uploads/2022/11/Screen-Shot-2022-11-02-at-10.02.42-80x40.png 80w, https://cms.blockworks.co/wp-content/uploads/2022/11/Screen-Shot-2022-11-02-at-10.02.42-50x25.png 50w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Arbitrum activity chart | Source: <a href="https://members.delphidigital.io/reports/arbitrum-activity-accelerates-after-the-nitro-upgrade" target="_blank" rel="noreferrer noopener">Delphi Digital</a></figcaption></figure>



The protocol is yet to launch its own native token, but Steven Goldfeder, co-founder of Arbitrum developer Offchain Labs, has cryptically <a href="https://twitter.com/sgoldfed/status/1516896690019647488" target="_blank" rel="noreferrer noopener">hinted</a> that an airdrop could eventually occur, <a href="https://cms.blockworks.co/podcast-optimisms-airdrop-is-the-future-of-governance-weekly-roundup/" target="_blank" rel="noreferrer noopener">following</a> in Optimism&#8217;s footsteps.



Arbitrum’s growth can be partly attributed the Nitro upgrade, which introduced lower fees, increased capacity and smoother development, Goldfeder told Blockworks in an email.



“At the same time, the Arbitrum ecosystem has been steadily growing, and this increase in adoption is largely a reflection of this continued organic growth,” Goldfeder said.



<h3>Arbitrum scales Ethereum to defy bear market</h3>



Australia-based blockchain infrastructure provider Mycelium debuted its <a href="https://cms.blockworks.co/bitmexs-arthur-hayes-advises-myceliums-perpetuals-launch/" target="_blank" rel="noreferrer noopener">perpetual swaps</a> on Arbitrum in August under the guidance of former BitMEX executive Arthur Hayes.



“When Mycelium first deployed derivative smart contracts in September 2021, Arbitrum was a natural choice,” Mycelium co-founder Patrick McNab told Blockworks. “Their growth since then is a success story that has defied the bear market odds.”



McNab added the network effects of access to liquidity, as well as protocols expanding synergistically, have led to large growth and innovation in Ethereum protocols over the past two years. “That is now playing out on layer-2s like Arbitrum.”



Offchain Labs has raised some $147 million in funding from the likes of Lightspeed Ventures, Coinbase Ventures, Pantera Capital and billionaire Mark Cuban, among others, <a href="https://my.pitchbook.com/profile/266539-15/company/profile#deal-history/205501-33T" target="_blank" rel="noreferrer noopener">data from Pitchbook</a> shows. Offchain’s post-money valuation is more than $1.2 billion.



Article and headline were updated at 3:40 am, Nov. 3, to clarify transaction count statistic.



<hr class="wp-block-separator">
Get the day’s top crypto news and insights delivered to your email every evening.&nbsp;<a href="https://cms.blockworks.co/newsletter/?source=end" target="_blank" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a>&nbsp;now.
 
Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from&nbsp;<a href="https://blockworks.co/newsletter/research" target="_blank" rel="noreferrer noopener">Blockworks Research&#8217;s Daily Debrief</a>.
 
Can&#8217;t wait? Get our news the fastest way possible.&nbsp;<a href="https://t.me/blockworks_news" target="_blank" rel="noreferrer noopener">Join us on Telegram</a> and follow us on <a href="https://news.google.com/publications/CAAqBwgKMPyTxgswn6_dAw" target="_blank" rel="noreferrer noopener">Google News</a>.
<hr class="wp-block-separator">

Arbitrum Transaction Count Rises to 62% of Ethereum Transactions

Ornella Hernandez

<div id="highlights-block_632a1ef741545" class="highlights">
 <ul>
 <li>Arbitrum paid 400 ETH via ImmuneFi to white hat hacker</li>
 <li>Arbitrum bridge bug was caused by bad initializers in the contract code</li>
 </ul>
 
</div>



Another cryptocurrency vulnerability has been uncovered by a so-called white hat hacker, who found an exploitable bug in the bridge between Ethereum and Arbitrum Nitro.



The hacker, known as riptide on Twitter, outlined their <a href="https://medium.com/@0xriptide/hackers-in-arbitrums-inbox-ca23272641a2" target="_blank" rel="noreferrer noopener">discovery</a>, which comes on the heels of an escalating series of hacks in the bridges that connect different blockchains, which collectively have been drained of hundreds of millions of dollars of predominantly user funds this year. 



Arbitrum, the layer-2 Ethereum scaling solution, paid riptide a bounty of 400 ether (ETH) as a reward via the bug bounty platform ImmuneFi.



The multi-million dollar vulnerability, as riptide called it, would have allowed an attacker to steal all incoming ether deposits from users attempting to bridge their assets between Ethereum layer-1 and layer-2 protocols to Arbitrum.



The initialization-related vulnerability, according to the white hat hacker, would have enabled any nefarious actor to impersonate a user and send the authentication message to the “sequencerInbox” function to execute the vulnerability.&nbsp;



The largest deposit recorded on the inbox contract was 168,000 ETH, around $250 million, with average deposits ranging from 1,000 to 5,000 ETH in a 24-hour period, riptide said.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">No big deal just bridging a cool $470mm through the same Inbox contract 👀 Definitely should be eligible for a max bounty 🤯 <a href="https://t.co/w7S58QNQZu">https://t.co/w7S58QNQZu</a>&mdash; riptide (@0xriptide) <a href="https://twitter.com/0xriptide/status/1572215767029977094?ref_src=twsrc%5Etfw">September 20, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Another Twitter user, smartcontracts.eth, <a href="https://twitter.com/kelvinfichter/status/1572213465854386178?s=20&amp;t=pb8MA3trIOvmUEpQImfGQQ" target="_blank" rel="noreferrer noopener">commented</a> that “rollups are still heavily in development,” cautioning his followers to be careful on layer-2 protocols. A layer-2 refers to a mechanism built on top of a blockchain’s core layer, typically to increase scalability or speed, plus introduce additional features. 



A similar bug was seen in the token bridge <a href="https://cms.blockworks.co/nomad-token-bridge-raided-for-190m-in-frenzied-free-for-all/" target="_blank" rel="noreferrer noopener">Nomad’s smart contract, which cost the protocol  $190 million in cryptocurrency</a> in the third-biggest cryptocurrency hack of the year.



Arbitrum <a href="https://cms.blockworks.co/arbitrum-upgrades-to-nitro-ahead-of-ethereum-merge/" target="_blank" rel="noreferrer noopener">recently launched Nitro</a> exactly one year after the rollup’s now-defunct first iteration and ahead of <a href="https://cms.blockworks.co/cryptos-equities-slide-on-central-bank-decisions-merge-aftermath/" target="_blank" rel="noreferrer noopener">the Merge</a>.



<h3>Arbitrum NFTs</h3>



Additionally, Arbitrum plans to integrate with NFT marketplace OpenSea on Wednesday.&nbsp;



A slew of NFT collections built on Arbitrum will be available to buy and sell directly on OpenSea.



OpenSea tweeted that creators would need to find their collections and set their creator fees directly.&nbsp;



The marketplace recently added the royalties percentages front-and-center on a collection’s page.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">1/ We’re excited to share that OpenSea will soon support <a href="https://twitter.com/arbitrum?ref_src=twsrc%5Etfw">@arbitrum</a>! 💙🚀 This is a first step in building our goal of a web3 future where people have access to the NFTs they want on the chains they prefer.&mdash; OpenSea (@opensea) <a href="https://twitter.com/opensea/status/1572250900198203392?ref_src=twsrc%5Etfw">September 20, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<hr class="wp-block-separator">
Get the day’s top crypto news and insights delivered to your email every evening.&nbsp;<a href="https://cms.blockworks.co/newsletter/?source=end" target="_blank" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a>&nbsp;now.
 
Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from&nbsp;<a href="https://blockworks.co/newsletter/research" target="_blank" rel="noreferrer noopener">Blockworks Research&#8217;s Daily Debrief</a>.
 
Can&#8217;t wait? Get our news the fastest way possible.&nbsp;<a href="https://t.me/blockworks_news" target="_blank" rel="noreferrer noopener">Join us on Telegram</a> and follow us on <a href="https://news.google.com/publications/CAAqBwgKMPyTxgswn6_dAw" target="_blank" rel="noreferrer noopener">Google News</a>.
<hr class="wp-block-separator">

Arbitrum Saved From Major ETH Loss by White Hat Hacker

Jack Kubinec

<div id="highlights-block_630f7b40519b9" class="highlights">
 <ul>
 <li>Arbitrum’s upgrade one year after its original launch is indicative of a “willingness to change” in the Ethereum ecosystem, an Arbitrum executive said</li>
 <li>Arbitrum expects cost decreases to take hold after a “days to weeks” lag</li>
 </ul>
 
</div>



The largest Ethereum scaling solution just got a speed boost. Arbitrum, a layer-2 rollup built to settle transactions cheaply on top of Ethereum, successfully deployed its Nitro upgrade after several hours of network downtime on Wednesday.



The successful upgrade is a positive development for Ethereum investors ahead of <a href="https://cms.blockworks.co/ethereum-merge-countdown-at-t-20-days/" target="_blank" rel="noreferrer noopener">the Merge</a>, but Arbitrum’s centralization tradeoff in pursuit of lower gas fees remains contentious.



Arbitrum launched Nitro exactly one year after releasing Arbitrum One, the rollup’s now-defunct first iteration.



Arbitrum expects a lag of days-to-weeks for the sequencer to bring down gas fees — paid in ether — as the system recalibrates. The protocol’s developers could not give Blockworks exact figures for how much transaction costs are expected to decrease under Nitro, but earlier in the summer, transactions fees on the network briefly surpassed those on Ethereum mainnet. Nitro solves this.



<h3>Prelude to a token</h3>



With the upgrade, Arbitrum will be re-launching <a href="https://medium.com/offchainlabs/the-arbitrum-odyssey-87d6e11171d5" target="_blank" rel="noreferrer noopener">Odyssey</a>, an initiative allowing users to earn NFTs for using the ecosystem. The spike in transaction fees caused Arbitrum to pause the program in late June.



The layer-2 rollup currently allows Ethereum to scale by having a sequencer — or Arbitrum-controlled computer — validate transactions off-chain before rolling up bundles of transactions for settlement on Ethereum. Nitro will compress more transactions into each batch, meaning the layer-2 will be able to settle more transactions in fewer Ethereum blocks.



Arbitrum’s innovation has come at the expense of decentralization. The layer-2’s validators are whitelisted by the developer team, so only approved nodes can verify transactions. Arbitrum’s sequencer is run in-house.&nbsp;



Arbitrum has <a href="https://twitter.com/ChainLinkGod/status/1397981978163507201?s=20&amp;t=kLEi4Li_eZwctGgPWWR0tQ" target="_blank" rel="noreferrer noopener">hinted</a> that a decentralized sequencer is in the works, and the company has plans to unveil some of its validators. In the meantime, the company thinks users have little reason to worry about centralization.



“[Arbitrum’s] sequencer is pretty limited in what it can do,” Goldfeder said. “The sequencer could never submit bad transactions or censor transactions.”



Like the optimistic rollup’s chief rival <a href="https://cms.blockworks.co/tag/Optimism/" target="_blank" rel="noreferrer noopener">Optimism</a>, the path to decentralization is <a href="https://newsletter.banklesshq.com/p/arbitrum-odyssey-begins-" target="_blank" rel="noreferrer noopener">widely expected</a> to involve the issuance of a token, for which the Odyssey NFTs may be a precursor.



Arbitrum’s upgrade comes two weeks before the Ethereum Merge to proof-of-stake (PoS). The timing is coincidental but points to a spirit of tinkering within the Ethereum ecosystem, Steven Goldfeder, CEO of Arbitrum developer Offchain Labs, told Blockworks.



<blockquote class="wp-block-quote">“There are certain blockchains like Bitcoin that [are] very anti-change. I might say it&#8217;s ossified. And then there are blockchains like Ethereum that are willing to reinvent themselves, in a secure way, that&#8217;s measured and takes time but is done really thoughtfully,” Goldfeder said.</blockquote>



Ethereum has bet layer-2s can fix its <a href="https://cms.blockworks.co/the-merge-will-not-lower-ethereum-transaction-fees/" target="_blank" rel="noreferrer noopener">scalability problem</a>. Arbitrum looks to be a promising example.



<hr class="wp-block-separator">
Get the day’s top crypto news and insights delivered to your email every evening.&nbsp;<a href="https://cms.blockworks.co/newsletter/?source=end" target="_blank" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a>&nbsp;now.
 
Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from&nbsp;<a href="https://blockworks.co/newsletter/research" target="_blank" rel="noreferrer noopener">Blockworks Research&#8217;s Daily Debrief</a>.
 
Can&#8217;t wait? Get our news the fastest way possible.&nbsp;<a href="https://t.me/blockworks_news" target="_blank" rel="noreferrer noopener">Join us on Telegram</a> and follow us on <a href="https://news.google.com/publications/CAAqBwgKMPyTxgswn6_dAw" target="_blank" rel="noreferrer noopener">Google News</a>.
<hr class="wp-block-separator">