​​What are the best DEXs on Arbitrum?

By: Elena Kireeva

What are the best DEXs on Arbitrum?

Decentralized exchanges have branched out into scaling solutions primarily to reduce transaction time and cost. Layer 2 scaling solutions now are the primary improvements on the Ethereum blockchain. Arbitrum, an L2 scaling solution on the Ethereum blockchain comes into the fray with several improvements and features to improve upon the existing infrastructure.

The Arbitrum blockchain boasts of a trustless security system rooted in Ethereum, with individual verification of the layer two results on the transaction history. With Arbitum, both the verified and unverified transactions can be run swiftly on the Ethereum virtual machine. The additional advantage of Layer 2 solutions is scalability. Their technical infrastructure is for permissionless off-chain storages and smart contract computation. This feature ensures the completion of more transactions per unit of time (seconds).

Before the eventual migration of the Ethereum blockchain from a proof-of-work consensus mechanism to proof-of-stake, the cost for Ethereum transactions was the primary deterrence and the proposition of layer 2 solutions was the eventual engineering. With Arbitum, the cost of the transaction is reduced to the bare minimum. The design framework is targeted at the L1 gas footprint of the ecosystem, in turn minimizing per-transaction cost.

The proposal to have DEXs on Arbitrum has garnered steam with so many blockchains already warming up to it. Below is a review of these DEXs with highlights of their standout features; energy efficiency and transaction costs.

Integral SIZE

Integral SIZE is an Arbitrum DEX offering a TWAP trading experience which guarantees zero price impact on any order size in their liquidity pool. The MEV problem on Ethereum is mitigated by Integral through its design in the smart contract. On SIZE, there is also protection against impermanent loss for liquidity providers.

Since its launch on the Ethereum blockchain, Integral has facilitated transaction volume of nearly $500 million and is now bringing its robust infrastructure for on-chain TWAP trading to Arbitrum.

KyberSwap

KyberSwap is the latest DEX to launch on Arbitrum. The migration to Arbitrum Layer 2 protocol is to help users work around Ethereum network congestion and exorbitant transaction fees. KyberSwap does not charge any fees for traders that use the aggregator.

By splitting trades and appropriating open transactions through multiple liquidity pools in the most optimal way,.traders can choose to form the plethora of options available to trade and exchange within the protocol. As a result of its operation across six networks and having achieved a total trade volume of over US$6B, KyberSwap is further leveraging the growth of the Arbitrum Layer 2 solution to expand its user base.

Balancer

In August 2021, Bakancer announced its launch on Arbitrum DEX immediately after the launch of Arbitrum adding it to the Ethereum and Polygon networks on the Balancer app. The main aim of the addition according to the Balancer team is to scale liquidity and significantly reduce transaction costs. In addition, the benefit is to allow small-scale projects to expand by leveraging the network's vast off-chain infrastructure.

Fernando Martinelli, Balancer Labs’ CEO spoke highly of the migration to the Arbitrum optimistic rollup, describing it as a leading L2 solution, in scalability, compatibility with the Ethereum network improved, and optimized user experience. He said, “we are excited Arbitrum is available on the Balancer ecosystem”.

Sushiswap

Sushiswap was one of the last DEXs to join the chain of DEXs on the Arbitrum L2 rollup. July 2022 marked Sushiswap's deployment of SUSHI to the Arbitrum Nova as a measure of its expansionary move.

The team describes “horrific UX” as Web3’s greatest hurdle to mainstream adoption. In its documentation, it describes the user interface as clunky while moving assets across chains. The release of SushiXSwap, which is one of the first-ever cross-chain automated market makers (AMMs), built on LayerZero’s Stargate protocol, solves this issue, reducing transaction time and the safety of assets (on transit) in the cross-chain bridge.

Curve Finance

Curve Finance is a decentralized exchange on the Ethereum protocol with an intricate design for trading stablecoins effectively. The Curve Finance DEX currently boasts a total value locked (TVL) of $4.94 billion, and is trading heavily even in the downturn of the market, in front of competitors like Pancakeswap and Uniswap V3 with $3.27 billion and $3.09 billion.

Curve Finance lists its DEX on the Arbitrum L2 solution to continue its broad vision of allowing the contiguous exchange of stable assets with the lowest fees and low slippage through its crypto pools.

Conclusion

The integrity of the Ethereum blockchain is paramount which is why the regular optimization of its infrastructure is essential for the continuous development and mainstreaming of the main chain. With the growing adoption of layer 2 solutions, in spite of Ethereum’s proof-of-stake adoption, there is a need for a more finessed user experience as well as an improvement in transaction throughput.

Arbitrum offers a multi-dimensional approach to handling cross-chain challenges. With Ethereum's recent improvement, Arbitrum will further simplify cross-chain communication between Arbitrum and Ethereum in addition to the upgrade of the fraud proofs, updated sequencers, data compression mechanisms, and token bridges.