This proposal would add ARB to the list of assets that Osmosis recognises as strategically important for growth, increasing the incentives allocated to it.

Details

ARB is currently the rank 40 cryptocurrency by market cap with a valuation of around $1.4 Billion, 3.5 times higher than Osmosis. The majority of ARB trade volume happens on alternative decentralized exchanges and on centralized exchanges such as Binance, not on Osmosis.

According to DefiLlama, the aggregate TVL of Arbitrum protocols is around $2.35 Billion, making it the 4th largest hub for DeFi activity. Ethereum DeFi “blue chips” such as Aave and Uniswap have deployed their respective protocols on Arbitrum, and decentralized perpetuals exchange GMX alone has generated over $100 Million in cumulative fees from margin and trading activity.

A recent clustering analysis by Flipside Crypto uncovered a moderate degree of overlap (as measured by co-occurance) between users of Arbitrum One, Polygon and BNB Chain - where Osmosis has already found reasonable success attracting liquidity from. To date, the Axelar bridge has facilitated over 618,000 WMATIC and 3,000 WBNB in transfers to Osmosis from their respective source chains. Further analysis of bridge activity shows that Arbitrum <> Osmosis is a growing source of USDC volume for Squid Router.

This proposal asks if Osmosis has a strategic interest in attracting more liquidity of ARB and so will enable it to access a greater proportion of liquidity incentives.

About Arbitrum

Arbitrum is an Ethereum L2, optimistic rollup. As an Ethereum scaling protocol, it makes transactions significantly faster and cheaper. The team at Offchain Labs launched the flagship chain, Arbitrum One, in May of 2021, and the Arbitrum ecosystem has quickly become a hub for DeFi. A separate AnyTrust chain, Arbitrum Nova was introduced in July of 2022 which is optimized for low-cost transactions.

The ARB token airdrop on March 23, 2023 decentralized governance of both Arbitrum chains and their underlying protocols. As part of this initial decentralization effort, 113 million ARB tokens were distributed to DAOs building apps on Arbitrum via an airdrop to their respective treasury addresses.

ARB is currently provided on Osmosis via the Axelar bridge.

Website: https://arbitrum.foundation/

Commonwealth Thread: https://commonwealth.im/osmosis/discussion/11358-arbitrum-incentives