A General Overview of Arbitrum’s Current State
Arbitrum remains one of the most important scaling solutions in the Ethereum ecosystem, but it is currently facing increasing competitive pressure from newer, more agile chains such as Base and Solana. These ecosystems have gained significant traction by delivering different new use cases, and stronger momentum in user onboarding and developer activity.
One of the key challenges facing Arbitrum—and the broader Ethereum L2 landscape—is the lack of cohesion and persistent fragmentation. Despite the progress in scaling and rollup infrastructure, the Ethereum ecosystem has not yet achieved a truly unified user experience. Fragmentation across L2s continues to dilute liquidity and user attention, weakening Ethereum’s network effects relative to monolithic chains like Solana.
As it stands, there is often no strong technical reason for a user to choose one L2 chain over another. Stylus and Orbits are great but not enough to be game changers on their own. Instead, the decision is driven by where specific cases, applications, or communities exist. Chains are competing for total value locked (TVL) and developer attention, but the ecosystem lacks a coordinated strategy for user onboarding, cross-rollup liquidity, and interoperability. This leads to suboptimal outcomes for users and developers alike.
From a capital flow perspective, Arbitrum has experienced net negative flows over the past year, suggesting that the limited capital is rotating out rather than consolidating in the ecosystem. This trend is concerning and signals the need for stronger, more differentiated narratives and incentives that can reverse the outflows and position Arbitrum as the go-to destination for meaningful, sticky use cases.
Despite these challenges, Arbitrum still retains critical advantages—a strong DeFi presence, and one of the most battle-tested rollup technologies on the market. The next phase of growth will depend on the ecosystem’s ability to coordinate around compelling narratives, support application-layer innovation, and improve user experience across the board.
Arbitrum is still in the process of defining its identity, while other competitors are positioning themselves more clearly in the market. For example, Avalanche is branding itself as the go-to chain for gaming, and Berachain is leaning heavily into trying the home of DeFi. Base, meanwhile, has emerged as the most “institutional” chain, using that positioning to attract more risk-averse and sticky liquidity.
At present, Arbitrum remains the second-largest chain in terms of TVL, just behind Base. However, it feels increasingly likely that other chains could surpass Arbitrum at any moment unless stronger positioning and growth strategies are implemented.
Strategic Objectives for Arbitrum
1. Establish DeFi as the Core Pillar of Arbitrum
DeFi has consistently been Arbitrum’s most valuable and validated use case. As such, it should be recognized and developed as the foundational pillar of the chain. The objective is to position Arbitrum as the most attractive environment for DeFi innovation, capital efficiency, and user returns.
- Build Best-in-Class Financial Products: Prioritize the development of high-yield, user-focused DeFi applications such as lending markets, structured products, yield strategies, quasi-banking platforms, decentralized indexes, and on-chain insurance protocols.
- Develop Innovative Products: * Create innovative products on-chain that are inhouse or “Arbitrum financial products”. (Indexes, LSTs, Fixed Yield products). This can serve both as an investment vehicle and as a utility for Arbitrum ecosystem alignment. Liquidity is key to finance and having more products that attract liquidity will create a positive flywheel effect. Explore new things like strategic use revenues. Buying or investing in proven protocols that will be ARB only.
- Integrate Real-World Assets (RWA) with DeFi: Foster and incentivize the integration of RWA with DeFi use cases. This includes enabling tokenized T-bills, credit, or real estate products that interact seamlessly with on-chain primitives. Bridging TradFi and DeFi will amplify the value proposition of Arbitrum to institutional and retail users alike.
2. Attract, Onboard, and Retain Non-Native Users by Building the best usecases.
To achieve long-term, sustainable growth, Arbitrum must expand beyond crypto-native audiences and bring in new users through seamless, user-friendly applications.
- Leverage Abstracted User Experiences: Support the development of applications where the blockchain is invisible to the end-user. This includes use cases in gaming, social media, and mobile applications where users are onboarded without ever needing to understand crypto concepts such as wallets or gas fees.
- ARB as Invisible Infrastructure: Encourage the use of Arbitrum as the backend infrastructure powering mainstream apps, where the value of the chain lies in speed, security, and cost-efficiency—not in brand recognition by the end user.
- Support UX-Centric Builders: Incentivize and support teams that build consumer-grade applications that solve real-world problems or create novel experiences for users, focusing on usability, scalability, and simplicity.
- Create a Holistic Builder Ecosystem: Launch and support accelerators, grant programs, hackathons, mentorship initiatives, and other mechanisms that provide structured support for builders from ideation to product-market fit.
- Provide Capital, Infrastructure, and Guidance: Establish clear paths for teams to access funding (grants, ecosystem funds, VC connections), tooling (node infrastructure, SDKs, APIs), and technical support. Build an “Arbitrum Builder Stack” that makes launching on the chain frictionless.
- Foster a Culture of Innovation: Position Arbitrum as the best environment for experimentation and first-of-its-kind products. Innovation is not only enabled through funding but through proximity to other high-caliber teams, shared learnings, and strategic support.
3. Design a sustainable structure for Arbitrum.
Today, the Arbitrum ecosystem consists of multiple entities working to move it forward: the DAO, Offchain Labs, the Arbitrum Foundation, and now Opco and third-party providers. While this multi-stakeholder structure offers flexibility and decentralization, there’s a growing need to clearly define which decisions should be handled in a more centralized, fast-moving manner, and which should remain decentralized and community-driven.
We must recognize that traction and momentum are often built through rapid decision-making by strong leadership. Not every decision will be perfect, but speed and execution matter—especially in highly competitive environments.
To ensure Arbitrum continues to thrive, we need a better operating framework—one that enables faster coordination, clearer ownership, and better alignment between all the moving parts of the ecosystem. A refined governance and execution model will be key to unlocking the next phase of growth.
1-Year Strategic Objectives
- Establish DeFi as the Core Pillar of Arbitrum
- Establish a dedicated working group composed of top DeFi builders, strategists, and community delegates that guides the creation of “Arbitrum financial products”. (Indexes, LSTs, Fixed Yield products). Supported by ARB treasury and revenue assets held.
- Attract institutional liquidity and RWA deployment. Launch initiatives to onboard institutional capital via compliant RWA DeFi primitives.
- Allocate capital to evaluate possible strategy investments in apps that will last and use arb rails.
- Attract, Onboard, and Retain Non-Native Users by Building the best usecases.
- New apps and ideas are being developed that are guided and not just granted. Arb has moved away from funding generic or repetitive crypto-native products. Instead, actively guide builders to develop applications with real-world utility and clear value propositions for mainstream users.
- Scale Hackathons, Accelerators, and Tooling Through DAO and OPCO Collaboration. Establish a professional-grade accelerator framework, combining funding, mentorship, go-to-market support, and product validation. Launch developer training programs focused on Solidity and other relevant languages so they can build and stay within the ecosystem. Partner with universities and technical institutions to create blockchain-focused curricula, internships, and certification programs. Fund “University Builders” programs to create campus-based Arbitrum communities that foster long-term developer loyalty.
- Design a sustainable structure for Arbitrum.
- Clear roles, responsibilities, and mandates are defined for all major ecosystem actors.
- Clearly delineation of which decisions should remain under decentralized governance (e.g., community treasury allocation, protocol upgrades) and which decisions can or should be handled by delegated actors for greater speed and accountability. Strive for a balanced governance model that maintains community input while recognizing the need for operational agility and leadership-driven execution.
- A new governance mechanism is being designed to prevent plutocracy, while still respecting and incentivizing large stakeholders with meaningful skin in the game.
2-Year Strategic Objectives
- Establish DeFi as the Core Pillar of Arbitrum
- Allocate capital to DEFI builders and applications that will stay in arbitrum even if bigger strategi investments are needed. The ecosystem is investing in growth-stage DeFi protocols.
- Arbitrum products deployed, scaled and attracting liquidity.
- New innovative Insurance, RWA and Yield products are on chain and supported by institutions.
- Attract, Onboard, and Retain Non-Native Users by Building the best use cases.
- Arbitrum has launched innovative and sustainable initiatives that are successfully onboarding users who may not even realize they’re interacting with Arbitrum infrastructure.
- Developers are choosing to build on Arbitrum because it offers the best environment for innovation and growth—not just because of incentives or external motivations. Just as founders view Y Combinator as the best place to launch startups, developers should see Arbitrum as the premier environment for building blockchain applications.
- Design a sustainable structure for Arbitrum.
- The organizational structure is being reviewed and optimized for greater efficiency. Roles, responsibilities, and mandates are also being redefined to improve clarity and execution speed.
Its important to emphasize that strategic objectives should not be seen as rigid or exclusive paths that limit future directions. I truly believe that many important use cases and new opportunities for chain growth will continue to emerge over time. This ecosystem moves so fast. The SOS should be reviewed periodically. Strategic objectives should serve as key areas of focus—but not as limitations. We should absolutely continue expanding our presence in areas like gaming, DePIN, and other emerging sectors that are still evolving and have the potential to become major drivers of adoption and value. That’s all I wanted to add.