Ooki launched on Arbitrum today making it the first DeFi margin trading platform to launch on Arbitrum!
Due to recent high gas fees affecting L1 Ethereum, there has been enormous demand for Layer 2 solutions like Arbitrum to provide a viable alternative to the expensive and volatile gas market on Layer 1.
What is Arbitrum?
Arbitrum is a Layer 2 scaling solution built on Ethereum which aims to reduce transaction fees and congestion by moving as much computation and data storage off of Ethereum’s main blockchain (Layer 1) as it can. At the moment, Layer 2 projects like Arbitrum are expected to be vital stop-gap solutions for Ethereum’s scalability crisis.
Arbitrum uses a technique known as Optimistic rollups to record batches of submitted transactions on the Ethereum main chain. It allows Ethereum smart contracts to scale by passing messages between smart contracts on the Ethereum main chain and those on the Arbitrum second layer chain.
The term rollup is used to describe how public information can be used to reconstruct a complete history of the chain from an optimized log of events. The Arbitrum protocol ensures that code will run correctly so long as any validator is honest, helping the network resist collusion and other forms of attack.
Arbitrum is considered to be one of the most EVM-compatible rollups. It’s compatible with the EVM at the bytecode level, and any language that can compile to EVM works out of the box — such as Solidity and Vyper.
Ooki's New Reflexive Interest Rate Engine
Alongside the launch on Arbitrum, Ooki is launching a new reflexive interest rate mechanism on Arbitrum. Ooki’s approach to deliver optimal rates to lenders and borrowers uses a variable interest rate with a dynamically changing interest rate curve. The new dynamic interest rate system is preferable because it will allow liquidity pools to grow larger.
We will be releasing additional information about the new interest rate engine soon!
How Cheap will Transactions be on Arbitrum?
Arbitrum website claims that certain projects are benefitting from 50x to 270x reduction of gas costs. Average cost for performing the following activities with Ooki on Arbitrum depends on gas fees but can be approximated to range between:
- Opening a trade: $2-5
- Adding to a trade: $2-5
- Closing a trade: $2-5
- Opening a loan: $1
- Lending funds: $1
The fees that are charged on Arbitrum are:
- Layer 1 calldata fee;
- Layer 2 transaction base fee;
- Layer 2 computation fee; and
- Layer 2 storage fees.
All of the functions that determine how much these fees cost are in some way dependent on the Layer 1 gas price. With gas prices averaging 100 gwei on Ethereum mainnet, Ooki’s launch on Arbitrum is a huge milestone to make DeFi trading, borrowing, and lending an even more attractive option.
How Long Does it Take to Deposit / Withdraw Funds on Arbitrum?
Users can quickly bridge funds from L1 to Arbitrum using https://bridge.arbitrum.io/
Alternatively, third party “fast bridge” withdrawal services (such as connext and hop-exchange) will effectively buy your withdrawal from you, for a price that is slightly less than the amount you are withdrawing. This means that for a fee you can receive your withdrawal instantly.