Executive Summary

Since its airdrop, Arbitrum has remained a hotbed for long-standing innovations. In our prior report on the Arbitrum DAO Ecosystem airdrop, we extensively studied the distribution of the $125 million $ARB tokens among 139 Arbitrum protocols and how these protocols had utilized their allocations.

This got us thinking on which builders who did not make the shortlist that have have been actively building on Arbitrum long before the DAO allocation.

As an Arbitrum native community, Castle is a fervent supporter of Arbitrum Builders, new and old, anon and non-anon teams, working irrespective of market environments.

We hope to recognize the contributions of these builders, relish their archievements, understand their past work, and take a glimpse into their vision for the future on Arbitrum. 🧙 

Rage Trade

Background and Accomplishments

Rage Trade was originally a perpetuals protocol on Arbitrum, building to deliver the most liquid and composable $ETH Perpetuals with up to 10x leverage.

During its nearly year-long operation, the protocol has avoided token farming to bootstrap liquidity. Nonetheless, over 88,480 unique traders used the platform, generating $377.21K in trading fees, and over $200M in volume traded.

Rage Trade offers two main products: recycled liquidity with Curve’s tricrypto and stablecoin farming using delta-neutral strategies with GMX’s GLP.

Recycled Liquidity

Recycled Liquidity introduced a new way for liquidity providers to deposit their LP tokens into 80-20 vaults: 20% of the LP tokens will be used to concentrate liquidity on Rage’s protocol, while the other 80% will be used on yield-generating services such as Curve, GMX, and Sushi.

Rage’s flagship product offered Tricrypto recycled liquidity vaults, which regularly rebalance to ensure optimal yield generation.

Protocol profits are deposited into Curve’s TriCrypto LP token, while losses are withdrawn from the LP token. Furthermore, the vault also employs a divergence loss strategy, which means that if ETH’s price goes up, the vault will short ETH Perps, and vice versa.

This balance ensures a greater level of liquidity for the ETH perp.

Stablecoin Farming

A Delta-Neutral position is designed to effectively minimize volatility for LPs to maximize yield and reduce market exposure by being hedged. Rage protocol allows LPs to deposit USDC liquidity in two vaults that offer Delta-Neutral positioning: Risk-On Vaults and Risk-Off Vaults.

1. Risk-On Vaults deposit your USDC into GLP which generates ETH yield, and borrow ETH/BTC on AAVE as a way to hedge against the volatility of GLP. In the event of a significant price fluctuation, Rage’s in-house keeper rebalances to ensure the health ratio is maintained.

2. Risk-Off Vaults lend USDC to both AAVE and Rage’s Risk-On Vaults. They accrue interest from the lent USDC, helping to ensure the Risk-On Vault health ratio is above 1.5, avoiding liquidation risk.

Current Developments

Today Rage V2 aims to become a beacon of perp trading, as an omnichain perpetual aggregator, currently supporting price aggregation from GMX V1 and V2 as well as Synthetix (not limited to Kwenta, Polynomial, and other protocols on top of Synthetix).

Transitioning from the Recycled Liquidity mechanism, the Rage Team recognizes the growth of DeFi perpetuals and its potential to attract a riveting market share from centralized exchanges.

What is an omnichain perpetual aggregator?

There are several capital inefficiencies between various perpetual decentralized exchanges (DEXs) across multiple chains. Users would need to have liquidity on multiple chains or bridge their tokens, hoping they can place an order before a market maker settles the discrepancy.

Rage aims to fix this issue and improve capital efficiency by removing this friction and allowing traders to trade on any chain. This helps trader execution at the best execution price, opening up more meaningful opportunities with funding rates and algorithmic trading.

To date Rage’s V2 protocol has done over $3.8M trading volume, with 2,175 trades, and total fees of $2K.

Dolomite

Dolomite began as a hobby project for two college buddies hoping to solve the shortcomings of existing exchanges, most particularly:

• 🌊 Lack of Liquidity

• 🖥️ Poor User Experience

• 🛡️Compromised Security of CEXes (Mt. Gox 2014, Bitfinex 2016, and Coincheck 2018)

Founded in July 2018 by Corey and Adam. As very early builders in the crypto space, the team recognized the importance of DEXs even before they were mainstream, at a time when Uniswap had not even launched.

Its original installment began on Loopring’s Protocol, the first DEX of its kind on the protocol, offering a way for users to hold assets in their wallet, manage assets in their portfolio, and exchange their assets with other pairs.

As early as October 2018, the team recognized the issue of fragmented liquidity across chains and the potential to enable cross-chain token trades. Loopring's blockchain-agnostic nature allowed for a seamless integration of this concept.

By late 2019, Dolomite introduced Margin Trading onto the platform for the ETH/DAI pair, bringing one of the first non-custodial orderbook trading solutions on Loopring, allowing users to leverage up to 5x of their collateral from their wallet, using dYdX Protocol’s lending liquidity to facilitate the trading experience.

For a primer on the evolution of liquidity within DeFi, you can refer to our previous report:

Coinciding with their development we saw the ascension of DeFi Summer on Ethereum, the team realized the innovation building on the backs of the Architectural Plumbing of Liquidity Provisioning Models. During the next two years, the team prepared their tools and set a course to build a new generation of Dolomite.

In 2022 Dolomite launched on Arbitrum with an upgraded protocol, featuring a Virtual Liquidity System which utilizes internal liquidity that can be recycled to receive yield from multiple sources at the same time. Allowing you to earn swap fees and lending yield concurrently, or earn the yield on LSDs and lend them out.

Combining all the lessons learned in the past and maintaining its DeFi ethos, Dolomite currently offers:

• 💳 Overcollateralized Loans

• 💱 Margin & Spot Trading

• 💰 Borrowing Opportunities

• ⚡ Zap to loop and hedge in a single click

Dolomite went on to reach $1M in TVL in October 2022, $5M in TVL in May 2023, and today sits at $18.6M in TVL.

Current Developments

Dolomite plans to drive greater capital efficiency in providing raw token support for various assets, including sophisticated assets such as GLP, wstETH, or rETH. Token holders retain all rewards (without any fees by Dolomite) associated, including ETH rewards, Multiplier points, Vesting Rewards, and any additional benefits linked to the underlying asset.

Going a step further, users can now borrow against their GLP whilst earning the underlying yield on the asset. This allows users to leverage these productive assets and create simple or complex strategies to hedge, loop, create limit orders, and create asset swaps in borrow positions.

The launch of margin trading will offer more unique pairs to trade on exotic, long-tail, productive, and blue-chip assets, making it seamless to trade, lend, and borrow against them.

Rysk Finance

Background and accomplishments

Rysk Finance was founded by Dan and Jib in October of 2021, with the two-fold aim to:

1. Solve the inefficiencies of yield opportunities in all market environments

2. Drive uncorrelated returns in a DeFi market where assets are highly correlated.

Initially, they got their first attraction in November 2021, where they participated in the hackathon from Encode Club’s (a blockchain education community) Hack DeFi supported by Wintermute. With more than 20 esteemed teams who worked for 4 weeks to pitch their projects.

Rysk landed in the 4th place alongside Struct Finance, a derivatives protocol.

Their pitch shared their mission to bring DeFi closer to the efficient frontier, where yields have confluence to quantifying risk, diversifying yields, and making asymmetric returns.

With their extensive experience in the options market, they modified the existing version of Opyn’s gamma protocol, which Dan served as advisory, to give liquidity providers greater accessibility to superior yields, without any token incentives.

The protocol was intended to launch on Ethereum in early 2022, with integrations into Opyn, Element Fi, and Yearn. However as a major leap, in September 2022, the team refocused its efforts relaunching on Arbitrum and utilizing GMX, Rage, and Uniswap to hedge exposure of skew differences.

Dynamic Hedging Vault

Rysk's initial product the Dynamic Hedging Vault (DHV), was inspired by Harry Markowitz's Modern Portfolio Theory, which aims for a market-neutral yield. This method involves understanding the delta of options, determined by the rate of change in an option's price relative to the underlying asset. For example, if the price of an asset like ETH rises significantly, the delta and thus the premium earned on a call option can also increase substantially.

Options with a delta close to 1 are considered deep-in-the-money, and those near 0 are deep-out-of-the-money. Liquidity Providers (LPs) deposit USDC in the DHV to earn a market-neutral yield. They provide essential liquidity for the platform's option underwriting.

The DHV manages delta exposure by adjusting the prices of opposite options to incentivize balance and hedge its risk, aiming for a delta-neutral position. When large directional bets skew the delta, the DHV uses tools like GMX, Rage Trade, and Uniswap for hedging, offsetting costs with option premiums. This strategy allows liquidity providers to earn consistent yields, uncorrelated with the underlying asset prices.

Rysk’s Alpha DHV launched in September 2022, with a $500K cap which was reached almost immediately by 187 unique depositers. Unfortunately, its financial performance fell short, as the vaults had a cumulative return of -0.52%, at a time when holding ETH yielded 38%.

Current Developments

Rysk Beyond

This prompted Rysk to innovate its products. Rysk Beyond takes the DHV a step further and enables anyone to trade options with a wide range of strike prices and expiry dates. It aims to become a capital-efficient, flexible, and advanced protocol for options traders, builders, and liquidity providers.

The DHV introduces multi-collateral partial collateralization, enhancing capital efficiency and expanding our product offering. Through Rysk Beyond, options writers can select their preferred collateral, initially including USDC and ETH, with plans to expand the list to include yield-bearing tokens in the future. This functionality empowers options sellers to mint naked options, as well as engage in covered calls or married puts, tailored to their risk appetite.

Unfortunately, Rysk’s Beyond DHV which launched in July 2023, sitting at $2.35M deposits, continues to perform unimpressively by doing uncorrelated returns just not optimally for liquidity providers. Currently, its cumulative performance is -5.55% at a time when ETH has done 24.37%.

Rysk Beyond also introduces one-click options strategies.

This empowers anyone to trade combinations of various vanilla options, executing them all in an atomic transaction.

Shell Protocol

Background and accomplishments

Shell Protocol was founded by Kenny White in 2020, who currently focuses his efforts on the operations, blog writings, and refining the financial models to help upkeep the architecture of the protocol.

The prelude of Shell Protocol that we see now on Arbitrum was Shell V1, a set of AMM pools on Ethereum in October 2020, to deepen the liquidity for like-value tokens (i.e. Bitcoin to Bitcoin, Stables to Stables), which is composed of a Maiden Pool (for DAI, USDC, USDT, and sUSD) and a Bitcoin Shell pool (for renBTC, sBTC, and WBTC). Pool assets had predefined allocations for weighting in pools, ranging from 3-57% for stablecoins, acting as safety measures to prevent broken pegs within pooled assets.

On top of the fixed fees for these pools, a dynamic fee was added to incentivize arbitrageurs to help rebalance the pool. In the end, the product aimed to solve peg protection for these assets. Shell peaked at close to $18-19M in TVL after its launch in October 2020, doing upwards of $676.6M in trade volume and reaching 14th DEX by TVL on mainnet.

Having been live for 2 years, Shell V1 was gracefully retired due to little demand, but instead of shelving the project the team started to build a new generation DEX on Arbitrum.

Proteus AMM Engine

Kenny White being a Hawaii native drew parallels with the creation of new islands that are formed from Volcanoes, creating the highest concentrations of biodiversity in the world with the next iteration of Shell Protocol.

Shell V2 is a new generation of DEX, which is highly composable, utilizing multi-step transactions and supporting various token types (ERC-20, ERC-721, and ERC-1155), with the ability to swap 3+ tokens all atomically without excess gas expense.

Originating from the sea god Proteus, which highlights his flexibility, Shell’s Proteus AMM lets teams create custom pools with:

• Highly precise concentrated liquidity (for better capital utilization)

• Fungible LP tokens

• No additional Solidity development required

• Atomically composable with other Shell primitives

Current Developments

Well-designed, precise bonding curves have better capital utilization and may capture more trade volume than the competition. While this makes Proteus a powerful tool for building static curves, Shell Protocol is innovating on a new primitive called Evolving Proteus (EP). EP is a tool designed for launching new tokens and NFTs natively on Arbitrum. EP is a time-evolving version of the Proteus AMM engine. The “evolving” aspect of EP means that its AMM’s bonding curve can change over time, providing flexibility and efficiency in liquidity provision and price discovery for newly launched tokens.

EP combines the best of Balancer with Uni V3 CLAMM: it will enable Dutch auction-style AMMs like Balancer LBPs, while having Uniswap v3’s liquidity concentration capability. This results in more efficient token launches, among other benefits. EP can also be used to create managed pools (similar to Arrakis) with better liquidity concentration. Another use case is that custom EP pools can facilitate large buy or sell orders while minimizing price impact.

These EP pools are scheduled to be released in Q4 2023 together with a revamp of the general front-end app.

The Shell Team is also aiming to establish the Shell DAO by the end of the year, as long as their long-awaited TGE which is planned to launch in January 2024.

Socket.Tech

Socket is an interoperability protocol, which allows asset & data transfers across chains, enabling developers to build truly cross-chain apps. Its interoperability stack comprises two key components: the Socket Liquidity Layer & Socket Data Layer.

Socket Liquidity Layer

The Socket Liquidity Layer enables efficient asset transfers across chains. It brings together liquidity from bridges and DEXs, routing funds based on user preferences such as fees, speed, or security. Since its launch, Socket V2 has processed over $1.6 billion in volume, handling more than 1.3 million transactions for over 400,000 wallets.

Socket Data Layer

The Socket Data Layer enables secure data transfer across chains. It unifies chains by connecting all smart contracts on all chains, allowing them to perform read & write operations on each other. The Socket Data Layer has yet to be launched.

Bungee.exchange is another product created by the socket.tech team to demonstrate the power of the Socket Liquidity Layer. It is a powerful yet user-friendly application designed for seamless cross-chain swaps. It even has the option to refuel (provide you with gas tokens on the destination chain) and allows you to purchase insurance on your transaction, though both features cannot be used at the same time.

For developers, Socket Tech offers the SocketAPI and SocketSDK to easily transfer liquidity and information across chains via the Socket meta layer. In addition to the API and SDK, Socket also offers a PlugIn, the easiest way to integrate Socket Tech into any application. Synthetix is an example of a project integrating socket tech using their plug-in.

Developers using these tools can whitelist specific bridges and DEXs.

Current Developments

Socket Tech is working on integrating more sources for their routes, including new non-EVM chains like Solana, Polkadot, and Cosmos. Besides new sources, Socket Tech is also adding new features to its Liquidity Layer, including gas optimizations and on-chain analytics

Another big development they are working on is to launch the Socket Data Layer. This Data Layer will be used to supercharge cross-chain apps by enabling secure cross-chain data transfers. This development is the main difference between Socket and LiFi: while LiFi solely focuses on liquidity aggregation, Socket aims to unify both liquidity and data.

Socket Tech also recently announced a $5M strategic investment led by Coinbase Ventures and Framework Ventures. The investment funds will be used to help scale Socket and integrate into the array of Coinbase products integrating with Coinbase Wallet and BASE.

LiFi - Linked Finance

Background and accomplishments

Linked Finance (LiFi) is a secure, flexible middleware layer for interoperability within DeFi, which aims to remove the complexity of performing cross-chain transactions.

It aggregates DEXs and Cross Chain Bridges to provide the fastest, cheapest, and safest route every time. LiFI has had 174,170 unique users who’ve produced almost $2M in fees on the Arbitrum network. Li-Fi continues to be the hub for cross-chain swaps on Arbitrum since October 2021.

LiFi offers two main products: jumper.exchange for end-users and widgets/SDK for developers.

For end-users Jumper.Exchange (powered by LiFi) offers a very intuitive interface for cross-chain swaps. It’s a complete solution including a fiat on-ramp (aggregated from a variety of sources), with the optional offering of insurance when bridging and a “gas station” which is used to “refuel” transactions, and supply gas on the destination route.

This gas station is unfortunately separate, which could serve as an inconvenience, unlike Socket.Tech’s Bungee which offers this service when bridging.

For developers, LiFi offers everything you need to set up cross-chain bridging. Utilizing the LiFI SDK, widgets, or API, every developer can unlock cross-chain liquidity for DeFi. The goal of these solutions is to help users of your product to onboard from anywhere. A big integration of LiFi is with Metamask Bridge. Both Socket and LiFi are integrated into Metamask to easily support cross-chain swaps, although it’s very apparent LiFi has dominated in market share since June 2023.

Cross-Chain Contract Calls

The utilization of the LiFi API includes cross-chain contract calls, which allows developers to create customized contract calls on the destination chain in the callData.

This means you can bridge ETH from your second favorite chain to Arbitrum, swap it for GMX and stake it into the platform, borrow DAI on your WETH on Radiant Capital and deposit it into Gains Trade, or buy that floor smolbrains NFT on Treasure and send the excess to a charitable organization on TheGivingBlock, Giveth, or Gitcoin.

Note this functionality is only for Polygon, BNB Chain, Optimism, Ethereum, Fantom, Avalanche, and Arbitrum.

Bridge Management

When utilizing the SDK, developers can offer complete aggregation or whitelisted bridging. Whitelisted bridging means that the integrating projects (and not users) will choose which bridges will be used and get prioritized over others.

However, as LiFi is committed to neutrality of aggregation, this service comes at the expense of having a slower API.

Monetize Bridging

Developers can monetize up to 10% of transaction volume through their instated contracts, but they must first reach out to the team in the Discord in the partnerships-inquiries channel.

Current Developments

Next to come are zkSync Era and Linea integrations, which will offer opportunities within the existing ecosystems. LiFi is also working on supporting non-EVM chains, like Solana, Cosmos, and Bitcoin.

Odos Protocol

Background and accomplishments

In February 2020, Dr. Ahmet Ozcan, Dr. Sam Green, Alexis Asseman, and Dr. Gokay Saldamli founded Semiotic Labs, a Silicon Valley startup specializing in Cryptography, AI, DeFi, and Blockchain Infrastructure.

Dr. Ozcan led a distinguished career at IBM, coordinating AI and Machine-Learning development, as well as being a Senior Scientist and Engineer in a multitude of technical domains.

He wrote a fascinating philosophical series on the Quantum Theory of Intelligence in September of 2019, which is a worthwhile read of how as humans we can compile and make meaning for signs (related to meaning and intention): not only do we understand words, but can grapple with the essence of ideas from our experiences and values.

This is unlike software generally, which is limited to information processing. For instance, when speaking to Siri, Alexa, or typing to ChatGPT we are unable to observe concern, intent, or imagination-only responses. In this series, Dr. Ozcan references Semiosis which is one of the active processes of making meaning of signs (images, music, video, or words).

Hence the name Semiotic AI, making meaning of the signals with AI.

Their first product was Odos, a Smart Order Routing solution built to optimize token swaps across chains, with a patented AMM path-finding algorithm, allowing for partitioned/multi-layered swaps, one of the first aggregators to introduce multi-asset input to another asset in a single atomic transaction. Outside of this, the Semiotic AI team has been a core developer for The Graph Protocol, contributing to core research for automation of query negotiation with reinforcement learning (RL), AI-based determination of query costs, and query latency prediction. They also created an open-source Indexer Stress Test tool for developers that utilize Natural Language Processing techniques to predict resource costs for GraphQL queries.

Semiotic AI made headlines in 2021 after they received a $60 million grant across 8 years from The Graph protocol for R&D.

Note: currently these teams work in separation between Semiotic AI and Odos Protocol, but Odos is a branch of Semiotic. Odos is funded by venture investments, whilst Semiotic has been funded by grants.

Odos’s DEX aggregator now supports a multitude of chains and most recently added Base to its growing list.

Routing Management

Developers can utilize the smart order routing mechanism, capture real-time pricing for DeFi tokens, and initiate cross-domain Arbitrage opportunities. Odos’s rate limit policy is up to 1,000 requests in a 5-minute window for free users (6.66x higher than 1inch’s API), although if needed you can reach out to the team for a more optimal rate limit.

Monetize Routing

For developers applications that utilize Odos’s smart order routing, you can apply to be a part of the Referral program, which is limited up to 2% from positive slippage, with 80% of the commission going to you and 20% to the Odos protocol.

Current Developments

The introduction of Odos Router V2 came with many benefits in August, including a referral system for API partners to monetize from, reducing the L2 transaction costs with compact call data, and like-asset routing for trading less volatile assets when routing.

Odos’s Router has most recently integrated with an abundant number of partners including Curve Finance, Dolomite, Camelot Exchange, Aerodrome, and many others.

NFTperp

Background and accomplishments

NFTperp is a perpetual futures exchange for NFTs, founded by 0xJose in April 2022, which tracks the floor prices of NFT collections. Offering a decentralised perpetual trading for NFTs on Arbitrum, a cost-efficient, easily accessible, liquidity driving, and peaking degeneracy for the NFT Finance ecosystem.

0xJose, having been a long-time swing trader, intended on building virtual AMM perpetual protocols for a while, having founded Matrixswap both a DEX Aggregator and Perp DEX it offered users up to 25x leverage on Polkadot, Polygon, and Cardano blockchains. Although with its major rise in development especially being multi-chain (9 chains by August 2022), and its last integration being on Arbitrum. The team had seen little traction to its protocol Matrix Labs, therefore decided to pivot into another area in perps in NFTs.

Why NFTs? Well 0xJose had been apart of a few NFT communities including most notably Sweeper Club, an exclusive DAO dedicated to sweeping Apes, including members like MachiBigBrother, Origin Protocol’s co-founders Josh Fraser and Mathew Liu, Dragonfly’s Tom Schmidt and many others.

This feat ended up being a great decision and he ended up being at forefront of NFT Perpetuals which led to tremendous traction.

The V1 version was launched on November 25th, 2022, and quickly became the leading platform for trading NFT perps on-chain. NFTPerp V1 helps in leveraging a virtual automated market maker (vAMM) model (adopted from Perpetual Protocol) to facilitate long and short positions of up to 10x leverage for a select number of NFT projects including Milady, Azuki, Bored Apes, Mutant Apes, Pudgy Penguins, Punks, and Remilio Babies (NFT Derivative of Milady). It relied on funding fees to balance the long and short ratio.

NFT Perpetuals were a nascent idea prior to the creation of NFTPerp. Much of the concern for such technology is the problem of illiquidity, floor prices for collections could potentially be manipulated to hunt positions into liquidations. NFTPerp solves this, by having their own in house NFT Price Oracle, which avoids wash trading, using a time weighted average price (TWAP), filtering out possible or extreme outliers in its methodologies all in real-time. All sales event data is parsed from Opensea, LooksRare, Sudoswap, Blue, and X2Y2.

NFTPerp was helping to solve various capital inefficiencies in the NFT Market including:

• Allowing for NFT Perpetuals

• Hedging against potential downside

• Improving accessibility for NFT Blue chip collections

• The reduction of marketplace fees and royalties (cutting into your profits).

Scenario 1 - Offer leverage for Degens and Traders

NFTPerp’s major use case helps traders a greater exposure to speculate on the NFT ecosystem with little to no collateral. Unleash your trading abilities to either magnify gains and losses. You can also work in teams to get reward boosts, as of right now there has been a total of 4 Trading Competition seasons, including co-sponsors like dYdX Hedgies NFT, Degenz, Perpy Finance, Fungify, Zharta and many more projects. Prizes distributed more than 1,000,000 vNFTP (escrowed NFT Perp tokens), Hedgie NFTs, Milady, WL passes, and other incentives.

Scenario 2 - Hedging against market conditions

Imagine if you will, you had bought a Milady at the floor late January 2023 for $1,000, you enjoy the community vibes and experiences for the better part of 5 months. By May, you are awoken to this tweet by Elon Musk, and your Milady has since 12x to $12,000. With many people FOMOing in, you decide you want to lock in profits, but still want to be apart of the community. A good way to do this is by hedging, opening a short trade on nftperp for Milady with 1 ETH collateral (assuming price was $2000) with 5x leverage, now you still hold the underlying NFT, but create a delta-neutral strategy and capturing all the profits.

Why not sell? The underlying NFT can have intrinsic ownership benefits that wouldn’t be available if you had sold you would be miss other opportunities, such is the case for Milady holders who were airdropped Milady Meme Coin which peaked at $150 million market cap and airdropped DMT which for many was a 5 figure airdrop at the highs both happened during the month Elon had tweeted.

Scenario 3 - Retail Traders cannot afford Bluechip NFTs

As for many Bluechip NFTs, the ability to own these assets are merely unattainable. There are two solutions for Retail Traders in this aspect is renting NFTs or having the opportunity to use NFT trading. NFTPerp takes the latter approach, this can open an avenue to increase further adoption and trading with collateral as little as $1.

Scenario 4 - Reduces fees trading NFTs

Much of the profits NFTs sellers make get distributed as royalties or the marketplaces fee, which can easily cut the pie of upside for the regular NFT user. NFTPerp helps mitigate this, by having a fee of 0.3% for opening and closing positions, which is stark contrast to Opensea’s 2.5% flat fee, as well as being on Arbitrum it gives retail users are lower barrier entry as they would on Ethereum.

In total 7 months it was live NFTPerp’s V1 product led to interest of $518M in volume, 502.6 ETH in fees, across all 2,084 traders.

However, significant net short positions particularly for the Bored Ape Yacht Club market, and sharp drops in the price of NFT collections resulted in a substantial amount of unrealized PnL. As a result of these events during June 2023, the team decided to shut down V1, as its shortcomings had become evident.

Before the incidents, the team was already working on an improved version of their exchange. NFTperp V2 is a hybrid protocol that combines a Fusion AMM with external LP and decentralized limit order books.

Current Developments

NFTperp V2 introduces a hybrid liquidity protocol that combines a constant liquidity Automated Market Maker (CLAMM) with a decentralized limit order book (DLOB). Every position taken against the AMM and/or DLOB acts as a direct counterparty on the other side, addressing the counterparty issue faced by NFTperp V1.

By utilizing a DLOB, users gain access to all order types, including Limit, Take-Profit, and Stop-Loss. These functionalities were not available in V1. Market orders will be processed through the AMM and/or DLOB. Additionally, users will have the ability to provide liquidity in the AMM. In V2, an enhanced oracle will be implemented to improve speed and reliability.

V2 is currently live on testnet. There is an ongoing trading competition where users can earn $VNFTP. It’s not exactly known when V2 is going to be launched on mainnet, but Founder 0xJose has hinted on the 9th December 2023 that V2 is 98% complete, which may mean it comes sooner than expected!

Conclusion

In conclusion, we hope to have sparked interest into the aforementioned projects, celebrate their achievements, and elevate the impact of their developments on Arbitrum.

If we have forgotten any, please bear in mind this is by no means a complete list.

What we really wanted to help highlight was that the journey for founders and builders alike is a windy path, these tribulations helped these builders overcome in building better product for the next generation of audiences.

While these projects did not get an ARB airdrop allocation, we hope to see many of these builders applying for a grant, due to their retroactive efforts and early contributions to Arbitrum ecosystem.

Disclosure

Note that Atomist, the founder of Castle is also leading the Marketing and Growth for Rysk protocol.

We at Castle have made no investments or received sponsorships with any of the mentioned protocols. The presentation of this research report, is strictly intended for informational purposes only, and does not constitute investment or a solicitation to trade any cryptocurrency offerings.

Use our referral system to spread the word about the Chronicle!

Brought to you by Shogun and GMX Intern.

Thanks for reading, please give us a follow on Twitter at @Castle__Cap and visit our website to learn more about our services and get in touch.

Virtually yours,

The Castle