Circle Internet Financial just rolled out its main USD-pegged stablecoin USDC on Arbitrum, a big boost to the decentralized layer-2 Ethereum scaling solution’s efforts to expand its DeFi ecosystem.

<blockquote class=”twitter-tweet”><p lang=”en” dir=”ltr”>1/ Launch alert 🚨 USDC is now natively available on <a href=””>@Arbitrum</a>, a leading L2 scaling solution for Ethereum: <a href=””></a></p>&mdash; Circle (@circle) <a href=””>June 8, 2023</a></blockquote> <script async src=”” charset=”utf-8″></script>

As per a tweet by Circle’s official Twitter account, “Businesses can access on/off-ramps for Arbitrum USDC and readily swap USDC across supported chains – avoiding the costs and delays associated with bridging”.

According to Circle, many popular Decentralized Finance (DeFi) apps will be supporting USDC on Arbitrum in wake of the launch, including Decentralized Exchanges (DEXs) like Uniswap, GMX, Camelot and SushiSwap, as well as lending/borrowing protocol Aave and liquidity protocol Balancer.

USDC a Big Boost to Arbitrum’s Fast-Growing DeFi Ecosystem

Despite only launching on Arbitrum on Thursday, the blockchain’s supply of USDC has already jumped to nearly $48 million, according to Arbitrum blockchain scanning tool Arbiscan.

With USDC now more accessible on the Arbitrum blockchain than ever before, Arbitrum’s DeFi ecosystem now has a new potential source of inbound liquidity.

Proponents of the blockchain will be hoping that the addition of USDC into the ecosystem will result in a further boost to Arbitrum’s Trade Value Locked (TVL), which has stagnated in the $3.5-4.0 billion range in recent months following a quick 2x in the first few months of the year.

TVL refers to the total value of crypto locked within smart contracts on a blockchain.

Higher and rising TVL is a sign of a healthy and growing DeFi ecosystem on a blockchain.

Arbitrum blockchain proponents will also be hoping that the introduction of USDC can rekindle growth in network activity which, though still way higher than it was this time last year, has stalled in recent months.

As per Arbiscan, total transactions on Arbitrum totalled just under 800,000 on Wednesday, up nearly 10x versus early June 2022’s levels, but way down from the record highs hit in March of around 2.7 million.

It is also hoped that, with USDC now more readily available on the network, the number of unique wallet addresses will continue to surge as a sign of continued adoption.

Unique wallet addresses were last around 8.55 million as per Arbiscan, up from only just over 700,000 this time last year.

How High Can ARB Go?

The news that USDC is launching on Arbitrum has barely had any impact on the ARB price.

ARB is the governance token for the Arbitrum Decentralized Autonomous Organisation (DAO), with holders able to vote on proposals to tweak how the blockchain functions.

While rising Arbitrum network utilization (as represented by a rising TVL, transactions and unique wallets) doesn’t directly increase demand for ARB given that network fees are paid using ETH, if the network continues to grow, the value of voting power to influence the network’s direction should also grow.

Given that Arbirtum is a relatively new blockchain (only launching in September 2021) and its ARB coin is even younger, having only been issued and dropped to network users in March, it is difficult to make predictions about ARB’s future price using price and network history alone.

But comparable Ethereum layer-2 scaling solutions like Polygon could give us an idea as to how high ARB could go, assuming the network continues its explosive growth in the coming years.

Polygon’s native MATIC token was around $1.50 in mid-June 2021 when its TVL reached an all-time high of over $11 billion.

MATIC then went on to reach all-time highs of close to $3.0 per token and a market cap of around $21.5 billion in late-2021 when TVL was closer to $10 billion.

Polygon’s TVL was last around $1.5 billion, more than six times less than its late-2021 peaks, while its market cap was last around $7.2 billion, around 3x down from the record highs.

That suggests that if we say growth of 5-6x in Arbitrum’s TVL, we could see a smaller, but still substantial rise in the ARB price in the region of 3x, which would entail ARB hitting new all-time highs in the $3.3-3.4 area.

That would give ARB a fully diluted market cap of close to $33 billion, a reasonable target sometime over the next few years as the bull market matures and broader DeFi adoption continues to rise.

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