About the editor: Spencer Noon is Co-founder & General Partner at Variant Fund. Web3 founder or data analyst looking to connect? Reply back to this email.

Is the bear market over? No one knows for sure, but I asked some of our community members for the best data-driven evidence they’ve seen that suggests we’re in the early stages of a new crypto bull market. Flagging this tweet storm written by Nirmal from Artemis, which I thought was particularly thoughtful.

Coverage on Arbitrum and its ecosystem: GMX, gTrade, Treasure, The Beacon, Sushiswap, and Uniswap.

• Arbitrum is a leading scaling solution for Ethereum. Its products consist of Arbitrum One, an optimistic rollup solution, as well as Arbitrum Nova, the recently launched platform for social and gaming use cases. Arbitrum has drawn the attention of major institutions such as Reddit, which chose Arbitrum Nova for its community points initiative, and the Norwegian Government, which recently announced a new cap table platform built on Arbitrum. To date, Arbitrum controls over 50% of all TVL on Ethereum L2s.

• Arbitrum One daily transactions have grown 600% YoY. Since the beginning of February, Arbitrum One is consistently doing between 40-50% of the number of transactions as mainnet, with an average cost reduction of nearly 97% compared to L1.

• In addition to transaction volumes, the amount of liquidity on Arbitrum is continuing to increase as well. Arbitrum One is currently the leading bridge from Ethereum into other execution environments. There is currently 870k+ ETH bridged into Arbitrum, which is more than all other major scaling solutions combined. DeFi TVL has also grown 39% over the past month and DEX volumes 46% over the previous week.

• Finally, this increase in traffic and economic activity from users has caught the attention of developers. Over the last quarter, Arbitrum has seen verified contracts grow by more than 50% month over month.

• GMX is a decentralized perpetual futures and spot exchange. Users can trade popular cryptocurrencies like Bitcoin and Ethereum directly from their crypto wallets. The decentralized exchange was launched in September 2021, and has already attracted ~220k (~200k on Arbitrum) users and facilitated $100b in trading volume.

• The GMX exchange has a native token called GMX: a governance and value-accrual token. Users can stake their tokens to earn 30% of all GMX’s fees, or provide liquidity to earn 70% of fees. All revenue ($144m so far, including $120m on Arbitrum) is thus shared with token holders.

• Open Interest has continued to increase, tracking ~$220m. The developers contributing to the protocol have been working on GMX V2 for the last year, which will allow for the trading of many different assets.

• gTrade is an oracle-based, decentralized leveraged trading platform offering users exposure to 75+ trading pairs across crypto, stocks, forex, indices, and commodities. Gains Network (gTrade) has totaled $2m in past-month earnings to place third (only behind Ethereum and OpenSea) on Token Terminal’s 30D earnings leaderboard. With only $15.3k in token incentives over this 30D period, over 99% of gTrade’s protocol revenue translates directly to earnings.

• In January, gTrade surpassed a 7D volume of $1b in back-to-back weeks. The 7D daily volume MA has ranged between $130-180m for over 3 weeks. gTrade supports this 9-figure daily volume with only $42.5m in liquidity across its Polygon & Arbitrum $gDAI Vaults (the counterparties to all trades).

• To kick off 2023, gTrade became a multi-chain platform with its Arbitrum launch. The expansion to Arbitrum played a big role in gTrade welcoming 1,433 new traders in the past 30 days. With 10,886 all-time traders, this means gTrade increased total users by over 15% in just the past month.

• Treasure is building the “decentralized Nintendo,” a game publisher connecting games and players together through shared experiences, resources ($MAGIC), and infrastructure (e.g. Trove marketplace, MagicSwap AMM, other game dev solutions). Treasure’s gaming ecosystem has continued to see steady growth in weekly active users - 6k average over the past 2 weeks. Games includes The Beacon, Bridgeworld, and BattleFly, with other announced games (Kuroro Beasts and Bitmates) coming soon.

• Since its launch in September of 2021, the number of unique holders of Treasure’s ecosystem token, $MAGIC, has grown to over 317k. With $MAGIC available on the world’s leading exchanges (Coinbase and Binance) as of December of 2022, and its games acquiring new player audiences, $MAGIC adoption continues to rise.

• Interoperability sits at the very core of Treasure. Over time, games powered by Treasure have incorporated sinks for $MAGIC and Treasures (NFTs) with 18.8m MAGIC and 2.5k Treasures used and deposited across different games in the ecosystem, with more planned uses to come.

• The Beacon is a free-to-play action roguelite RPG, built on Arbitrum One. A game prototype was launched on November 25, 2022, and was available for 22 days. During that period, the game registered over 40k accounts, over 20k of which had paid for and minted NFTs. And of the 27k paid accounts today, over 14k of those had no activity on Arbitrum One prior to their first mint in-game. This shows that good games have the potential to drive many net new users to their native blockchains.

• Paid accounts - minters of The Beacon NFTs - displayed high user retention, over 25% of whom played the game every day they could during the prototype launch period. In fact, paid accounts outnumbered free accounts by 1.35:1, highlighting the high engagement that a web3 community can bring.

• Web3 gaming audiences are still siloed by their preferred blockchains. The Beacon is built on Arbitrum One, an L2 on Ethereum, and has users from Mainnet and other L2s. However, only 28% of paid accounts have also transacted on Avalanche.

• Sushi is a cross-chain AMM-based DEX, originally a fork of Uniswap V2. The project has grown to become the 4th largest DEX by both TVL and volume, supporting over $298b in trade volume across 20+ different blockchains. Despite a cooling market for crypto, Sushi managed to grow the overall number of transactions by 34.12% during 2022; however, this growth was stunted by the fall in token valuations, which resulted in lower trade volumes over the same period.

• Sushi was one of the first DEX’s to launch beyond Ethereum mainnet and currently supports trading across 20+ different blockchains. An increasing number of trades happening on Sushi are taking place on major L2 protocols, particularly Arbitrum which accounts for more than 50% of monthly swaps and 37.9% of overall dollar volumes as of writing.

• Throughout 2022, Sushi had 1.3m unique users making transactions on our DEX, a 9.2% increase YoY. Starting in early fall, there was explosive growth in new users coming to Sushi via the Arbitrum ecosystem, while the number of mainnet ETH users plateaued.

• Uniswap is the largest DEX across all chains. With over $1.4T in trading volume since inception, Uniswap volume spans multiple chains, including Arbitrum. Since its launch in August of 2021, Uniswap has done over $23b in trading volume on Arbitrum and continues to execute 45% of all swapping volume, recently transacting $140m in 24H trading volume.

• Uniswap does more in daily trading volume than the total value locked in its liquidity pools. Uniswap's concentrated liquidity feature allows for more efficient capital allocation by market makers. Roughly 50% of all Uniswap trading volume on Arbitrum are swaps between USDC and ETH at nearly a 4x capital efficiency ratio.