Jul 1, 2024
The on-chain ecosystem has witnessed a remarkable surge in Layer 2 (L2) solutions, each promising speed, low fees, and scalability. zkEVMs, in particular, have emerged as a beacon of hope, offering a glimpse into the future of decentralized applications. Instead, we receive isolated liquidity, confusing bridges, and a constant race against missed opportunities. This has resulted in a new challenge for the space: fragmentation.
The Fragmentation Conundrum
Imagine a city with bustling boroughs, each operating independently with its currency and limited trade routes. This fragmented system represents the current state of the L2 landscape. While each L2 offers distinct advantages, liquidity within each network remains isolated. As a result, yield opportunities are often restricted to the confines of a single chain, leaving you with unrealized potential.
This fragmentation isn’t just an abstract concept; it makes your life more difficult:
Suboptimal Yields: You’re forced to choose between different L2s, losing your yield potential.
Increased Complexity: You risk devastating asset losses by making the slightest mistake managing your bags across multiple L2s
Limited Interoperability: The lack of seamless bridges between L2s hinders the free flow of assets and liquidity.
The on-chain landscape is a complex ecosystem of end users, infrastructure providers, and developers. Traditionally, these groups operate with misaligned incentives, often leading to fractured growth and unrealized potential.
End users seek secure, scalable platforms with opportunities for asset growth.
Infrastructure providers require robust incentives and capital to participate effectively.
Developers need a thriving user base and financial support to build innovative applications.
Current networks often struggle to bridge these gaps. Token airdrops and grants offer temporary solutions but fail to establish sustainable, long-term engagement. The result is often fragmented liquidity, technical bottlenecks, and a lack of an aligned foundation.
Enter, Arithmic
Arithmic reimagines the relationship between these core participants. As a Universal L2 staking protocol, Arithmic provides deep liquidity and capital efficiency through native restaking, automatically reinvesting your staking rewards into their original pools. Arithmic goes beyond bridging; it aggregates liquidity from these disparate networks, creating a single, powerful pool of capital, powering up your yield generation while securing other networks.
The Power of Unified Liquidity
Arithmic’s innovative model functions as a symbiotic ecosystem. Users stake a diverse range of assets, including ETH, BTC, and more, directly with infrastructure providers through the Arithmic platform. These providers secure the network, earning rewards for essential services like validation, sequencing, and data availability. The yield generated from network activity is shared between both users and infrastructure providers, fostering a direct alignment of financial interests.
This incentive alignment creates a powerful feedback loop: as more users stake their assets, liquidity increases, attracting additional providers and further solidifying the infrastructure. This robust infrastructure, in turn, facilitates seamless scaling and empowers developers to build innovative applications, which further attracts users and fuels network growth. This dynamic cycle ensures that every participant in the Arithmic ecosystem benefits from its collective success, creating a sustainable and interconnected blockchain environment.
Solving the Trilemma
Chains have long grappled with a multifaceted challenge: the inherent conflict between decentralization, security, and scalability, known as the “blockchain trilemma.” Current chains often struggle to achieve all three simultaneously, leading to sluggish transaction speeds, prohibitive fees, and limited capacity for growth. This technical hurdle is further amplified by the fragmented incentive structures that permeate the ecosystem.
While integral to the success of any blockchain, users, infrastructure providers, and developers often operate with misaligned goals, hindering the collaborative effort needed to overcome the trilemma’s constraints. The result is a landscape marked by slow transactions, exorbitant fees, and a frustrating user experience.
Arithmic’s Breakthrough: The Soma zkVM
Arithmic confronts these challenges head-on with a technological and economic breakthrough. Soma, a cutting-edge Gen 2.0 zero-knowledge Virtual Machine (zkVM), is at the core of the solution you’ve been waiting for. Soma is engineered from the ground up to supercharge transaction processing, dramatically increasing speed while significantly reducing fees.
A key innovation within Soma is its use of lookup tables. Imagine them as pre-calculated “cheat sheets” that quickly verify complex calculations without performing them from scratch. This approach is particularly effective for blockchain operations that are not easily represented using traditional algebraic methods. By streamlining these complex validations, Soma delivers exceptional performance enhancements.
The results speak for themselves: Arithmic’s Soma zkVM achieves 10x the industry-average transaction throughput. This is a monumental leap forward compared to other L2s, putting Arithmic as the fastest L2 according to L2beat. The on-chain experience with Arithmic is, therefore, drastically improved.
Arithmic Unifies Liquidity for Maximized Yields
At the core of Arithmic are our Multichain Staking Pools (MSPs), unlocking the full potential of unified liquidity and maximized protocol-guaranteed yields. By accepting a diverse range of crypto assets, including ETH, BTC, LSTs, LRTs, and Arithmic’s native token ARITH, these pools aggregate capital from various sources into a single, powerful liquidity reservoir.
This pooled liquidity is then strategically deployed across multiple yield-generating venues, including staking on Arithmic’s own network and restaking on platforms like EigenLayer. The resulting rewards are then redistributed to pool participants, subject to their chosen participation style and deposit size.
Yield Choice and Flexibility
Within each MSP, users have the flexibility to choose between two distinct token types, each offering a unique risk-reward profile:
Stable Hyper-Staked Tokens (sHSTs): These tokens appeal to risk-averse users, offering a guaranteed 6% annual yield on their deposited assets. While this rate may seem modest, it significantly outperforms the market average of around 4%, providing a stable and reliable source of passive income.
Equity Hyper-Staked Tokens (eHSTs): For those willing to embrace higher risk, eHSTs unlock the potential for substantially higher yields. However, eligibility to hold eHSTs is tied to a user’s engagement and activity within the Arithmic ecosystem, as measured by the platform’s innovative points system (more on this below).
Arithmic Points: Your Ammo for High-Yield Rewards
Arithmic’s community-first approach is embodied in the innovative points system. Every interaction with the platform, from bridging tokens to participating in community events and using Arithmic dApps, earns users valuable points. These points are not merely a gamification element; they determine a user’s eligibility to hold eHSTs and unlock the highest yield potential.
The platform maintains a global leaderboard, ranking users based on their accumulated points. Only a select percentage of the top-ranked users (the top 20%) will be invited to hold eHSTs, fostering competition and incentivizing active engagement within the Arithmic ecosystem.
For those unable to secure eHST eligibility initially, we expect secondary markets to emerge, allowing users to trade or purchase these sought-after tokens directly from other holders or through exchanges.
The Future of Arithmic
We aim to build a state-of-the-art network where hardware and software align to create the most optimal and scalable system, extending Arithmic’s vision beyond the current milestones. The team is actively working on developing custom ASICs (Application-Specific Integrated Circuits) to further accelerate the platform’s performance and unlock even greater scalability.
As the adoption of Liquid Staking Tokens (LSTs) and Liquid Restaking Tokens (LRTs) proliferates, Arithmic’s MSPs will be poised to capitalize on this growth, offering users diversified exposure to yield-generating assets within a unified liquidity pool. These MSPs will expand to include meme coins and other assets, catering to a wide range of investor preferences and risk appetites.
Join the Arithmic Revolution
The blockchain landscape is at a crossroads, fragmented by isolated liquidity and misaligned incentives. Arithmic introduces a bold step towards unification, aggregating capital from disparate sources into a single, powerful liquidity reservoir.
By aligning the interests of users, infrastructure providers, and developers through our staking model and yield-sharing mechanisms, we believe Arithmic is poised to create a sustainable, interconnected blockchain environment that benefits all participants and aligns all parts of the Web3 world.
Join the Arithmic community today and be among the first to experience the power of unified liquidity and maximized yields! Connect with us on X to stay updated on the latest: @ArithmicNetwork
Links:
X handle: https://x.com/ArithmicNetwork