Curve Finance, a well-known decentralized exchange (DEX), is facing challenges on the Arbitrum platform due to a decline in total value locked and low user activity. There is a growing discussion about possibly halting operations on certain Layer 2 (L2) networks.
Declining Total Value Locked on Arbitrum
As of August 4, Curve's TVL on Arbitrum was just $52.6 million, compared to over $3.1 billion on Ethereum. This means Arbitrum now represents less than 1.6% of Curve’s total TVL. Such numbers raise significant concerns about the sustainability of operations on this platform.
Low Trading Volume and Activity
Trading volume also remains low: on August 4, Ethereum recorded a trading volume of $304 million, while Arbitrum only had $3.6 million. For a DEX specializing in stablecoin swaps, such low activity on Arbitrum poses a serious issue.
Impact on Curve Finance's Future on L2
In response to this situation, a proposal to discontinue all L2 development has emerged within the Curve Finance community. Many participants believe that working across 24 different L2s requires significant time and resources with minimal rewards. The primary stream of revenue still comes from Ethereum, prompting Curve to refocus its efforts on its ecosystem moving forward.
In light of current trends, Curve Finance may wind down its operations on Arbitrum and other Layer 2 platforms. This decision could potentially strengthen Curve's position on Ethereum, where primary attention and resources are being redirected.
