Why We're Choosing Arbitrum

With the launch of Notional V3, the Notional protocol will make a long-awaited debut on Layer 2. Launching on L2 has the potential to broaden the scope of who can use Notional, expand Notional’s leveraged strategy offering, and catalyze the protocol’s growth.

In an ideal world where the Notional Team had infinite resources, Notional would be on every L2. But in practice, limited resources means that we will need to choose one for the immediate future. Notional’s success depends on building a thriving ecosystem of integrations with other protocols, and each integration takes time and effort. We can’t do that in too many places at once. We need to focus on one L2.

The need to focus on a single L2 means that we need to choose the right one. If the L2 we choose fails to grow its ecosystem and user base, that failure will weigh on Notional’s own growth. The L2 we pick has to be highly utilized now, it has to stay highly utilized going forward, and it has to have a large community of users who would find Notional’s products attractive.

We evaluated our options using three main criteria:

• Traction: does the L2 have significant usage and a strong DeFi ecosystem?
• Product: is the L2 secure, and is the development team making consistent progress toward strengthening and decentralizing the technology?
• Culture: is the L2’s user base a good fit for Notional’s products?

On each of these three criteria, Arbitrum is the clear leader. That doesn’t mean it’s the “best” L2, or that any other L2 is bad. But it does mean that Arbitrum is the best option for Notional at this time. Let’s examine each criterion to see why.

Traction

Arbitrum is the leading L2 by the metrics that matter to Notional. They have the most TVL, and the largest DeFi ecosystem. Here’s the total TVL comparison on L2 beat:

And here’s the comparison of TVL in each chain’s DeFi ecosystem from DeFi Llama (Arbitrum is green):

The evident traction that Arbitrum has found with its L2 and DeFi ecosystem make it a safe bet for Notional.

Product

Arbitrum has consistently led on product. This is probably one of the primary drivers of their success. They weren’t the first rollup to process a transaction, but they were the first to enable permissionless access to their L2.

Since then, their lead has only grown among their optimistic rollup peers. From L2 Beat, Arbitrum’s “risk pizza” is mostly green and has no red.

Arbitrum’s recently announced BOLD furthers their progress and provides fully permissionless state validation. This product improvement will cement Arbitrum’s status as the most secure L2.  It also illustrates their ability to ship upgrades that improve their product and benefit their DeFi ecosystem at a faster rate than their competitors.

Culture

Arbitrum’s user base is very focused on DeFi and earning yield. This is the right fit for us. Notional’s leveraged products are best suited to an active user base that is willing to take some risk in order to maximize their yields by using leverage.

We attribute this culture to the Arbitrum team taking a hands-off and neutral approach to their L2. In our view, the Arbitrum team has been focused on their product and it has not given special preference or picked winners.

We believe that neutrality from the Arbitrum team and a focus on product over marketing has helped to create an organic community of users and projects that is self-reinforcing. Arbitrum is a strong team and they have attracted strong projects. This is good for Notional because it creates more opportunities for protocol integrations and makes Arbitrum a good bet for long-term growth.

Launching on Arbitrum

The launch date for Notional V3 on Arbitrum is steadily approaching. We’ve been putting the finishing touches on the smart contracts and Notional V3 UI over the past few weeks and we are almost ready to launch our invite-only Beta to the public on Arbitrum.

We are incredibly excited to unveil what we have built and open up access to the never before seen leveraged yield opportunities that we’ll be offering. If you want to get the alpha before Notional V3 is fully public, sign up to our waitlist for updates and access to our invite-only Beta on Arbitrum.

Picking an L2 is a big decision, and builders have more choice today than they’ve ever had before. We believe that Arbitrum’s traction, their commitment to product, and their community’s culture of DeFi and decentralization make them the best L2 option for Notional. We’re excited to bring Notional V3 to L2 on Arbitrum!