Arbitrum and Aave noted that combining the DeFi rollup with digital lending infrastructure creates improved user engagement, quicker uptake of product features, and so-called “flywheel effects” that are said to be amplified by proper incentives. Arbitrum, developed by Offchain Labs, is an Ethereum rollup, a Layer 2 (L2) scaling solution that bundles transactions and moves execution off the Ethereum base layer “to increase throughput and overall network capacity.”
Its mainnet, Arbitrum One, launched back in August 2021, delivering better performance with enhanced execution and “reduced transaction fees which regularly cost under $0.01.”
Arbitrum is said to be known for technical advancements such as Orbit (a customizable framework for deploying app-specific chains “using Arbitrum’s tech stack) and Stylus (multi-language support), its leading decentralization progress among L2s, and its DeFi ecosystem.”
Arbitrum has now reportedly solidified its position as the so-called “home of DeFi,” with $17 billion “in total value secured (ranks first among L2s per L2Beat), $3 billion in TVL (second among all L2s), and $8 billion in stablecoins (ranks fifth among ALL chains).”
Earlier, Robinhood had reportedly deployed tokenized US stocks, ETFs, and commodities on top of Arbitrum One in order to “enable commission-free trading with 24/5 access for EU users, and announced plans to develop Robinhood Chain, its own L2 blockchain powered by Arbitrum’s tech.”
In March of 2022, Arbitrum had reportedly became one of “the first deployments of Aave V3, which was rolled out cross-chain across several blockchains before launching on Ethereum (ETH).”
The Arbitrum V3 market has now grown to become “one of the largest cross-chain deployments of Aave V3.”
As of December 2025, Aave V3 on Arbitrum ranks “as Aave’s second-largest cross-chain deployment with $2.2 billion in supplied assets and $1 billion borrowed, which account for approximately one-fifth of Aave’s total market size outside of Ethereum.”
Arbitrum users tend to be active DeFi users, “exhibiting borrowing demand with strong adoption of advanced tooling on Aave.”
Other key metrics and stats as of December of 2025:
- Active Loans: Across all blockchains that Aave is deployed, Arbitrum currently ranks first in total active borrowers (with positions >$1) with over 25k borrowers with positions >$1.
- Utilization Rate (%): Arbitrum has maintained a consistently high utilization rate (78%), which currently ranks highest across all Aave markets.
- Flash Loans: Arbitrum ranks second among all Aave Markets in both volume and transaction count of flash loans. More users on Arbitrum make use of the Aave Swap adapter, which combine Aave’s Flash Loans with swaps powered by Paraswap or CoW Swap to perform what are normally multi-step operations in a single transaction (e.g., repay borrow positions using collateral, swap borrow borrowed assets, and swap and withdraw).
For Arbitrum, Aave V3 is its largest DeFi protocol, accounting “for ~40% of its total TVL as of December 2025. ”
Aave’s share of Arbitrum’s TVL has steadily “increased over time as after starting in the mid-single digits as of 2023.”
In September of 2025, the Arbitrum DAO launched the DeFi Renaissance Incentive Program (DRiP), which has been designed “by Entropy Advisors and powered by Merkl.”
The DRiP initiative aims to drive DeFi adoption on Arbitrum in “a sustained manner by rewarding targeted and measured actions rather than directing rewards to specific protocols.”
In total, DRiP will distribute up to 80m ARB tokens “across four seasons, each designed to target a specific DeFi vertical.”
