Hassan Maishera
Layer 2 networks are thriving, with the leading L2s boasting billions of dollars in daily volume, hundreds of thousands of users, and hundreds of dapps. As the number of EVM L2s has increased, so has the competition among these networks for supremacy. On the surface, each of the dominant Layer 2s offers broadly the same benefits: lower fees and higher throughput than Ethereum. Given this verisimilitude, each L2 is hellbent on emphasizing the features that make it better than the rest.
This battle is most clearly evident when studying the evolution of DEXs deployed on two of the top EVM L2s – Arbitrum and BNB Chain. (While technically an L1, BNB Chain is to all intents and purposes an L2 in design.) The more ambitious exchanges on these networks have consistently innovated, incorporating features that allow users to do much more than simply swap Token A for Token B. From perps to synthetic assets and from pro trading tools to advanced order types, there’s a lot that can be done on a DEX these days as an exploration of BNB Chain and Arbitrum shows.
Arbitrum vs BNB Chain
Both Arbitrum and BNB Chain are mainstays of the L2 landscape. The former is prized for its excellent DeFi, perps, and gaming applications plus its deep integration with Ethereum. BNB Chain is also EVM-compatible, even if its gas token is BNB as opposed to ETH, and its origins of course can be traced back to Binance. In terms of core metrics, BNB has twice the TVL of Arbitrum, clocking in at a whopping $8B, while its daily DEX volume stands at $2B. Arbitrum is averaging around $680M in DEX volume and its active daily addresses at approximately 420,000 are a quarter of BNB’s.
But this comparison is less about which chain has the best benchmarks and more about which has the best DEXs. And it’s here that the analysis becomes more nuanced because we’re less interested in sheer volume and more interested in identifying the ways in which each ecosystem is innovating – both in terms of spot and futures trading. Broadly speaking, Arbitrum is better served when it comes to perps thanks to GMX, which remains a dominant player, whereas BNB Chain has the advantage in terms of spot trading, not least in the number of decentralized exchanges it supports. And one of its DEXs in particular stands out for implementing new products and advanced features with gusto – THENA.
Unpacking THENA – BNB Chain’s Rising Star
THENA is the third largest DEX on BNB Chain by volume and TVL, recording close to $250M in weekly volume. Its evolution from a simple spot DEX into a cross-chain exchange that supports perps and advanced spot trading features owes much to its partnership with Orbs. The Layer-3 infrastructure leader has invested in THENA, which in turn has integrated several of Orbs’ flagship products in the form of dTWAP, dLIMIT, and – recently – Perpetual Futures Hub.
The former two features – dTWAP and dLIMIT – have enhanced THENA’s spot trading, allowing users to break large orders down into smaller trades; and to set precise price points at which to swap tokens. dTWAP minimizes slippage and ensures better price execution, ensuring that even whales can ply their trade without worrying about being left out of pocket. dLIMIT, meanwhile, gives users the sort of professional trading tools that are typically associated with centralized exchanges.
Finally, we have Perpetual Hub Ultra, which has truly elevated THENA into much more than just a spot DEX. Using Orbs’ plug-and-play architecture, THENA has been able to roll out perpetual futures trading with up to 60x leverage and support for more than 300 trading pairs. Its integration has not merely enhanced THENA’s product suite, but significantly boosted perps on BNB Chain, delivering a liquid, secure, and scalable platform for going long or short on crypto assets.
GMX and ArbiDex Are Raising the Game on Arbitrum
Meanwhile, over on Arbitrum, traders are also being treated to new products, assets, and market types galore courtesy of GMX and ArbiDex. GMX needs no introduction, having been the jewel in Arbitrum’s crown for years. But the perps platform has been revitalized with the launch of V2 which has breathed new life into it – and brought new and returning users in their droves.
GMX V2 routes orders through GM Pools, quoting the oracle index price rather than relying on an order book or external market makers. Chainlink Data Streams take care of the pricing oracles, ensuring that liquidations occur only at fair market prices. In addition to Fully Backed Markets such as ETH, which are fully supported by pooled assets (e.g. ETH and USDC), V2 enables Synthetic Markets that are supported by assets that differ from that being traded. This enables GMX to offer perps markets for more volatile cryptos such as DOGE without increasing systemic risk.
When it comes to spot trading on Arbitrum, traders have been well served by the rise of new DEXs that offer more sophisticated features than the incumbents in many cases, as is rvidenced in the case of ArbiDex. It’s emulated THENA’s approach on BNB Chain by integrating dLIMIT and dTWAP by Orbs. As a result, ArbiDex users can take advantage of CEX-style features such as the ability to set limit orders while operating with a trading interface they already know inside out. Indeed, one of the reasons why dLIMIT and dTWAP have proven so popular across the multi-chain landscape is because they don’t break the existing UI. Arbitrum DEX BaseSwap has also integrated these twin trading protocols and is reaping the rewards.
Which Chain Is Winning?
In the race to innovate, and gain ground on the hundreds of other L1s and L2s competing for market share, both BNB Chain and Arbitrum have made real headway this year. While not ostensibly in direct competition with one another, a head-to-head analysis of their core metrics nevertheless makes for interesting reading. As we’ve already established, BNB Chain is well ahead when it comes to TVL and DEX volume, but other data points suggest the two chains are much more evenly matched.
For example, the number of protocols deployed on BNB Chain and Arbitrum is almost neck and neck at approximately 1,000 and 950 respectively. In terms of active growth, meanwhile, the number of active users on Arbitrum has actually increased faster than on BNB Chain over the past month. But when we come to perps, despite Arbitrum’s name being synonymous with this onchain vertical thanks to GMX, it’s surprisingly BNB Chain that leads here, its daily volume of $1.5B more than twice that of Arbitrum.
It’s also worth noting that the benchmarks defining the two networks, not least TVL, are strongly influenced by that of their native tokens. In Arbitrum’s case that is ETH of course, whereas BNB Chain is powered by the crypto asset whose name it bears. Given ETH’s late summer breakout, following a sluggish H1, it’s no surprise therefore that Arbitrum is on the up right now.
When you zoom out, this much is clear: outside of Ethereum, Solana, and – in the case of perps – Hyperliquid, Arbitrum and BNB Chain are way ahead of the other L2s. They comfortably beat the likes of Base, Starknet, ZKsync, and dYdX in virtually every single benchmark. The reasons for this are multifaceted as we’ve established. But it’s clear that one of the catalysts behind their growth has been the willingness of leading DEXs on each network to innovate.
Through rolling out new features and plugging in deeper liquidity – delivered in many cases with the support of infra providers such as Orbs – the two networks have flourished. In doing so, they’ve become playgrounds where DeFi users can try out the latest tech, from cross-chain perps to synthetic assets, while operating in the L2 ecosystem they’ve come to call home.
