Arbitrum Native Decentralized Exchange Camelot Growing Massively in February

Camelot, a relatively new decentralized exchange (DEX) on the Arbitrum network, has seen huge growth since launching at the end of 2022. Daily trading volume has jumped 369% since the first day of February, hitting $18 million on Friday at presstime, according to Camelot’s analytics page.

So, too, has the price of Camelot’s native token, GRAIL. It’s up 520% this month, recently fetching $2,833.47, per CoinGecko. According to blockchain analytics firm Nansen, the number of users and transactions on Camelot has grown more than 120% in the past day.

Camelot’s recent strides coincide with similar progress for Arbitrum, the biggest Ethereum layer 2 scaling system. It’s also the fourth-largest blockchain overall in terms of total value locked (TVL), with more transaction volume than even Ethereum’s main network.

The surge in users and transaction volume in the past day corresponds with the launch of TROVE, the governance token for yield-bearing index protocol Arbitrove, which is also built on Arbitrum. The public sale of TROVE occurred on Camelot on Friday, Feb. 17, and will end on Monday, Feb. 20, at 9 a.m. ET (14:00 UTC).

Camelot’s tokenomics includes two tokens – GRAIL and a nontransferable governance token called xGRAIL – to create a balance between incentivizing users to grow liquidity on the protocol and enhancing the long-term health of Camelot’s ecosystem, according to its documents. Arbitrum’s top decentralized finance (DeFi) exchange, GMX, uses a similar dual token model.

Camelot redistributes its swap fee earnings to xGRAIL token holders and uses the earnings to buy and burn GRAIL from the open market to maintain constant buying pressure for the DEX’s native token.

Additionally, the first GRAIL bond market on Camelot will go live later on Feb. 17, allowing users to purchase GRAIL and xGRAIL at a discount to the market.

Camelot’s TVL, a popular statistic measuring the overall value of crypto assets deposited into the protocol, is on a tear, core contributors said on a Feb 16 community call. The Arbitrum native DEX’s TVL has jumped 276% to $62.71 million in the month of February, according to DeFi TVL aggregator DeFiLlama.

Arbitrum doesn’t yet have a dominant DEX, according to Walter Teng, vice president of digital asset strategy at Fundstrat Global Advisors.

"No de facto DEX on Arbitrum (yet) means the market will look to find a Velodrome equivalent,” he said to CoinDesk, referring to the most popular automated market maker on rival layer 2 network Optimism. Velodrome boasts a TVL of $216.32 million, per DeFiLlama.

GMX, the largest project on Arbitrum with a focus on financial derivatives, has a TVL of $505 million, 794% bigger than Camelot’s, per DeFiLlama and has 356% more transactions than Camelot in the past 30 days, per Nansen.

But Camelot is catching up. Nansen data shows that in the same time period, GMX has seen a 15% increase in users and 22% rise in transactions, while the number of users and transactions on Camelot soared 242% and 384%, respectively.

Even though Arbitrum developers haven’t stated any plans for a token or airdrop yet, the increased activity on Camelot, and subsequently on Arbitrum, may be attributed to users hoping to boost their on-chain activity as a means to receive an Arbitrum airdrop, added Teng.