Earn Yield on Arbitrum by Defi Dad

Before we get started, a reminder that this is not a recommendation or endorsement to buy any tokens mentioned in this tutorial.

Hop Protocol is one of the biggest names to hit the interoperability scene in DeFi. Hop is a scalable rollup-to-rollup general token bridge, allowing users to send tokens from one rollup or sidechain to another almost immediately without having to wait for the network’s challenge period, which is a common criticism where you have to wait 7 days to withdraw from Optimism or 4.5 hours from Arbitrum.

Thankfully, Hop uses market makers, called Bonders, who front the liquidity at the destination chain in exchange for a small fee. This credit is extended by the Bonder in the form of hTokens, which are then swapped for their corresponding native token in an AMM.

A good example is if I want to withdraw USDC from Arbitrum to Ethereum, Hop would allow me to transfer my liquidity from Arbitrum thanks to LPs holding USDC and hUSDC on Arbitrum.

Hop is also one of the only solutions for bridging between L2s, which is even better for a fugure where we can avoid congestion and high fees on Ethereum L1.

Since Arbitrum quickly grew to a high of $2B in TVL since its launch in early September, there’s been huge demand for dApps to deploy and for DeFi investors to get their liquidity onto Arbitrum. With about $660M TVL today and having witnessed a euphoria of yield farming on other sidechains and L2s, it seems possible and likely that there will be lots more liquidity bridging to Arbritrum using Hop. Bridging requires fees whether you move L2 <> L2 or L2 <> L1.

L2