This research analyzes the sustainability of sequencer net profit, excluding contributions from Timeboost. It examines key drivers, Arbitrum's competitive positioning, and main risks related to technology and competition. Finally, it explores how these factors may shape Arbitrum's future incentives and marketing strategy.
The revenue of the Arbitrum sequencer is highly concentrated, with 46.4% generated from the top 10 highest-earning days since the Dencun upgrade. The revenue structure has shifted significantly, with DeFi's contribution declining from over 50% in late 2023 to 20.4% year-to-date. In contrast, CeFi, primarily from MEV/bot transactions, now accounts for 21.8% of total revenue.
Future revenue projections face several challenges. Arbitrum's market share has decreased from 22% to 10% due to rising competition, which affects profit margins as blob costs increase without a corresponding growth in transaction volume.
Key factors influencing future revenue include the migration of major DeFi protocols to their own L2 solutions, which may reduce fee generation, and increasing L2 interoperability, which could either boost transaction volumes or heighten competition.
Sustainability hinges on Arbitrum maintaining its competitive advantages, including its leading position as the L2 with the highest Total Value Secured ($14.2 billion) and its dominant share in DeFi volumes. Success will require a strategic focus on emerging verticals and the retention of key protocols through effective incentivization.
Arbitrum sequencer revenue is concentrated over a small number of days. Since the Dencun upgrade, the top 10 largest days represented 46.4% of total revenue. This revenue is volatile and difficult to forecast as it depends on external factors independent from Arbitrum, such as potential airdrops (Layer Zero) or volatility in crypto markets.
Source: growthepie.xyz
As a result, we have decided to focus our analysis on the other 53.6% of revenue which is more stable and more linked to Arbitrum's fundamentals.
DeFi segment once contributed over 50% of the revenue at the end of 2023. The share of DeFi protocols (Uniswap, GMX, Vertex) in the total gas fees generated by the Arbitrum sequencer has been decreasing steadily over the years, which has accelerated since last April. DeFi now represents only 20.4% of total revenue YTD.
Source: [growthepie](<https://www.growthepie.xyz/chains/arbitrum>)
This has been offset by the emergence of the CeFi segment, which now accounts for 21.8% of revenue YTD, while it only represented 0.5% in 2022. This includes MEV transactions and other trading bots. CeFi experienced its highest share in the first week of February 2025, reaching 37%. As the DeFi sector developed on Arbitrum, the number of assets on the chain grew, and with the reduction in gas fees, the possibilities of arbitrage have exploded. There are now more transactions linked to arbitrage than other DeFi transactions.
Source: growthepie.xyz
In the future, we expect CeFi transactions to continue growing as the ecosystem expands, chains become more interoperable and transaction costs continue to decrease, thereby providing further opportunities for value extraction.