Over $2 billion has been pumped into Ethereum scaling solution project Arbitrum in less than one week. Why? Because of surging interest in NYAN, a meme token based on the Nyan cat viral internet sensation.
Arbitrum is a project that aims to ease congestion on Ethereum and lower transaction fees. Launched on August 31, Arbitrum, which uses tech called “optimistic rollups” to allow Ethereum-based projects to run smoothly, is already being used by two huge projects in the decentralized finance (DeFi) space: lending protocol Aave and decentralized exchange Uniswap.
DeFi is essentially a catch-all term used to describe products and services that enable peer-to-peer lending, borrowing and trading. It's a multi-billion dollar industry, and most of the action takes place on Ethereum, which can at times become slow and expensive to use as a result. But despite two big DeFi names using the project, Arbitrum was previously struggling to get users.
Now, a $2.2 billion fortune is running through it, according to data from L2 Beat, because people want to farm ArbiNYAN, or NYAN, an ERC-20 token. NYAN is a meme token—a cryptocurrency based on an internet meme—not to be confused with other meme tokens NYAN V2 and NYAN Finance.
It was created last week by an anonymous developer, known as arbinyan, in a bid to get people to put money in Arbitrum. In a few tweets on September 8, he pitched the idea: lock-up tokens and Arbitrum will pay rewards based on how much is put into the protocol.
Farm NYAN on Arbitrum! Eth pool launch 23:00 UTC pic.twitter.com/RiOlaNkQqn
— arbinyan (@arbinyan) September 8, 2021
And it has been a roaring success: since September 8, $1.44 billion in NYAN tokens has been pumped into the project, according to DeFi Llama. It isn’t clear how many people have invested that $1.44 billion, but the community’s Discord server has 2,400 members.
NYAN’s price crashed over the weekend, down from its high of $7.76 yesterday to $1.03 today, according to DeFi metrics website, Defined. But money is still flowing into the Arbitrum project in the form of the token. Right now, 72% of the Arbitrum funds are in the form of NYAN.
“It exceeded my wildest expectations—people like farming meme tokens,” NYAN’s anonymous creator told Decrypt. “Honestly, the main goal was to pump Arbitrum and ETH by proxy, as there's no other scaling strategy but rollups.”
The promise of 6,000% returns has evidently worked for NYAN. Meme tokens like NYAN often have a yield farming element to them, meaning investors can lock them up and earn rewards—which is exactly what NYAN promises. But these kinds of tokens often shoot up in price within a short period of time, only to crash and lie forgotten until the next one comes along.
It’s the kind of volatility that may deter more risk-averse investors. Other reasons for concern may include the risk of being outright scammed, given that a large number of these tokens and projects are being launched by teams of anonymous developers. One common scam in DeFi is known as a “rug pull,” in which investors are asked to put a load of crypto into a project, then the—often anonymous—founder runs away with all the money.
But regardless of the risks of investing in DeFi meme tokens, the money being pumped into Arbitrum shows there is a huge appetite for them.
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.