Arbitrum Unveils Onchain Labs to Boost Experimental Crypto DApps

Offchain Labs, the developers behind Ethereum layer-2 network Arbitrum, have partnered with the Arbitrum Foundation to launch Onchain Labs, an incubator-style program. Announced on March 17, 2025, the initiative aims to expand Arbitrum’s decentralized application (DApp) ecosystem by supporting experimental projects.

Onchain Labs will focus on helping developers build and scale new DApps within the Arbitrum ecosystem. Offchain Labs stated that its role will be to provide product and go-to-market advice, rather than engineering or operational resources.

The company stated that its venture capital division, Tandem, may invest in these projects but made it clear that there is no assurance it will acquire their tokens in public markets. “Tandem is not guaranteed to purchase any of these project tokens in public markets,” the company emphasized.

Commitment to Fair Launch Practices

Beyond expanding Arbitrum’s DApp offerings, Onchain Labs is prioritizing fair launch practices. Offchain Labs emphasized that it will only support projects that commit to equitable and community-aligned launches.

The company expressed concerns over the rise of extractive, zero-sum launches, which it said contradict the core ethos of crypto. “As an industry, we can — and must — do better,” it stated. By working only with teams that embrace fair launch principles, the incubator aims to ensure that all participants in the ecosystem benefit.

Challenges with Layer-2 Expansion on Ethereum

The rapid growth of Ethereum layer-2 solutions (L2s) has created new challenges for the blockchain ecosystem. While Arbitrum was among the first L2s, the number of such networks has surged following Ethereum’s Dencun upgrade.

Data from L2Beat shows that over 70 layer-2 networks are currently live, with more being developed. The rapid increase has raised concerns about fragmentation, as DApps are spread across multiple L2s with inconsistent interoperability. “There are already too many. Adding more will only reduce interoperability,” said Vitali Dervoed, CEO of Composability Labs, in a previous statement.

Ethereum’s Market Shift and Lower-Cost L2s

The rise of lower-cost layer-2 solutions, including Base and Arbitrum, has also affected Ethereum’s revenue. Standard Chartered recently revised its Ethereum price target for 2025, reducing it from $10,000 to $4,000.

Geoff Kendrick, head of digital asset research at Standard Chartered, noted that L2 networks have affected Ethereum’s market performance. He stated, “Layer-2 solutions were introduced to enhance ETH scalability, but our estimates suggest that Base alone has reduced Ethereum’s market cap by $50 billion.”

Arbitrum has a mission to keep advancing toward its application layer powered by Onchain Labs and in line with community-led values. As the Ethereum ecosystem continues to grow there is still a long way to go to see what the long-term effects of this initiative will be.