Arbitrum – Everything You Need to Know

Arbitrum – Everything You Need to Know


As one of the most prevalent platforms for creating dApps, short for decentralized applications, Ethereum is undergoing a massive surge in adoption, resulting in scalability issues. Ethereum is only able to process 15 transactions per second. Hence, the transaction count is bound to increase with many dApps established in the network.

This considerable surge in adoption makes the network subject to multiple obstacles, such as causing an awful user experience (UX) primarily due to low transaction fees and costly transaction fees or gas fees. To solve what is proving to cause severe problems in the network, the Ethereum community launched an effective strategy called Arbitrum. 

What is Arbitrum?


Established by Offchain Labs, Arbitrum is a layer two (L2) rollup technology that is known for its ability to offer high speed. The never-ending creation of decentralized apps on the Ethereum network necessitated the use of L2 solutions to help ease the network’s burden to some extent and provide less inflated transaction fees. 

On its own, the Arbitrum project was designed for addressing the limitations of current Ethereum-based smart contracts and boost them in terms of speed scalability while also adding extra privacy features to boot. As for the cons, such as high execution costs and long transactions. 

The platform makes it relatively easy for developers to implement Ethereum transactions and Ethereum Virtual Machine (EVM) contracts at layer two while still using the Ethereum blockchain’s remarkable layer one security to their advantage.

Arbitrum uses the transaction rollup technique for logging batches of transactions that have been submitted on the Ethereum main chain, executing them on cost-effective, scalable layer 2 sidechains. This process aids in releasing the storage burden that Ethereum faces to quite an extent. While also allowing for a novel class of powerful and secure L2-based dApps.

How Arbitrum Works

Arbitrum was released in Beta version on May 29, 2021, and swiftly gained DeFi app developers’ attention. Who are always looking for ways to minimize users’ fees for using the Ethereum network during peak times. Now, you can find a thriving ecosystem of dApps, whether it is liquidity management platform DeFiEdge or DEX (decentralized exchange) GMX. In addition, the project observed a vast array of upgrades to its protocol. With the Arbitrum Nitro update going live in August 2022. This ultimately led to enhanced interoperability and throughput. 

This particular type of technology that Arbitrum is centered on is called an optimistic rollup. Which enables Ethereum-based smart contracts to scale by sending messages between smart contracts and those in the second chain layer of Arbitrum. The transaction processing will be fulfilled at layer 2, with Arbitrum recording the findings in the main chain.

Following this, validators can post a rollup block and approve another block’s validity. Rollup is the term used to describe how validators utilize public information to redesign an entire chain history from optimized logs. This is to ensure that the code runs properly. 

The Arbitrum project’s upcoming versions will comprise two additional modes: the sidechain and the AnyTrust channel. Like many other blockchains, specific nodes can partake in the Arbitrum main chain. 

Validator nodes are included to witness the complete nodes and state of the chain. This ultimately helps in combining layer one transactions. Aggregators who send their transactions to the layer one chain will be rewarded in terms of Ether (ETH). Whereas other user transaction fees are circulated to other participants in the network.

The Arbitrum project gives rise to a challenging step for block rollup. Which ultimately sees validators observe the precision of the block and issue a challenge if they think it is not true. If the block is proven false or the challenge ends up being unjustified, all the assets of the lying validator will be confiscated. This process guarantees that all validators play justly and accept the outcomes if they do not adhere.

The Advantages of Arbitrum

There are quite a few features that are unique to Arbitrum. 

  • High EVM compatibility

This specific technology that Arbitrum is centered on is deemed one of the most EVM-compatible rollups. Any language, like Vyper and Solidity, can be compiled into EVM. 

This simplifies the development process, as developers do not need to champion a new language before creating dApps on Arbitrum. Moreover, this project goes well together with EVM at the bytecode level. 

  • Powerful Developer Tools

The project team behind Arbitrum has gone into numerous ways to alleviate bottlenecks while developing a layer two solution. They’ve produced in-depth developer documentation for Arbitrum, and developers can commence using the pre-existing tools on Ethereum. 

There is no need for developers to download anything that is exclusive to the Arbitrum project, such as a compiler or a plugin like Truffle or Hardhat. 

  • Low Cost

Arbitrum isn’t just designed to enhance the Ethereum transaction throughput and alleviate transaction costs. This L2 scaling solution for Ethereum can keep costs to a minimum. Despite lower transaction costs, the project still offers ample incentives and benefits for validators. 

  • Good Ecosystem

Arbitrum establishes partnerships with multiple Ethereum decentralized applications and infrastructure projects, including Sushiswap, Uniswap, DODO, etc. 

Is Arbitrum A Token?

Based on Decentralized Finance (DeFi) data, the Arbitrum project doesn’t have a token YET. Hence, if you ever witness or even so much as offered something with “Arbitrum token” frills for the purpose of trading, know that it is a scam. 

Offchain Labs has announced an airdrop is potentially coming up for those who complete certain Rollup activities on the arbitrum network or by holding certain arbitrum NFTs. Nonetheless, the drop of this token is speculative and should always be interpreted as Non – Financial Advice and only speculation within the Crypto & NFT space. For now, the Ethereum network rollup transactions will continue to be paid in Ether (ETH).

ALSO READ: Zk-Sync – Everything You Need To Know

Why Arbitrum is a Game Changer

Arbitrum stands out by making the most of resolving disputes in optimistic rollups. This helps minimize congestion on the network even more than its opponents. Still, it can be challenging to determine how it can influence Arbitrum’s overall success. 

If this was an ideal world, there would be no disputes, and all transactions would be valid. However, conflicts will eventually occur since we’re not living in a perfect world. If there is a high frequency of disputes. Arbitrum’s efficiency in solving those disputes could make it the most brilliant L2 solution.  Please comment down if you have any questions about Arbitrum. You can also check our website’s blog section for more information on related topics.

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