What is Arbitrum: Layer 2 Scaling Bridge for Ethereum

what is arbitrum used for

The Arbitrum protocol ensures that code will run correctly (i.e. as intended) so long as any validator is honest, helping the network resist collusion and other forms of attack. While some circles believe that the best way to scale Ethereum is through on-chain tweaks and upgrades, others are instead pursuing different routes, known as second layer solutions. Apart from being used to transfer value on the Arbitrum blockchain, $ARB token grants you a seat at the governance table of the Arbitrum DAO.

The Best Arbitrum Bridge

what is arbitrum used for

It has its own Virtual Machine, while Optimism uses Ethereum’s Virtual Machine partly. The race to build the best scaling solution for Ethereum is heating up — with Layer 2 solutions like Arbitrum, Optimism, and Metis emerging as top contenders. Although most of these solutions operate with the same goal — reducing transaction fees and times — they accomplish it with different mechanisms. Imagine a world where active crypto enthusiasts can effortlessly cross over various blockchains, dodging skyrocketing transaction fees, thanks to the power of blockchain bridges. Arbitrum has been integrated into several decentralized finance protocols, such as SushiSwap, Curve and Abracadabra. Data from DeFi Llama show that $2 billion worth of cryptocurrency is locked up within Arbitrum’s smart contracts.

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The Ethereum layer-2 landscape is currently bursting with projects, all competing for users, developers and total value locked (TVL). That said, Arbitrum Nova is arguably more centralized than Arbitrum One, since the DAC is required to provide data availability to end users. As it stands, the DAC consists bitcoin cash mining of just a handful of members, including Infura, Offchain Labs, Google Cloud and Reddit. Despite being the fourth most popular blockchain by TVL, Arbitrum is the 18th blockchain by 30-day fee revenue — at just $3.8 million compared to Ethereum’s $178.4 million, per data from token terminal.

Arbitrum vs. Other Layer 2s: What’s the difference

He has particular expertise in the burgeoning decentralized finance ecosystem and loves trying out all the new platforms. He also always follows major events in other financial markets and geopolitics as a whole, especially when an event’s effects ripple through the crypto market. Since Ether is such a large and established cryptocurrency, it’s available on several different cryptocurrency trading platforms. If you’re interested in also investing in altcoins, make sure to do your research on whether or not an exchange offers it. If you’re looking to invest in both stocks and crypto, Webull and Robinhood offer the this, but have fewer altcoins on their platforms than a dedicated crypto exchange. Orbit chains are fully permissionless, with dedicated throughput, increased gas fee reliability, and more.

what is arbitrum used for

The Best DApps on Arbitrum

Let’s look at the major products — Arbitrum, Nitro, and Nova — and how they differ. For instance, DeFi projects like Sushiswap and Aave use Arbitrum in the hood to offer efficient swaps with lower gas fees. In that case, other express bridges like Connext, Across, and Multichain are ready to swoop in and transport your crypto from Ethereum to Arbitrum far faster than their MetaMask counterpart. Developers also have the option of launching their own Arbitrum chains that run top an Arbitrum layer 2. If you aren’t yet familiar with the Ethereum ecosystem, you can check out ethereum.org for an intro. He stays up to date with all the latest coins, platforms and technologies in the field.

  1. Further, you can learn about real-world use cases of global corporations implementing Baseline Protocol with our Blockchain For Enterprise course!
  2. Developers can deploy large contracts on Arbitrum going beyond the Ethereum contract size and transaction gas limits.
  3. Additionally, as long as there’s even just one honest validator, the chain will remain secure; i.e., it only takes one non-malicious fraud-prover to catch any number of malicious trouble-makers.
  4. As such, they have produced comprehensive developer documentation for Arbitrum, and the developers can get started using existing tooling for Ethereum.

To speed things up, optimistic rollups assume that the transactions contained within the rollup are valid. It is possible to contest transactions through a dispute resolution mechanism if a validator suspects fraudulent behavior. (Optimistic rollups are separate from ‘zero knowledge’ rollups, which bypasses a dispute resolution mechanism by validating transactions before they are added to the rollup). In this article, we’re going to dive deep into Arbitrum’s technology and look at various types of Ethereum scaling solutions. Also, we’ll look at the background of Arbitrum, including the development team, Offchain Labs.

In terms of Arbitrum crypto, there is no Arbitrum token or Arbitrum coin, with the network instead focusing solely on delivering scalability solutions. This software program runs completely on the Layer 2 and functions as a regulator and record keeper. ArbOS ensures that the smart contracts are operating correctly, that records are stored, and that actions and transactions are being effectively executed.

Rollups use a 2-layer architecture to process transactions off-chain before settling them on-chain. The benefit is that the blockchain no longer needs to validate separate transactions – it can directly confirm a “rolled up” batch of transactions. At the moment, Layer 2 projects like Arbitrum are expected to be vital stop-gap solutions for Ethereum’s scalability crisis. Updates to the Ethereum network, intended to reduce fees and congestion, are slated for the next year and beyond. The benefit of this is that a blockchain need only process a single transaction—the rolled-up transaction—instead of confirming each individual transaction contained within the rollup.

If you want to know more about how the mainnet works, check out our article on what is Ethereum. At the very top of the layered scaling solution, are the Arbitrum smart contracts — i.e., those smart contracts launched on Arbitrum by developers. By being built upon the Ethereum blockchain and borrowing its security, Arbitrum’s cutting-edge scaling solution tackles high transaction https://cryptolisting.org/ costs while skyrocketing speeds. Arbitrum and Optimism differ from Polygon’s scaling solution because  Arbitrum and Optimism use optimistic rollups and Polygon is a sidechain that runs along Ethereum. Claiming to be the most optimistic rollup in the industry, Arbitrum costs are minuscule compared to the native Ethereum gas fees, claiming to reduce fees by more than 50x.

Unfortunately, we don’t live in a perfect world and disputes are going to happen at some point. If the frequency of disputes is high, Arbitrum’s efficiency in resolving them could make it the superior Layer 2 solution. Sharding split the blockchain infrastructure into 64 shards, decentralizing the network even more.

Arbitrum Nitro is a major technical upgrade to the underlying tech of Arbitrum One’s ecosystem. Nitro achieves this by introducing interactive proofs that run over the WASM code used by Arbitrum. The bottom layer (shown on the right-hand side of the below image) is Layer 1 — the primary blockchain of Ethereum.