What is Arbitrum?(ARB)

Zebpay
4 min readJun 3, 2024

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High transaction fees are a big issue on the Ethereum network. The Arbitrum network aims to solve blockchain issues like high transaction fees and network congestion on Ethereum. Ethereum transactions occur using smart contracts, and a fee is charged to reward validators for storing such Smart contracts on their hardware. This fee increases when users on the network grow, and thus more crypto transactions are required to be handled by the blockchain network. Ethereum also makes the code and data of Smart contracts public, which has its costs.

The Arbitrum network aims to lower transaction fees and network congestion by offloading most of the processing and data from Ethereum’s mainnet. Ed Felten founded Offchain Labs in 2018, the company behind the Arbitrum network. The concept of storing data off-chain is known as layer-2 scaling solutions. This article will explain some of the features of the Arbitrum network and whether it is helpful for the Ethereum network.

How does Arbitrum work?

The functioning of the Arbitrum network depends on four crucial roles: virtual machine (VM), verifier, manager, and key. The verifier checks the legitimacy of accepted crypto transactions. A VM, or virtual machine, is a set of codes to define the operation. A manager is a person who tracks the progress of a VM to ensure the smooth functioning of the network. Finally, a key is a protocol member who handles crypto tokens and initiates transactions on the blockchain network. Arbitrum employs Smart contracts to code VM rules, and the manager can make the VM work according to the framed rules. Verifiers track the hash of the VMs.

The Arbitrum network processes Ethereum transactions through optimistic rollups. These transactions are handled on a side chain and then sent to the main blockchain through the Arbitrum bridge. Arbitrum Bridge enables users to transfer their crypto from Ethereum, but only if they have the crypto assets to bridge in their digital wallet.

Benefits of using Arbitrum

EVM compatibility

Arbitrum is known to be one of the most EVM-compatible scaling solutions. Any programming language, such as Vyper and Solidity, can compile to the EVM out of the box, as Arbitrum is compatible with the EVM at a bytecode level. This feature makes it easy for developers to work on it, as they do not need to learn a new language before using Arbitrum.

Robust developer tool

Arbitrum is working to minimize the barriers to entry for users to build on it. They have compiled extensive developer documentation, which can be used by developers to start building on their layer 2 solutions. There is no need for compilers or plugins like Truffle.

Low fees

Arbirtrum is not just designed to improve Ethereum’s throughput but also to lower its transaction fees. It lowers fees significantly through its efficient roll-up technology. It achieves this while providing enough incentives to validators.

Well-developed ecosystem

It is already being used on a wide range of dApps and other Ethereum projects such as DODO, Suchi, Uniswap, and others.

Arbitrum scalability solution

Ethereum alters its architecture to develop layer-2 solutions to reduce transaction fees and network congestion. Arbitrum using optimistic rollups is one such layer-2 scaling solution for the Ethereum network. Optimistic rollups assume all-new chain data is genuine unless disputed by a user within a week. On the other hand, Zk proofs use cryptographic proofs to validate new blocks on the network, eliminating the need to trust validators. Zk proofs are more complicated than optimistic proofs and require additional research to use them.

Arbitrum use cases

  • It deploys optimistic rollups, unlike other layer-2 solutions, offering several benefits.
  • It supports unmodified EVM smart contracts, meaning dApps can run without changes to their code.
  • It can process thousands of transactions per second with lower fees while maintaining the security of the blockchain.
  • Developers can deploy popular programming languages over the network.
  • It does not depend on a centralized entity; instead, it employs a decentralized network of validators to stake ARB tokens, its native token.

Getting started with Arbitrum

You can start with Arbitrum through its token bridge or decentralized applications such as 1inch or Aave. You can deposit funds to the Arbitrum network after connecting your crypto wallet to the bridge, and it usually takes about 10 minutes for deposits to clear.

Conclusion

The ARB token was launched in March 2023 and has shown positive indicators in the crypto market. Its fundamentals look strong, as they are backed by competent experts. Additionally, it also validates crypto transactions at high speeds, making it ideal for cheap and quick transactions.

The future upgrades of the Ethereum network can pose a threat to layer-2 solutions. It will be interesting to see how its market dynamics play out, and you should do your research before investing in any crypto.

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