What Is Arbitrum?

Although Ethereum is the most preferred blockchain, it does lack speed and scalability. That is why layer-2 solutions such as Arbitrum have been created.

Arbitrum is a layer-2 scaling solution that is designed to increase speed and scalability, while still retaining the privacy of Ethereum’s mainnet, to enhance Ethereum smart contracts.

There are several layer-2 scaling solutions currently available, but Arbitrum offers some additional features that others do not. In this article, I’m going to walk you through what Arbitrum is and how it works.

Arbitrum was created to allow developers to execute unmodified Ethereum Virtual Machine (EVM) contracts and Ethereum transactions on layer-2 technology, while still maintaining the security that the Ethereum mainnet offers its users.

This layer-2 solution aims to solve the long transaction times and high gas fees experienced when using the Ethereum blockchain. Arbitrum does this by using a technique called a rollup.

In simple terms, a rollup takes multiple Ethereum transactions and rolls them up into a single piece of data before submitting them all to the main Ethereum blockchain. This saves space, increases transaction speed, and reduces the cost to transact.

The Arbitrum initiative was started by Ed Felten, Steven Goldfeder, and Harry Kalodner. All of whom are blockchain experts on a mission to make cryptocurrency a better experience for the world.

Arbitrum is an optimistic rollup. This particular rollup allows smart contracts on Ethereum to scale by sending data and messages between smart contracts on the Arbitrum layer-2 chain.

Scalability is increased because the transaction processing occurs on layer-2, while all the records of the transactions still appear on the Ethereum mainnet. As a result, the transaction speed and overall efficiency is increased.

The future of Arbitrum includes other modes as well: the AnyTrust channel and the sidechain.

Individual nodes can participate in the Arbitrum chain, as they do in many other blockchains. Validator nodes monitor the chain's status and work with full nodes to integrate layer-1 transactions.

Aggregators who transfer transactions to the layer-1 chain are rewarded in ETH, while other network contributors, such as validators, get user transaction fees. 

This layer-2 solution project adds a challenging stage for block rollup, in which additional validators evaluate the block's validity and issue a "challenge" if they feel it is incorrect. 

If the block is proved to be incorrect or the challenge is proven to be false, the assets of the validator who lies will be seized. This procedure assures that all validators always play by the rules and accept the penalties if they do not.

The Arbitrum Virtual Machine is the platform's unique virtual machine (AVM). The AVM is the execution region for Arbitrum smart contracts, and it sits on top of EthBridge, a smart contract collection that interacts with the Arbitrum chain. Smart contracts that are compatible with Ethereum are automatically translated to operate on the AVM.

When compared to other layer-2 solutions, Arbitrum has many benefits, including:

Low cost

Considering Arbitrum is a layer-2 solution, the highly efficient rollup technology cuts costs to a minimum. Even though transaction costs are lower, Arbitrum still provides nice incentives for its validators. 

High EVM compatibility

Arbitrum is EVM-compatible, meaning that developers from the Ethereum blockchain can use any language, such as Solidity and Vyper, to build on Arbitrum. No new language is necessary to learn.

Developer tools

Developers can use tools that already exist on Ethereum, which means there are no plugins that are necessary to download. It’s basically a turn-key solution for Ethereum developers.

Expanding ecosystem

Arbitrum has fostered partnerships with multiple Ethereum DApps and infrastructures, including DODO, Sushiswap, Uniswap, and many more.

As the world of Web3 continues to expand and people desire more optimized technologies, solutions such as Arbitrum will continue to transform the way we view and utilize blockchain technology.