blog posts

What Is Arbitrum? Layer 2 Solution For Ethereum Problems

What Is Arbitrum? Layer 2 Solution For Ethereum Problems

Arbitrum Is Built To Solve Two Major Ethereum Problems: High Fees And Low Transaction Speeds.

One of Ethereum’s scalable solutions is Arbitrum, which aims to increase transaction time multiplication and reduce fees on the Ethereum fold block.

The Ethereum network has many advantages, it is decentralized, its imaginative contract language is known to digital currency developers, and it is home to decentralized finance. Ethereum is slow and costly and will remain if users do not migrate to other blockchains such as Solana or Phantom. Of course, these problems may resolve in the next few years with the advent of Ethereum 2.

Until then, there is another solution: scalability solutions, these pieces of software mounted on the primary layer of the blockchain increase speed. Arbitrum is one of these solutions and has become a popular place for Ethereum users to trade.

What are the benefits of Arbitrum?

Arbitrum is cheap and fast, and all transaction information is sent back to the main Ethereum blockchain. Although Ethereum processes only 14 transactions per second, Arbitrum has reached 40,000 TPS (transactions per second). Ethereum transactions also cost several dollars, but at Arbitrum, it is about 2 cents.

In addition to the features mentioned above, Arbitrum supports Ethereum Virtual Machine (EVM), meaning DIFE developers can integrate their decentralized applications (D-APPs) with Arbitrum without much change. The Arbitrum also has its virtual machine called the Arbitrum Virtual Machine (AVM).

Arbitrum is made by Offchain Labs. The company has raised about $ 120 million by the end of 2021.

How does Arbitrum work?

The creators of Arbitrom have stated in their documentation that the following image is the essential way to understand how Arbitrom works:

What is Arbitrum?

Intelligent people and contracts ask the Arbitrum blockchain to do something by placing transactions in the inbox. The Arbitrum then processes them and puts the transaction receipt in the output. How the Arbitrum processes that marketing and determines the trades at the input determine the chain state.

Arbitrum currently performs Ethereum transactions optimally through a rollup, processing the transactions on a side chain, or side chain, before reporting to the Ethereum.

What is Optimistic Rollup?

Rollup, which means to gather and compress, is a technique of compressing transactions in the blockchain during which the batch transactions are rolled up and turned into a transaction. The advantage of this method is that the blockchain processes only one transaction, i.e., the rolled-up transaction, instead of several trades, which saves transaction time and fees.

Now “optimistic rollup” means optimistic accumulation, in which it is assumed that transactions within the rollup are valid. If one of the transaction confirmers has doubts about one of the transactions, It can check it through the dispute resolution mechanism. Optimistic rollups are different from “zero-knowledge rollups” because, in zero-knowledge, transactions are validated before being added to the rollup.

Arbitrary optimistic rollups are performed on dedicated side chains. The side chain is the porcelain block that connects to the main chain, in which case the arbitrum secures the Ethereum. The Arbitrum collects batch transactions, processes them on the side chain, and then communicates the transaction data to the Ethereum Blockchain General Office.

Arbitrom claims that all transactions made in this way have an “AnyTrust guarantee” because all verifiers agree on the validity of one-block transactions. Verifiers must ether before committing transactions, thus encouraging honesty by putting money in the middle.

Like many blockchains, individual nodes can participate in the arbitrage chain. Confirmation nodes monitor the chain’s state, and full nodes help aggregate transactions to layer one. Aggregators who allow verification transactions at Layer One are rewarded with Ether, and the rest of the transaction fee is shared among network participants, including transaction verifiers.

Does Arbitrum have native tokens?

Unlike other rollup networks such as Looping or Boba, Arbitrum does not have tokens. Offchin Labs claims that the Arbitrum network does not need permits because its sidechain transactions are done with Ether.

Arbitrum is integrated and can be used in several decentralized exchanges such as Sushi Swap, Crew, and Abrakadar. According to information obtained from L2BETA, at the time of writing, $ 3.75 billion worth of digital currencies have been locked into Arbitrum intelligent contracts. A large portion of the locked assets appears to be related to the decentralized Sushi Swap exchange.

Arbritrum One blockchain, called Arbritrum One, is in the beta phase of the leading network and gives developers different levels of control over the system. Offchin Labs decides to remove these controls when the project is strong enough.

How to use Arbitrum?

Arbitrum can be used in decentralized applications such as Ave, 1inch, Gnosis Safe, or directly from Arbitrum Bridge.

You must first add the Ethereum network to your wallet, log in to the chain list website, then connect your wallet to this website and select the Arbitrum network to add this network information to your wallet.

To use the Arbitrum Bridge, you first need to connect the Web3 wallet, such as Metamsk, to the network and then transfer the assets to the Arbitrum network, which usually takes about 10 minutes.

The future of arbitrum

Arbitrum’s goal is to eliminate the feature of AnyTrust chains, a sub-chain that sacrifices trust for a lower fee and faster speed. Offchian Labs also plans to transfer complete control of the project to users through Dao.

What do you think about Layer 2 networks? Which of these networks do you prefer to use?