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What Is Arbitrum? – An Introductory Guide To The Second Generation Rollup Technology

 

By Damian David Mar 23, 2023

 

 

What Is Arbitrum?

 

Arbitrum is a next-generation Layer-2 blockchain framework built on Ethereum and makes use of a variant of the Optimistic rollups protocol tagged "Nitro" to actualize higher transactional fees, faster finality, more privacy, and a more aggressive fault-intolerant technology in the Arbitrium blockchain.

 

Arbitrum blockchain core features revolve around its ability to tackle the downsides of the Ethereum blockchain mainnet as its native Rollup technology allows it to provide X7 more of Ethereum throughput capability with cheaper fees while still maintaining standard smart contract security and high functionality.

 

On August 31, 2021, Offchain Labs launched the first Arbitrum blockchain mainnet for public use after the beta mainnet launched in May 2021. Offchain Labs is a company based in New York that was founded by Edward Felten, Harry Kalodner, and Steven Goldfeder in the year 2018. 

 

 

How Does Arbitrum Work?

 

Ethereum's transaction per second (TPS) is very low (About 7-20 TPS) and this has been a major concern for most blockchain developers alongside users. Why? Because this means you would have to wait longer to make a transaction on the Ethereum blockchain mainnet and it'll cost you a shitload of gas because those 7-20 transactions being processed at any time are selected by auction of the highest bidders.

 

Arbitrum's main goal is to solve that problem or at least mitigate it to some very substantial extent. And its solution is by using a decongestant technology tagged as "Rollups" in the blockchain industry. Precisely, it uses a variant of a variant of "Rollups" to provide the solution. In other words, Arbitrium uses "Optimistic Rollups" but a variant of it is called "Arbitrum Rollups" because it was pioneered by Arbitrum.

 

So how Arbitrum works is that via its Arbitrum Rollups technology it "rolls up" packs of transactions on its base layer which is the Ethereum blockchain, takes it off-the-chain and onto the Arbitrum Layer-2 blockchain, processes it, and then sends the receipts back to its base layer which is the Ethereum blockchain. This conveniently makes it a scaling solution for Ethereum with faster and cheaper transactions alongside high throughput.

 

But remember, Ethereum possesses high-security measures and Arbitrum is careful to leverage that perk while decongesting the Ethereum blockchain, so how does it maintain Ethereum's security still? Especially when it seems like it "rolls up" transactions out of the Ethereum blockchain. This is where the Nitro Technical Protocol comes to play, so what is Nitro?

 

Nitro is a general technical upgrade to the Arbitrum blockchain framework but the most important of this upgrade is the security aspect of it. Nitro inherits Ethereum security measures by serving as an opening window to the Ethereum blockchain using WebAssembly (WASM) code thereby allowing validators or anyone who's interested to have visibility to the Arbitrium blockchain to subsequently detect and prove fraud or maliciousness (if there is one).

 

For developers building dApps on the Arbitrum blockchain framework, the smart contracts for the dApps are sent to the "Inbox" component of the Arbitrum chain, the smart contracts transactions in the "Inbox" will then determine how it'll be processed via a process called the "Chain State", if successful a receipt will be generated and then submitted to the "Output" component of the Arbitrum chain.

 

What Are Rollups?

 

Rollups are a bunch of transactions packed together and taken off the chain of its parent blockchain to be processed off-chain in a side-chain to improve transactional speed, throughput and reduce cost. There are two types of Rollups in blockchain technology and they're; Optimistic Rollups and ZK Rollups.

 

What Are Optimistic Rollups?

 

Optimistic Rollups is a variant of Rollups technology that executes and processes bundles or packs of transactional rollups off-chain without prior validation or confirmation hence the term "Optimistic" and only requests validation or confirmation only when a transaction is suspected to be fraudulent or malicious. Optimistic Rollups are said to be faster than ZK Rollups.

 

 

What Are ZK Rollups?

 

ZK Rollups is a variant of Rollups technology that executes and processes bundles or packs of transactional rollups off-chain but strictly with prior validation or confirmation proof attached to the transaction without still compromising the contents of the transaction hence the term "ZK" (Zero Knowledge). ZK Rollups are said to be more secure than Optimistic Rollups.

 

What Is Arbitrum Token (ARB)?

 

Arbitrum Token (IARB) is the native utilitarian and governance token of the Arbitrum blockchain framework that was said to be launched on March 23, 2023. ARB is an Ethereum standard token and it will inherit Ethereum security and resources.

 

$1 Billion worth of the ARB token is reported to be airdropped on March 23, 2023, the token is meant to ultimately decentralize the Arbitrium blockchain as holders will be able to vote on their preferred changes to the Arbitrium blockchain framework.

 

Is Arbitrum Safe?

 

Yes. Arbitrum has so far proven to be reliable and secure. Backups to this claim include its parent chain which is the Ethereum blockchain because it inherits Ethereum security measures, the Nitro fraud-proof protocol also adds to this claim so overall, Arbitrum offers safety and enhanced privacy.

 

Why Choose Arbitrum?

 

Arbitrum is part of the league of blockchains that have dedicated their services to providing a faster, cheaper, and more cost-effective experience for developers and users of the Ethereum blockchain.

 

Amongst those leagues of blockchains that are making Ethereum lighter, Arbitrum is the one with the second fastest TPS (up to 40,000 TPS) after Polygon (up to 65,000 TPS) and ahead of Optimism(up to 20,000 TPS).