So Arbitrum is a tech suite that lets you do all sorts of things that you can also do with Ethereum. By now, the problems with the amazing coin Ethereum are obvious to crypto fanatics. It's expensive and slow.
Arbitrum has come up with some technical solutions to this. We'll look at them in a bit more detail later, but their Arbitrum optimistic Rollup protocol provides much lower transaction costs due to bundling of transactions associated with rollups, while inheriting from Ethereum toplevel security.
Arbitrum is compatible with the Ethereum Virtual Machine, Ethereum dApps and smart contracts work fine on it.
Their AnyTrust protocol provides the speed.
Arbitrum's flagship product is the 2021 Arbitrum One chain, which soon got an addition of Arbitrum Nova, a separate AnyTrust chain built purely for very low transaction costs and high speeds.
Arbitrum One later got another upgrade by the Arbitrum Nitro stack, making it another ten or so times faster.
It seems clear to us by now: Arbitrum wants to be as fast and cheap as possible. As crypto lovers, we only applaud that!
Arbitrum was founded by Offchain Labs. This is a New York-based development company since 2018 founded by Ed Felten, who still worked for Obama in the White House as deputy CTO.
Co founder and CEO Steven Goldfeder is responsible for developing Arbitrum along with the other co founder CTO Harry Kalodner.
April 3, 2019 Pantera Capital led a seed round to get some money into Offchain Labs for development and marketing, raising just under $4 million,
In April 2021, Series A followed, raising $20 million.
August 2021 followed the Series B, raising another $100 million, led by Lightspeed Venture Partners.
There were a lot of interested companies and angel investors, including Mark Cuban, Polychain Capital, Alameda Research, Redpoint Ventures and Ribbit Capital.
Arbitrum Beta Mainnet was launched in May 2021. Mainnet went live in August 2021, followed shortly thereafter by Arbitrum Nova and their support for sidechains in the first quarter of 2022. The upgrade of Arbitrum with Arbitrum Nitro stack followed in August 2022.
Another airdrop followed in March 2023, where they gave hefty coins to loyal users of their network and gave these $ARB tokens governance at the Arbitrum DAO to decide the future of all protocols on Arbitrum.
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Arbitrum was created primarily as a layer 2 protocol to solve the problems at layer 1 and especially the scalability of Ethereum. So on their main page, this is the subtitle: "scaling Ethereum".
Arbitrum is programmed in Solidity, Ethereum's language. Because they use an open source Arbitrum compiler, any Ethereum-based token can interoperate with Arbitrum dApps and the Ethereum Virtual Machine.
Arbitrum makes choice and privacy easy and lets developers choose their own validators, as well as specify what information can be shared with other users.
With a max number of transactions of about 40 per second for the entire Ethereum network, which is justifiably huge, users have no choice but to bid against each other to get their transactions validated, thus supply and demand raises the price.
Arbitrum's overall goal is to enable user-friendly decentralized applications. With that comes, of course, low gas fees for a transaction and high speed for processing it.
When we talk about a layer 1 protocol, we are talking about first-generation blockchains. Bitcoin, Ethereum, Litecoin, these are layer 1 networks with limited scalability.
A layer 2 protocol adds on top of layer 1 technology, which usually has to do with reducing the cost of layer 1 and increasing the speed of these networks.
Arbitrum uses the power of Ethereum, security and smart contracts, to enhance their technology.
Arbitrum One and Arbitrum Nova gain additional power from their patented Nitro technology stack. This next-gen rollup architecture provides roughly 7x more throughput than Ethereum, without any concessions to security and with much lower fees.
To get an idea of what you can use Arbitrum One for, we will mention some well-known apps that use it. Since there are tig we will give a small selection.
Ø 1 Inch - swapping
Ø Aave - lending
Ø Ankr - node providers
Ø Arbitrum News DAO - tools
Ø Binance - centralized exchanges
Ø Celer - bridges
Ø Chainlink - tools
Ø DAI - stablecoins
Ø Halls of Olympia - gaming
Ø Loopring - wallets
Ø MakerDAO - dApps
Ø Open Sea - NFT marketplaces
So you can use Arbitrum One for a very large number of things, and as you can see, it is being used. Hundreds of companies and apps are already using Arbitrum, their network is huge.
With a total value locked in of nearly $2 billion, they are at the top of their playing field.
Arbitrum One works with Arbitrum rollup and is a trustless, permissionless protocol for "rolling up" transactions in a bundle. This makes it cheaper and faster to do business on the Ethereum blockchain.
As long as there are still two honest DAC nodes (see below), business can be done. This optimistic rollup strategy greatly increases speed.
With Arbitrum Nova, think of pretty much the same use cases, such as stablecoins, NFT, wallets, games, tools, nodes, bridges and also social. The number of networks using it is a lot smaller, though.
Arbitrum Nova uses the Arbitrum AnyTrust protocol. Here they use a DAC (Data Availability Committee) to capture data off-chain permissioned so that data can only be delivered by chosen nodes on demand and reliably.
This technique significantly reduces transaction costs and virtually eliminates congestion. Their consensus algorithm ensures that gas fees for the Ethereum blockchain have shrunk considerably for their customers.
If you want to know more general things about Arbitrum, you can visit the page called "A gentle introduction to Arbitrum."
If you want to get a good run through with technical aspects, you can sit back and read their Nitro white paper.
Arbitrum is a Web 3.0 technology. It sticks to its roadmap, in which they promised to let the important decisions in the future be determined by the holders of the $ARB token.
With the important airdrop for their loyal users, that time has come. At the Arbitrum DAO, people will be able to vote with that token or they can delegate their vote. 11.62% of the tokens will be owned by the users.
As a result, the future of Arbitrum will not be in the hands of a small group of hotshots, as is the case with many blockchains, but rather the holders of the $ARB token.
However, there will still be a fire department called the Security Council. This is elected by the Arbitrum DAO voters and is responsible for dealing with things like a crisis, bug or disaster of any kind requiring immediate action.
The community members on Discord are called Arbinauts.
If you want to know more about the DAO, the airdrop and how it works you can visit their introduction page on DAO governance.
Expectations are high, especially with the airdrop ahead. However, our crystal ball is broken, so the future seems somewhat clouded.
With a good number of tokens coming to market, the potential for dilution due to increased supply is high.
On the other hand, this is an excellent network with high utility value, a strong team and technically highly engineered. Furthermore, this team is not sitting still and seems to be well underway.