Arbitrum is a layer 2 scaling solution for Ethereum that aims to enhance the scalability, speed, and cost-effectiveness of the Ethereum network. It employs a technology called Optimistic Rollups to combine multiple transactions into a single block, thereby reducing congestion on the Ethereum main net and lowering transaction fees.
Optimistic Rollups are a form of Layer 2 scaling solution that enables for faster, more efficient transactions on the Ethereum blockchain by processing them off-chain and then sending them as a single transaction to the Ethereum main net. Arbitrum employs a variant of Optimistic Rollups known as Arbitrum Rollups, which are intended to be more flexible, efficient, and user-friendly than existing scaling systems.
The creation of the Arbitrum network was carried out by Offchain Labs, a development company based in New York. The company's founding members are Ed Felten, Steven Goldfeder, and Harry Kalodner. Ed Felten, a Princeton computer science professor, has a history of roles including serving as President Obama's Deputy CTO and co-founding Offchain Labs, where he currently serves as chief scientist.
Steven Goldfeder is an expert in computer science. He earned his Ph.D. at Princeton, and Harry Kalodner is a former Princeton University researcher with a lot of expertise in computer science. All of them started Offchain labs and created Arbitrum Network. The year 2021 witnessed Offchain Labs raising $120 million in a Series B funding round, with Lightspeed Venture Partners as the main investor.
Arbitrum was developed as an Ethereum Layer 2 solution to facilitate the expansion and functionality of Ethereum. This solution is now moving toward a DAO. Following the airdrop of the ARB governance token, token holders will have the ability to vote on crucial management decisions and future development upgrades. By taking this significant action, the Arbitrum community will acquire control over the future of the network and be able to implement changes that are in the best interests of the members.
Arbitrum One: The Arbitrum One optimistic roll-up protocol processes multiple transactions outside the chain before posting them. The roll-up protocol enables users to benefit from reduced fees and better Layer 1 performance. The Arbitrum Nitro upgrade, which was completed some months ago, made it possible to employ standard tools and languages instead of needing custom designs.
Arbitrum Nova: Nitro is built on the same codebase as Arbitrum Nova and is specifically built for dApps, social applications, and game creation. Nova is appropriate for large transaction volumes, and it has a notable Rollup fallback.
Progressive Decentralization: Arbitrum has profited from the gradual decentralization of the two chains affected by the DAO transition: Arbitrum One and Nova. Various elements impact the decentralization status, including the ownership of the chain, validator, Data Availability Committee, and sequencer.
Creation of New Arbitrum Chains: The Arbitrum Foundation has unveiled its latest offering, Arbitrum Orbit. This technology allows developers to establish their own permissionless Layer 3 blockchains. This enables system users to customize the system to meet the requirements of their projects. More than that, Arbitrum Orbit encourages the creation of new chains.
The native token of the Arbitrum network is the Arbitrum Token (ARB), and it can be used in the following scenarios:
Transaction Fees: ARB is utilized to pay the transaction fees on the Arbitrum network. When people make transactions on Arbitrum, they have to pay a small amount of ARB as a fee. This gives users a reason to hold ARB and makes sure the token is in demand.
Staking: Users can stake their ARB to help keep the Arbitrum network safe. Users who stake their tokens can earn incentives in the form of extra ARB. This encourages users to hold ARB for an extended period of time and contributes to the network's stable token supply.
Governance: ARB token holders have the capability to partake in the governance of the Arbitrum network. This means they can vote on network-related proposals such as changes to the transaction cost structure or protocol enhancements. The possession of ARB now gives individuals a say in the network's future development.
DATE NEWS/EVENTS IMPACT 06/05/2023 DEUS Finance suffers a $6M loss as a result of the DEI stablecoin and Arbitrum attack -30% Decrease 09/04/2023 The community asks Arbitrum Foundation to return 700 million ARB to DAO Treasury +48% Increase
Arbitrum is the best option for Ethereum Layer 2, and it provides a service that developers need. It is on track to maintain and even increase its popularity and utility in the coming months and years as a result of planned enhancements and existing utility. With the Arbitrum DAO now operational and more positive developments on the way, this is a solution to start utilizing — and to keep an eye on.
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