Arbitrum: An Overview

Arbitrum: An Overview

June 21, 2024

Overview

Arbitrum is a Layer 2 scaling solution for Ethereum, enhancing transaction speed and reducing costs with Rollup technology, featuring ARB as its governance token, and currently boasting a total value locked (TVL) of $2.98 billion despite recent fee fluctuations.

3 min. read

3 min. read

3 min. read

What is Arbitrum?

Arbitrum is a Layer 2 scaling solution developed by Offchain Labs. It is designed to allow fast smart contract transactions at a very low cost within the Ethereum Network. Arbitrum aims to improve Ethereum's performance by processing off-chain transactions while maintaining the original network's security. This solution is attractive for decentralized applications (dApps) that require faster and cheaper transactions.

ARB is the governance token of Arbitrum with a total supply of 10 billion. It is a token that lets holders vote on protocol changes and improvements. 

How Does Arbitrum Work?

Arbitrum operates using Rollup technology, which bundles multiple transactions into a single batch that is then processed on the Ethereum mainnet. This approach minimizes congestion and lowers fees. 

Validators on Arbitrum submit the rolled-up transactions to the Ethereum blockchain, ensuring the integrity and security of the data. The platform also features fraud proofs, allowing users to challenge incorrect transactions, thereby maintaining trust and security.

Compared to other Layer 2 solutions such as zkSync, Arbitrum provides a more established ecosystem of dApps.


Important Metrics of the Project

Key metrics for Arbitrum include its transaction throughput, which has 532 in its peak performance. The current TPS is much lower at 16. 

Latest Arbitrum News

Arbitrum's average transaction fees surged by 97.8% to $0.015 due to an increase in daily transactions from 1.7 million to 2.3 million on June 11. Despite the rise, fees have since decreased to $0.007. Arbitrum remains the largest Layer 2 network with a total value locked (TVL) of $2.98 billion. 

Disclaimer: The information provided in this research paper is for educational and informational purposes only. It does not constitute financial advice, investment guidance, or any solicitation to buy or sell financial instruments. The views expressed herein are those of the authors and do not necessarily reflect the opinions of Kollectiv.

2024