What is Arbitrum (ARB)?

TLDR
Arbitrum (ARB) is Ethereum’s leading Layer 2 scaling solution, using optimistic rollups to deliver faster, cheaper transactions while maintaining Ethereum’s security.

1. Purpose: Solves Ethereum’s scalability issues by offloading computation off-chain.
2. Tech: Optimistic rollups with fraud proofs and EVM compatibility.
3. Governance: ARB token empowers decentralized decision-making via the Arbitrum DAO.

Deep Dive

1. Scaling Ethereum with Optimistic Rollups

Arbitrum processes transactions off-chain using optimistic rollups, batches them, and posts summaries to Ethereum. This reduces congestion and gas fees by up to 90% compared to Ethereum’s base layer. Its fraud-proof system ensures security by allowing disputes if invalid transactions are detected (Arbitrum Docs).

The Nitro upgrade (2023) boosted throughput and lowered costs further, while Stylus enables developers to write smart contracts in languages like Rust and C++.

2. Decentralized Governance via ARB Token

ARB is a governance token with no supply inflation, capped at 10 billion. Holders vote on protocol upgrades, treasury allocations (e.g., $14M audit program), and elect a 12-member Security Council for emergency fixes. Proposals require quorums (5% for core changes) and pass via on-chain voting, ensuring community-led evolution (Arbitrum DAO FAQs).

3. Expanding Ecosystem and Use Cases

Arbitrum hosts 900+ dApps, including DeFi giants like Uniswap and Aave, and supports niche chains via Orbit for gaming and social apps. Its networks (Arbitrum One for DeFi, Nova for high-throughput use cases) collectively hold over $2.5B in TVL, making it the most adopted Ethereum L2 (CoinMarketCap Community).

Conclusion

Arbitrum is Ethereum’s scalability backbone, combining cutting-edge rollup tech with decentralized governance to balance speed, cost, and security. As Layer 2 adoption grows, can Arbitrum maintain its dominance against rivals like Optimism and zkSync?