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Arbitrum

Arbitrum

Arbitrum (ARB) is an Ethereum scaling solution developed by Offchain Labs that dramatically reduces costs and latency. As an “optimistic rollup”, Arbitrum instantly scales applications to reduce costs and increase capacity without compromising the security of Ethereum

It launched as Arbitrum One in early September after a massive $120 million funding round. According to the second layer data platform L2beat, Arbitrum is the most popular second layer network at the moment with a total value of $2.57 billion, giving it a 47% L2 market share.

Porting contracts to Arbitrum does not require code changes or downloads as Arbitrum is fully compatible with most existing Ethereum developer tools

Arbitrum features
  • Trustless security: security rooted in Ethereum, with any one party able to ensure correct Layer 2 results.
  • Compatibility with Ethereum: able to run unmodified EVM contracts and unmodified Ethereum transactions.
  • Scalability: moving contracts’ computation and storage off of the main Ethereum chain, allowing much higher throughput.
  • Minimum cost: designed and engineered to minimize the L1 gas footprint of the system, minimizing per-transaction cost.

An aggregator plays the same role that a node plays in Ethereum. Client software can do remote procedure calls (RPCs) to an aggregator, using the standard API, to interact with an Arbitrum chain.

The aggregator will then make calls to the EthBridge and produce transaction results to the client, just as an Ethereum node would.

Most clients will use an aggregator to submit their transactions to an Arbitrum chain, although this is not required. There is no limit on how many aggregators can exist, nor on who can be an aggregator. To improve efficiency, aggregators will usually package together multiple client transactions into a single message to be submitted to the Arbitrum chain.

Arbitrum also supports a privileged Sequencer that can order transactions and give low latency transaction receipts

Most users will use their familiar wallet software to interact with aggregators or the Sequencer. Once you connect your wallet to the Arbitrum network, your wallet will handle the rest.

All Arbitrum transactions are posted on the Ethereum blockchain, guaranteeing that all of the underlying data is available to users. Once a transaction has reached finality on Ethereum, it is considered final and can no longer be replaced or re-reordered. At this point the result of the transaction is fully determined.

Although transaction data is posted on the Ethereum blockchain, transaction execution is moved off-chain and performed by Arbitrum validators. Arbitrum validators report back their results of this off-chain processing in the form of an assertion (sometimes called a rollup block). The assertion is posted on the Ethereum chain optimistically without proof.

Just like aggregators, being a validator is completely permissionless and open to all.

Validators post a stake, which they will lose if they’re caught trying to cheat. This ensures that validators have an incentive not to try anything dishonest.

Once an assertion is posted, a challenge window opens up during which anyone can challenge that assertion. Other validators check the assertion and prove fraud if it's wrong. Arbitrum has a custom proof system that guarantees proving fraud is highly efficient. Validators that successfully prove fraud will receive a large reward. A validator who is caught cheating will lose a large deposit. (That’s where the reward comes from.)

Crucially, it only takes one honest validator to guarantee correct execution. And since validation is entirely permissionless, anyone in the world can watch the Arbitrum chain and ensure that it executes correctly. Even if everyone else in the world is dishonest, one honest person can force the Arbitrum chain to execute correctly (and make a tidy profit from taking the deposits of attempted cheaters).

If the challenge window expires without a successful challenge (or, in the unlikely event of a fraud attempt, once the fraud is proven and the correct outcome determined), the correct assertion is confirmed and accepted by Ethereum. Arbitrum is guaranteed to prevent fraud as long as anyone honest is validating. Withdrawals from Arbitrum require confirmation, but Arbitrum supports pipelining so the chain continues to execute and make progress even while assertions are awaiting confirmation.

Timeline

May 28, 2021
Arbitrum was founded by Ed Felten, Harry Kalodner and Steven Goldfeder.

Funding Rounds

Patents

Further Resources

Title
Author
Link
Type
Date

A Quick Guide to Understand Arbitrum & How it Works

Arcana Network

Web

October 26, 2021

Haseeb Qureshi L2 rollup discussion

Haseeb Qureshi

Web

January 21, 2022

References

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