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What is Arbitrum? Is it the Best L2 Solution in 2022?

Owotunse Adebayo

While Bitcoin remains the leading cryptocurrency in the Blockchain space, Ethereum is a king on its own. The Ethereum network supports various services ranging from smart contracts to Decentralized Finance applications (DApps). Unfortunately, it is not without issues, as its speed and operational cost remain a massive deterrent to users. Fortunately for the network, it is gradually upgrading into a new network- Ethereum 2.0. The complete integration to ETH 2.0 will address issues like scalability and costs adequately addressed. However, while users contemplate using alternate networks and wait for its complete upgrade, the network has incorporated a scaling solution. For understanding, scaling solutions are platforms that sit on a blockchain, aiming to improve its overall performance. One of the scaling solutions residing on Ethereum is Arbitrum.

What Are Layer 2 Solutions?

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Layer 2

Layer 2 solution is a term that describes softwares created to upgrade the performance of the current Ethereum network. They are unique to the network and process its transactions while maintaining the decentralization and security of the Ethereum mainnet. Apart from offering reduced transaction costs, they also promise high speed and scalability. A typical example of Layer2 solutions includes Polygon, Polkadot, and Immutable X. The benefits they offer the Ethereum network are that they help it perform better than in its current state. Ethereum is a high-demand network whose existing structure makes it slow and costly for all. However, with Layer 2s solutions built on it, its transactions are secure, speedy, cheaper, and scalable.

What Is Arbitrum?


Created in August 2021 by Off-chain Labs, Arbitrum is a layer two solution that improves Ethereum smart contracts performance. Like every scaling solution, it also aims to boost Ethereum’s smart contracts’ speed and scalability. The software also equips the Layer 1 security network with additional privacy features. The platform is fast, highly-scalable Abritrum, and easy to use. Despite being independent, it also relays all transaction information to the main Ethereum chain. Arbitrum also addresses Ethereum’s smart contract’s most significant shortcomings— poor efficiency and high execution costs. This is why it can perform 40,000 TPS- a figure that thwarts Ethereum’s 14 TPS. Alternatively, users can pay as low as four cents on Arbitrum, while Ethereum charges are in dollars. Another uniqueness of Arbitrum is that it supports the Ethereum Virtual Machine (EVM), allowing DApps developers to integrate with zero modifications.

How Does Arbitrum Work?

For its operation, Arbitrum uses the transaction rollups techniques to record submitted transactions in batches on the Ethereum main chain. These transactions are then executed on Arbitrum while tasking Ethereum to ensure correct results. The advantage of this process to Ethereum is that it helps offload the majority of its computational and storage burden. These limitations to Ethereum have been dragging back the utility blockchain. Alternatively, this technique also enables new classes of robust layer 2-based DApps in the Ethereum Chain.

According to Arbitrum developers, users and smart contracts ask the chain to execute a task by placing it into its inbox. Then it processes these tasks, outputting a transaction receipt to its users. The network also uses bespoke technologies to determine the execution time and costs of the tasks in the inbox. As of today, Arbitrum handles Ethereum transactions via the Optimistic Rollup technique.

What Is The Optimistic Rollup Technique?

A rollup technique involves compressing batches of transactions into a single one, primarily for Blockchain transactions. The advantage of this technique is that it saves time and resources. It saves time by batching up these transactions and can confirm them at once without verifying them individually. It is also cost-efficient, as it processes them at a single cost. Furthermore, an optimistic rollup technique is a type of rollup that processes transactions in batches. They are different from zero rollups, which do not assume that the transactions within a rollup are valid. Optimistic rollups allow validators to contest transactions should they suspect fraud. Advantages of optimistic rollups include; low transaction cost, increased scalability, smart contract capability, and data security.

Examples of rollup networks operating in the Blockchain space include Boba, Loopring, etc. Arbitrum’s optimistic rollups sit parallel to the Ethereum Mainnet on layer two and do not perform computations by default. This means that transaction on Arbitrum settles on its owned-sidechain, connected to its mainchain- Ethereum. After collecting batches of transactions, it serves them back to Ethereum. After the validator agrees and confirms this transaction on a block in Arbitrum, they receive the “AnyTrust Guarantee” badge. Before the validator can confirm these transactions, they must stake ETH. Alternatively, the platform also pays them their rewards in the Ethereum native token. Arbitrum does not have a token, as the platform runs with ETH.

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How To Use Arbitrum

To use Arbitrum, users and developers can access it via DApps like Aave and 1inch. Alternatively, one could also utilize the platform via its token bridge. Users will deposit ETH to Arbitrum after connecting their Web3 wallet to use the token bridge. The best web3 wallet to use in connecting is Metamask. Users will also pay ETH as gas fees to complete their onboarding into the platform. This process takes about 15mins to complete, as one can now fully connect to Arbitrum.

Why Should I Use Arbitrum?

Arbitrum’s design provides an accessible platform for developers to launch highly efficient and scalable Ethereum-compatible smart contracts. However, while it continues to outperform, the platform faces stiff competition in the market. Other layer two solution networks also provide the same services, despite the dense population of users. However, listed below are the features of Arbitrum that make it unique:

Fast and Scalable

With a closer look at Arbitrum and its competitors, one would decipher that it is faster than most of its peers. Its 40,000 TPS puts it among the fastest Layer 2 solution on Ethereum. This is why Arbitrum has been able to boost the throughput of Ethereum, which in turn makes it highly scalable. If it continues to improve on its speed, it will be hard to ignore whether or not Ethereum transition into 2.0.

EVM Compatibility

Arbitrum is the most compatible with Ethereum Virtual Machine (EVM) among its competitors. It is compatible with EVM at the bytecode level. This is why it is also compatible with Solidity and Vyper, both of which are essential programming languages in EVM. The advantage of this is that developers do not need to learn new languages before building on the platform. Alternatively, the popularity of EVM’s languages means that Arbitrum possesses an immense ability to attract most blockchain developers.


Arbitrum team has also ensured that the network remains open to all users, especially developers. The Layer 2 solution also equips developers looking to build on it with developer documentation important for Ethereum’s existing tools. This is why it is suitable for Ethereum-themed projects and related chains. Developers do not need to download plug-ins or compilers, to build Ethereum DApps.

Cheap To Use

As an Ethereum layer two scaling solution, Arbitrum’s design minimizes transaction fees on the network. This is primarily due to its highly-efficient rollup technology, making it process multiple transactions in batches. This is why it can cut down fees to represent a tiny fraction of its original gas fee charges on Ethereum. The platform does not charge low prices, as it also provides sufficient incentives for validators.

Promising Future

Arbitrum remains one of the top Layer 2 solutions on Ethereum without its native token. Its developers are entirely focused on the project’s growth, promising a utility token in the future. The platform already integrates Ethereum DApps like Uniswap, Balancer, and Sushi, into its solution. However, it plans to increase its adoption, bringing more DApps to use its solutions.

What Is The Future Of Arbitrum?

Arbitrum is a solution that has entirely revamped Ethereum without changing the outlook of the in-demand network. It currently ensures that Ethereum continues to work the way it is while still managing to make it cheap. Its offering will further increase the performance and value of Ethereum and the project incorporated into its solution. The platform currently possesses its bespoke virtual machine- Arbitrum Virtual Machine (AVM). However, it plans to upgrade the virtual machine to aid compatibility with other projects in the future.

The future versions of Arbitrum will also have the channel and AnyTrust sidechains modes. AnyTrust Chains is a sidechain that sacrifices trustlessness for reduced fees and increased speed. This also implies that Arbitrum users will further enjoy higher transaction speed at lowers costs in the future. Lastly, Offchain Labs plans to phase out its control over the project. If they eventually do, it will be open to more significant investments, increasing its attractiveness.


The popularity of Layer 2 solutions continues to increase, as their importance to Blockchain networks remains high. Apart from bolstering their speed and scalability, they also lower cost via the Rollup Technique they utilize. Arbitrum is a layer two software designed to improve the performance of Ethereum smart contracts. Like every scaling solution, it aims to boost Ethereum’s speed, scalability, and lower cost. While the platform currently enables Ethereum DApps to perform well, it promises upgrades to users in the future.

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