Ethereum blockchain has low scalability and its fees are very high. For example, a transaction in this network can have a fee of up to 25 dollars. Low scalability and high fees are not a suitable option for users of DeFi and other areas of digital currency, and for this reason, the scaling methods of Ethereum's second layer projects are used to increase scalability in the network.
The Arbitrum project is a second layer solution of the Ethereum network that is created to improve scalability. In this article, we will review the "Arbitrum" project, its technical dimensions, Arbitrum digital currency and the complete introduction of the Arbitrum blockchain. In addition to this, the status of Arbitrum tokens, the project's executive team and investors will also be reviewed.
What is the Arbitrum project ?
One of the most important issues that prevent the Ethereum blockchain from growing exponentially is the high transaction fees in this network. The reason for the increase in fees is that the number of network users increases and more transactions need to be approved by the network. Arbitrum technology is one of the most important and best solutions to the problem of scalability and high transaction costs in the Ethereum network.
The Arbitrom project is a second-layer blockchain for the Ethereum digital currency network that uses rollups to increase scalability and reduce costs. The second layer is a new blockchain that confirms all transactions of buying and selling Ethereum and other tokens of the ecosystem and performs its various steps without involving the first layer, and finally only stores the history of transactions in the first layer.
"Roll up" is a method of summarizing information in the form of a data group, which is finally sent to the main blockchain for confirmation. Roll-ups actually execute transactions in the second layer or arbitrage and only record its output in the main chain. This allows users to perform their transactions easily, paying less and with high speed.
In simple words, the Arbitrum digital currency project reduces the transaction cost and time by reducing the Ethereum network traffic and transferring it to another layer. In normal mode, the Ethereum blockchain supports 14 transactions per second; Meanwhile, the Arbitrum project can support up to 40,000 transactions per second.
This number not only has an amazing effect on the network in terms of speed, but also drastically reduces its fees. A transaction on the Ethereum network costs several dollars, while the same transaction on Arbitrum costs only a few cents. There are important points about the Arbitrum blockchain, which we will examine below.
Arbitrum is a separate layer of the Ethereum network that performs transactions independently without the need for the main network through roll-up and sends its output to the network. Arbitrum Blockchain has the same protocol as other mentioned networks; With the difference that it sends the output of its transactions to the Ethereum network in order to obtain the security of the Ethereum network.
Another important feature of Arbitrum blockchain is compatibility with "Ethereum Virtual Machine". This feature helps the Arbiterum project to implement and run dApps built on the Ethereum network without rewriting them on Arbiterum . The first version of Arbitrum is known as "Arbitrum One". Currently, a new version called "Arbitrum Nova" has been added to it, which we will review below.
Nova Arbitrum
Arbitrum Nova is a new chain built on AnyTrust technology. This chain is made to reduce the transaction cost as much as possible, and the way it works is slightly different from Arbitrum One. Nova entrusts all transactions to a committee of validators to minimize transaction costs and time.
While the Arbitrum project is generally built for financial transactions, the Nova version is designed for gaming, decentralized social networks, and cost-sensitive applications. Nova is fully compatible with the Ethereum virtual machine and can easily solve the concerns of many users.
Arbitrum ecosystem
Arbitrum ecosystem refers to all active parts in this network, including validators, managers, shareholders and developers. Currently, many decentralized applications of the Ethereum network also support the Arbitrom network, and the capital locked in these projects is the highest among the second layers of Ethereum. You can visit the "https://portal.arbitrum.io/" website to see active programs on Arbitrum's main network.
How does the Arbitrum network work?
So far, we have noticed that the Arbitrum digital currency network independently validates transactions and finally stores the result in the Ethereum network; But the important question is, technically, how is this possible and how does the Arbitrum network do this? There are four main elements in the Arbitrom ecosystem that make it possible. These elements include validators, a virtual machine, a key, and an administrator. In the following, we will examine each of these elements separately.
The design of the Arbitrum project is the design of a simple digital currency that allows developers to use the virtual machine of the network by creating a smart contract and implement the rules and conditions written in the contract. Virtual machines are applications that run on Arbitrom's virtual machine architecture. The designer of the virtual machine determines a group of managers for it. Any honest administrator can easily force the virtual machine to behave according to the codes.
Users who care about the outcome of the virtual machine can choose a trusted person to act as the administrator of the Arbitrom network virtual machine. Of course, this is a theory and in practice a limited group of managers can be enough to execute contracts. In simpler terms, there are a limited number of administrators who oversee the operation of the virtual machine and the execution of the smart contract . An important point is how validators work and how do they reduce the cost of transactions?
In order to perform validation, in the Ethereum main network, each validator is responsible for checking the status of the smart contract implementation; While Arbitrom's validators can operate based on the administrators' opinion about the virtual machine without the need to do this, and reduce costs far.
In this situation, instead of checking the status of the virtual machine, validators only check its hash status, and in this way, they perform several times the transaction of the Ethereum network. These processes are performed by "optimistic rollup"; As mentioned earlier, rollups are systems that help scale the Ethereum network. But the question is, what is optimistic roll-up and how does it work? We will answer this question in the following.
What is an optimistic rollup
Simply put, Optimistic Rollup is a second layer scaling protocol designed to improve the scalability and speed of the Ethereum network. Optimistic rollup, like other methods of improving scalability, increases the scalability of the network by allowing transactions to take place outside of the Ethereum main chain. In fact, the optimistic rollup transfers transactions outside the mainnet and finally transfers its result to the mainnet.
If we want to explain roll-ups in simple language, we should say that optimistic roll-up is a kind of technique to compress blockchain data. In this case, the main blockchain does not need to check each transaction separately and can instead process a set of transactions compressed by the second layer project.
This increases the scalability of the network in a suitable way. The reason the rollup is optimistic is that the blockchain optimistically assumes that all transactions in a set are valid. Of course, if there is a dispute about the validity of an item, validators can solve their problem with the dispute resolution system.
To briefly review how Arbitrom works, people and smart contracts ask Arbitrom to place transactions in the inbox. At this stage, the Arbitrom network validates the transactions and places it in the outbox.
In this way, outgoing fund transactions are transferred to the Ethereum blockchain in a method called optimistic roll-up and are confirmed by Ethereum as a group. Arbitrum also has its own native token.
Arbitrum token launch and airdrop
Arbitrum launched its sovereign token ARB on March 23 this year (2023). Arbitrum digital currency is offered in the maximum amount of 10 billion units. Arbitrum airdropped 11.62% of its total inventory to early adopters on launch day. In addition, Arbitrom's cryptocurrency has 1.13% of the total stock for its app developers.
Arbitrum network team
The Arbitrum network was created by the " Offchain Labs " team. This team consists of developers and digital currency experts who were able to develop the Arbitrum network well in the span of two years. Off Chain Labs was founded by Ed Felten, Steven Goldfeder and Harry Kalodner. In 2014, Ed Felton started his business in the field of roll-up technology.
These three people decided to build a network to completely solve the Ethereum network's scalability problem. The team of developers who work in Offchain Labs were able to develop all the different aspects of the Arbitrum network in a period of two years; In addition to the Arbitrom network, the native token of this network was also developed during this period, and it was launched and airdropped to users in late March or March 2023.
Many people have supported and invested in the Arbitrum project during this time. However, some of these investors are very important to users. Among these investors, "Lightspeed Venture Partners" can be mentioned. This company is a financial company that earns profit through various investments. COINBASE Ventures (Coinbase Ventures) is another investment company that provided Offchain Labs with a large part of the initial capital for the growth of Arbitrum digital currency.
zero knowledge
Zero-knowledge rollup is one of the main competitors of optimistic rollup, which was created with the aim of improving the scalability of Ethereum. In this method, without discovering user or transaction information, a special code is provided to the second layer as a proof of transaction authenticity, which is mathematically valid. By doing this without disclosing the network information, it ensures the accuracy of the information and there is no need for a challenge time like the optimistic rollup.
Zero-knowledge based projects are faster than optimistic roll-ups in verifying transactions between the first and second layers, but they are more difficult to adapt to the Ethereum virtual machine, although projects such as Polygon and zkSync have already done this. With the expansion of these projects, the space for the Arbitrum project will also become narrower and this project will require more innovations.
Arbitrum digital currency is a second layer Ethereum project that increases its scalability by reducing the volume of transactions within the Ethereum network. To do this, Arbitrom uses Optimistic Rollup, which is actually a technique to compress transaction information for general review by the Ethereum network.
Arbitrum digital currency is the native token of this network, which was airdropped to users a few weeks ago. The development team of this network is managed by Offchain Labs, and the same company raised funds from American investment companies.
