Arbitrum is a Layer 2 scaling solution for Ethereum. Ethereum is currently the second most popular blockchain network, but it is limited by low transaction speeds and high transaction fees. Arbitrum helps scale Ethereum by making transactions faster and cheaper without compromising security. Since it is compatible with Ethereum, users can use Ethereum-based smart contracts, decentralized apps (dApps), platforms, and digital assets on Arbitrum with minimal or no modifications needed.

How does Arbitrum work?

Arbitrum uses optimistic rollups to process transactions, deploy smart contracts, and run dApps outside the main Ethereum network. It groups transactions into batches and processes them on the Arbitrum chain using the same type of consensus mechanism as Ethereum. After processing the transactions, it then transmits the final results to the Ethereum blockchain for recording — unless someone submits proof that the data sent from Arbitrum is incorrect.

Since the transactions don’t need to be recorded one by one, Arbitrum can handle up to 40,000 transactions per second. And because the data is recorded on Ethereum, transactions made on Arbitrum benefit from Ethereum’s security mechanisms while staying more efficient and cost-effective.

Among the solutions Arbitrum offers are:

• Arbitrum Rollup: Arbitrum’s main optimistic rollup protocol
• Arbitrum One: The chain that implements the Arbitrum Rollup. It executes transactions and sends them to Ethereum for recording, and allows developers to build dApps at low cost.
• Arbitrum AnyTrust: Arbitrum’s protocol for apps that need high security and ultra-low costs, such as gaming and social applications. It does not offer the same level of decentralization as Arbitrum Rollup.
• Arbitrum Nova: The flagship chain implementing the AnyTrust protocol. It is an alternative to Arbitrum One with an additional layer of security.
• ‍Arbitrum Orbit: It allows developers to launch chains within the Arbitrum ecosystem and customize them according to their specific needs.

Thanks to Layer 2 scaling solutions like Arbitrum, Ethereum can now run more applications, from decentralized finance (DeFi) to gaming apps. This helps make blockchain technology even more useful for solving real-world problems across different industries.