After the advent of Ethereum and its smart contract functionality, developers began building projects on the Ethereum platform. The demand for these decentralized applications grew so rapidly that Ethereum faced network congestion, leading to high transaction fees. As a result, network participants began to avoid transactions due to the prohibitive costs associated with this issue.
This scenario highlighted the need for more scalable and cost-effective solutions, leading to the emergence of Layer 2 solutions. These are modular blockchains designed to perform specific functions. Some Layer 2 solutions have advanced this mechanism by offering a comprehensive suite of products, including the ability to create customizable chains tailored to business and personal needs. This brings us to Arbitrum, the leading Layer 2 solution hub. We’ll explore to understand how its technology is leveraged by O3 Layer.
Arbitrum
Arbitrum is a collection of Ethereum scaling solutions that facilitate the creation and use of decentralized applications. The Arbitrum suite comprises protocols, chains, services, and SDKs that support and enhance the Arbitrum ecosystem.
Arbitrum Orbit
Arbitrum Orbit is a permissionless component of the Arbitrum technology stack that allows users to create customizable, unique chains leveraging Arbitrum technology. This permissionless stack can provide both Layer 2 (L2) and Layer 3 (L3) solutions. In the case of a Layer 2 solution, it settles directly on Ethereum, while a Layer 3 solution settles on any Ethereum Layer 2 network. Consequently, all layers created by leveraging Arbitrum Orbit ultimately settle on Ethereum (Layer 1, L1), either directly or indirectly.
After briefly explaining Arbitrum Orbit, let’s delve deeper into what Orbit is:
Orbit
Orbit is a comparment within Arbitrum’s technology stack that enables the creation of custom L2 or L3 chains. This technology provides tailored solutions to business or personal requirements.
O3 Layer and Arbitrum Orbit
Let’s examine how O3 Layer leverages Arbitrum Orbit. Before proceeding, it’s important to recall what O3 Layer is.
O3 Layer is the first modular Layer 3 protocol built on Bitcoin and powered by Arbitrum Orbit. O3 Layer utilizes the Arbitrum Orbit tech stack to create its own customizable, unique blockchain for smooth operation. It handles the execution layer of O3 by creating a customizable blockchain on Arbitrum Orbit. By integrating Arbitrum Orbit into O3 Layer, what positive outcomes occur? Let’s break them down:
Increased Throughput: By offloading execution to Layer 3, a higher volume of transactions can be processed in parallel, reducing congestion and latency compared to Layer 1 or Layer 2.
Lower Transaction Costs: Operating on L3 often results in reduced gas fees, making O3 blockchain more cost-effective and accessible.
Seamless Interaction with L2 and L1: Our execution layer can interact with smart contracts and assets on Arbitrum L2 and Ethereum L1, enabling complex decentralized applications that span multiple layers.
Bridging Assets and Data: Built-in bridges facilitate the transfer of tokens and information between L3 chain and other layers, enhancing the utility of O3 blockchain.
Faster Transaction Finality: You may experience quicker transaction confirmations due to the high throughput capabilities of O3’s execution layer.
By embracing Arbitrum Orbit, O3 Layer enhances its scalability and efficiency, demonstrating the powerful potential of modular blockchain architectures in addressing the evolving needs of decentralized networks.
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