Arbitrum — What is the Ethereum scaling solution?
Arbitrum: An Ethereum Scaling Solution
If you’ve been following the world of cryptocurrency, you’ve likely heard about the scalability issues faced by the Ethereum blockchain. To address these issues, a number of scaling solutions have emerged, each promising to make Ethereum faster and more efficient. One of the most popular of these solutions is Arbitrum.
What is Arbitrum?
Arbitrum is a layer-2 scaling solution for the Ethereum blockchain. It’s designed to make Ethereum faster and more efficient by processing transactions off-chain and then submitting them to the Ethereum blockchain. This reduces the amount of congestion on the Ethereum network, which in turn reduces transaction fees and increases transaction speeds. The Arbitrum scaling solution has saved the Ethereum blockchain $704m in gas fees as of the 24th of March this year.
How does it work?
Arbitrum uses a technology called Optimistic Rollups to process transactions off-chain. When a user initiates a transaction, it’s processed by the Arbitrum network and then submitted to the Ethereum blockchain. If the transaction is valid, it’s included in the next block of the Ethereum blockchain. If it’s not valid, it’s rejected. Arbitrium has market share for the Optimistic Rollups of about 67% as of March 24th this year.
What are the benefits of using Arbitrum?
There are a number of benefits to using Arbitrum. First and foremost, it makes Ethereum faster and more efficient. This means that transactions can be processed more quickly and more cheaply, which is a big deal for users who are tired of waiting for their transactions to be confirmed.
Another benefit of using Arbitrum is that it allows developers to create more complex smart contracts. This is because Arbitrum processes transactions off-chain, which means that there’s more room for computation. This opens up new possibilities for decentralized applications (dApps) that require more complex smart contracts.
Airdrop
The recent Arbitrum airdrop is one of the most highly-anticipated events in the crypto market, and it took place on March 23, 2023. A total of 1.162 billion ARB tokens were set aside for the airdrop, and eligible users could claim them by going to the official Arbitrum website and connecting a Web3 wallet like MetaMask.
To determine eligibility, users could input their wallet address into a tool on the Arbitrum website and receive confirmation regarding their eligibility status. The minimum airdrop entitlement was 625 tokens, and the maximum was 10,250 tokens. There was also a point system in place that dictated how many tokens each user would receive, with a minimum of three points required to qualify for the airdrop.
The airdrop puts Arbitrium ($ARB) on number #39 of the biggest cryptocurrencies by market cap with a current market cap of $1.5 billion and a fully diluted market cap of $11.85 billion. As of today the 24h volume reached around $1.2 billion.
Usage of the Network
As of today, April 3, 2023, Arbitrum remains one of the most popular layer-two scaling solutions on the Ethereum network, with a significant amount of total value locked (TVL) and a large number of users. According to the latest available data, Arbitrum One has a TVL of $6.06 billion and over 3.9 million users, outperforming its closest competitor Optimism by almost double.
Latest News
The Arbitrum Foundation’s intention to gift itself 750 million ARB tokens ($1 billion) has been met with backlash from the community and raised questions. The foundation has promised new votes and no “near-term” ARB sales in response to the criticism. The controversial governance package, which includes a vote on the distribution of 750 million tokens, will also be divided into separate votes by the foundation.
According to on-chain data, two whales opted to sell their ARB tokens at a loss, with one selling 2.03 million of them for an average loss of $160,000. The dispute has also caused ARB’s price to decline; on April 2, 2023, it reached a low of $1.15, a decrease of 11.5%.
Conclusion
Arbitrum is one of the most promising scaling solutions for the Ethereum blockchain. Its use of Optimistic Rollups to process transactions off-chain makes Ethereum faster and more efficient, while also opening up new possibilities for dApps. The recent airdrop and growing adoption of the network suggest that there’s a lot of excitement surrounding Arbitrum, and it will be interesting to see how it evolves in the coming months and years.
Price development
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Niklas
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