Arbitrum Explained — How do rollups work ?
The below diagram visually describes the workflow of an Arbitrum transaction in extensive detail. Below the diagram is a link to a doc which explains everything from two different angles: one from a chronological perspective (Life of a Transaction) and the other from an object oriented perspective (Architecture). If there is any incorrect information in either of these please leave a comment down below. I’m currently working on the same sort of explanation for Optimism and after that I’ll move on to other L2 projects with the intention of explaining them in as fine grained detail as possible. Please give a follow if you’re interested in these future works.
- The Notes
Unfortunately Medium does not allow for nested points, which were critical to the format of explanation I wanted to deliver. Please use the above link to view the notes.
Warnings and Risks:
Arbitrum is set up with a 4/6 multisig — When the threshold is met these signers have absolute power over the system by being able to force upgrades. In other words, they can upgrade the smart contract instantly at any point, allowing them to do virtually anything.
Multisig Address — 0xC234E41AE2cb00311956Aa7109fC801ae8c80941
“The admin of all contracts in the system, capable of issuing upgrades without notice and delay. This allows it to censor transactions, upgrade bridge implementation potentially gaining access to all funds stored in a bridge and change the sequencer or any other system component (unlimited upgrade power). It is also the admin of the special purpose smart contracts used by validators.” -Source
Validators are permissioned. -Source
According to L2 Beat all of the contracts are upgradable including the bridge.
“We believe temporarily maintaining these capabilities is the only responsible way to launch while we continue to harden our system; as we progressively decentralized, these controls will be phased and eventually eliminated entirely.” -Source
While they probably have good intentions, probably do intend to do this, and probably will do this, we cannot judge a project based on a future promise.
About the author
Andrew Scott Riley is a research consultant at Cyber Capital. With his computer science background, he analyzes cryptocurrency projects and whitepapers and compiles extensive research reports.
About Cyber Capital
Cyber Capital, Europe’s oldest cryptocurrency investment fund, is a fund manager that specialized in providing exposure to the crypto-asset markets as an alternative asset class. Cyber Capital is fully registered by the Dutch Authority for the Financial Markets under the AIFMD-light regime and the Dutch Central Bank.
