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Arbitrum (ARB)

Manuel Valente

Introduction

Arbitrum, a project dedicated to solving scalability problems on the Ethereum blockchain, is a major player in the Layer 2 (L2) field.
Arbitrum is based on Optimistic Rollup, a Layer 2 technology that improves the performance and reduces the cost of transactions on the Ethereum blockchain, by combining smart contracts.
In practice, Optimistic Rollup enables transactions to be processed in two stages.
First, all transactions are performed on a secondary layer outside the main blockchain, where they are processed and verified.
Then, once all transactions have been processed, a proof is sent to the Ethereum blockchain to finalize the transactions.
This method enables multiple off-chain transactions to be processed in a single transaction on the main blockchain, significantly reducing transaction costs and increasing transaction processing speed.
Arbitrum’s story is one of perseverance, innovation and commitment to improving the blockchain ecosystem.
It goes back to the research on sidechains and Layer 2 conducted by various teams in the crypto ecosystem.
However, Arbitrum’s history as a Layer 2 scaling solution was specifically developed by Offchain Labs, a company founded by three brilliant minds: Steven Goldfeder, Harry Kalodner and Ed Felten.
Their journey to create Arbitrum is an example of innovation in blockchain.
The concept of Arbitrum emerged at a time when Ethereum, one of the most popular blockchains alongside Bitcoin(buy Bitcoin), was facing scalability issues.
Transaction confirmation times had become longer, and transaction fees had reached prohibitive levels.
This created a growing demand for scaling solutions to address these issues, and Arbitrum positioned itself as one such solution.
The project began to take shape when Steven Goldfeder, Harry Kalodner and Ed Felten joined forces to explore potential solutions to these challenges.
They all had impressive backgrounds in computer security, cryptography and blockchain research, making them a formidable team to tackle these complex problems.
The first idea that led to the creation of Arbitrum was to take advantage of the “rollup” design.
Rollups are Layer 2 scaling solutions that consolidate a large number of transactions into a single data point on the main blockchain, reducing congestion and transaction costs.
This approach was particularly innovative, as it offered an effective solution for improving scalability while leveraging the security of the main blockchain, in this case Ethereum.
Over the months, the team worked hard to develop and refine the technology behind Arbitrum. They conducted extensive research, wrote complex code and collaborated with other industry experts to ensure that their solution would live up to expectations.

Buy ARB tokens with Coinhouse.

The history of the Arbitrum team

The team at the helm of Arbitrum is made up of eminent personalities and renowned experts in the fields of blockchain, IT security and cryptography.
Here’s an overview of the key players who have helped make Arbitrum a reality: Steven Goldfeder, CEO of Arbitrum: Steven is a leading figure in computer security and cryptography.
He has published numerous cutting-edge research papers in these fields, and has built up a solid reputation as an expert.
Before embarking on the Arbitrum adventure, he obtained his PhD and was appointed Assistant Professor of Computer Science at Princeton University, where he continues to play a key role in teaching and research. Harry Kalodner, co-founder and CTO of Arbitrum: Harry is an expert in blockchain and cryptography.
Before co-founding Arbitrum, he worked as a researcher at Microsoft Research, where he focused on projects related to blockchain security and privacy.
His technical skills and experience in these fields were essential to the development of Arbitrum’s underlying technology. Ari Juels, Arbitrum’s co-founder: Ari is another prominent member of the Arbitrum team.
He is Professor of Electrical and Computer Engineering at Cornell University, where he also held the position of Director of the Computer Security Laboratory.
His knowledge of computer security and cryptography was invaluable to the project.
The Arbitrum team is complemented by many other talents and experts, each bringing his or her own expertise to advance the project.
Their commitment to improving the blockchain ecosystem and dedication to creating an efficient scaling solution have been key success factors for Arbitrum.
Arbitrum has become one of the most prominent Layer 2 scaling solutions in the Ethereum ecosystem.
Its story is an example of how innovation, perseverance and a talented team can make a significant contribution to the evolution of blockchain technology.
As the ecosystem continues to grow and develop, Arbitrum is well placed to play a central role in the future of blockchain scaling.

How does Arbitrum work?

Arbitrum operates using an approach called Optimistic Rollup.
In this model, most transactions are executed off the Ethereum blockchain, then the results are submitted to Ethereum for verification.
This method significantly reduces transaction costs and speeds up confirmation times, while maintaining security.
In practice, Optimistic Rollup enables transactions to be processed in two stages.
First, all transactions are carried out on a secondary layer outside the main blockchain, where they are processed and verified.
Then, once all transactions have been processed, a proof is sent to the Ethereum blockchain to finalize the transactions.
This method enables multiple off-chain transactions to be processed in a single transaction on the main blockchain, considerably reducing transaction costs and increasing transaction processing speed.

The Arbitrum airdrop

The Arbitrum airdrop (the airdrop was a success, worth mentioning). A total of 1 billion ARB tokens will be issued.
They will be distributed as follows:

  • 40% allocated to existing token holders and active Arbitrum users
  • 25% earmarked for the Arbitrum Foundation, to support project development
  • 20% allocated to developers and community projects
  • 10% for strategic partners
  • 5% reserved for awards to Security Council members.

The airdrop represents around 12% of ARB’s total offering, and tokens are offered to people who have used the network in the past year.
Almost half of the total offering of the digital coin will go to the Arbitrum Foundation.
Offchain Labs.
Arbitrum has benefited greatly from its chosen airdrop marketing strategy to distribute its native token to the community: in the months leading up to the announcement of the ARB token release, a great deal of capital flowed in from Ethereum and other chains.
The Arbitrum airdrop was a great success and helped generate massive interest in the project.
ETH token holders were rewarded with ARB tokens at the airdrop, prompting many Ethereum users to explore Arbitrum as a Layer 2 solution.

What is layer 2?

A Layer 2 is an additional layer built on top of an existing blockchain (in this case, Ethereum) to improve its performance.
It offloads some of the workload from the main chain, reducing congestion and transaction costs.
Layer 2s emerged in early 2019, in response to the need to solve scalability issues on blockchains, particularly Ethereum.
The Ethereum network, in particular, suffered from congestion and high transaction costs, prompting the development of Layer 2 solutions.
Layer 2s emerged because of several technical challenges facing blockchains, including: Scalability: Layer 1 blockchains, like Ethereum, have a limited capacity in terms of transactions per second (TPS).
Layer 2 blockchains offer a solution for processing a larger number of transactions at lower cost. Transaction costs: By moving some transactions off the main chain, Layer 2 reduces transaction costs, making them more accessible to users. Latency: Layer 2 can provide faster transaction confirmations using more efficient consensus mechanisms. Adoption: Layer 2 facilitates the adoption of blockchains by making the user experience smoother and less costly.
The different Layer 2s The different types of layer 2

What does ZK stand for?

Definition: A zero-knowledge proof or zero-knowledge protocol is a method by which one party (the prover) can prove to another party (the verifier) that a given statement is true, while the prover avoids transmitting additional information.
the fact that the statement is actually true.
Simple example: Jean-Jacques Quisquater “The parable of Ali Baba’s cave” ZK = Scaling + Privacy This is both a privacy-enhancing technology, as it reduces the amount of information that needs to be provided between users, and a scaling technology, as it can enable evidence to be verified more quickly.
New ZK technologies such as ZK Starks have recently become available!
The general consensus is that they are better than ZK Snarks. The differences between ZK :zk-STARK (Zero-Knowledge Scalable Transparent) zk-STARK is like a giant transparent trading room where every transaction is visible to all, but no private information is revealed. ZK-SNARKs at their core depend on elliptic curves for their security Use cases: Hermez, Starknet, StarkWare, DYDX, Immutable X zk-SNARK (Zero-Knowledge Succinct Non-Interactive Argument of Knowledge). zk-SNARK is more like a secure black box where you can deposit your transactions without anyone being able to see them.
Stands for transparent, scalable, non-knowledge argument of knowledge.
STARKs are based on hash functions.
Use cases: Zksync, Zcash, Loopring, ZKSwap, Linea, Polygon zkEVM.

What is an "Optimistic Rollup"?

An “Optimistic Rollup” is a scaling solution that improves the performance of an existing distributed registry infrastructure.
This approach is based on the creation of an additional layer (Layer 2) on top of this main infrastructure (Layer 1).
Layer 2 initially processes transactions faster and at lower cost than the main layer.
It assumes that transactions are valid by default, which is optimistic.
These transactions are then submitted to the main layer for periodic validation, with the possibility of contestation.
This method aims to optimize performance while maintaining a satisfactory level of security.

The Arbitrum ecosystem

The Arbitrum ecosystem is growing rapidly, with many DeFi (Decentralized Finance) applications and other projects exploiting Arbitrum’s Layer 2 technology to deliver an enhanced user experience on Ethereum.
Projects such as Uniswap, Aave and Sushi have already integrated Arbitrum, paving the way for wider adoption.
Technical data (a small table with the items listed below): TPS, nodes, consensus mechanism, programming languages used for smarts contracts, staking, security, governance, bridges that exist, compatible wallets. Technical data

What are Arbitrum tokens used for?

The ARB token is essential to the smooth operation of Arbitrum.
It is used to secure the network by encouraging validators to follow the rules and verify transactions.
In addition, it enables users to access the platform’s functionalities, including payment of transaction fees.
Advantages: Compatibility with
EVM (Ethereum Virtual Machine) Withdrawal period of around 1 day (under normal circumstances) No whitelisting, enabling more decentralized applications to be deployed quickly Non-custodial and compatible with Ethereum wallets
Disadvantages: Currently uses a centralized sequencer, which entails a risk of front-running Fewer composition possibilities with EVM compared with Optimism Complexity when switching between rollups and sidechains while guaranteeing high security

Tokenomics

Arbitrum’s native tokens are called ARBs.
The creation of ARBs is essentially linked to the role of validators and the consensus mechanism used in the network.
Arbitrum uses a consensus mechanism called “Rollup”, which is a form of Optimistic Rollup.
Validators in the network are responsible for transaction validation and network security.
They are incentivized to behave well through ARB rewards.
These ARB rewards are generated by users paying transaction fees when they interact with Arbitrum.
A portion of these fees is then distributed to validators in the form of rewards for their work.
This creates a strong incentive for validators to keep the network healthy and secure.
In addition to rewards for validators, Arbitrum has also set up a token creation mechanism for developers of dApps (decentralized applications) using the platform.
Developers can be rewarded in ARB for their contributions to the ecosystem, encouraging the creation of new applications and the adoption of the platform. Using ARB tokens ARB tokens have several uses within the Arbitrum ecosystem: Payment of Transaction Fees: Users must pay transaction fees in ARB to carry out operations on the network, such as sending transactions, creating smart contracts, etc. These fees are used as an incentive to validate transactions.
These fees are used to encourage validators to keep the network secure. Staking: Arbitrum also offers the option of staking its ARB tokens.
Users can lock their tokens in the network to contribute to the security and smooth running of the network.
In return, they receive ARB rewards. Governance: ARB tokens can be used to participate in network governance decisions.
Token holders can vote on proposed protocol updates, parameter changes and other important decisions. Developer incentives: Developers of decentralized applications (dApps) can be rewarded in ARB for their contributions to the ecosystem.
This can encourage innovation and the creation of new dApps on the platform. Distribution of ARB tokens The initial distribution of ARB tokens was carried out during a private and public token sale.
This raised funds for Arbitrum’s development and attracted the attention of the crypto community.
However, Arbitrum also plans to distribute ARB tokens in a decentralized way to encourage community participation.
A significant proportion of ARB tokens are intended to be distributed to network validators as rewards for their work.
This ensures that the key players responsible for network security and stability are incentivized to do the right thing. Implications for users and investors Arbitrum tokenomics has significant implications for users and investors: Users: Arbitrum users must ensure that they hold ARB tokens to pay transaction fees. What’s more, by staking their tokens, they can earn rewards, which can be an incentive to maintain their commitment to the platform.
ARB token holders can also participate in network governance. Developers: app developers can earn ARB tokens by contributing to the ecosystem, which can be a way of funding the development of their projects. Investors: for investors, Arbitrum tokenomics can represent an investment opportunity.
The growing demand for ARB tokens linked to the increasing adoption of the platform could potentially increase the value of tokens.

What are Arbitrum’s projects?

  • Expansion of Arbitrum One and Arbitrum Nova: improved speed and reduced costs for Ethereum transactions via rollup solutions.
  • Increased adoption of dApps: encouraging the use of Arbitrum by developers in the DeFi and blockchain gaming sectors (Decentraland).
  • Development of decentralized governance: setting up and strengthening the Arbitrum DAO for community management of decisions.
  • Enhanced interoperability: greater compatibility with other layer 2 solutions and blockchains for better interconnection.
  • Optimizing the user experience: continuous improvement of the infrastructure for better user experience and adoption.

How to buy Arbitrum?

  1. Go to your Coinhouse application and log in to your personal space or create an account.
  2. Go to the buy/sell section.
  3. Select the amount you wish to invest, and the currency of your choice (in this case ARB).
    Do you have USDC available?
    Exchange them for ARBs.
  4. Once your transaction has been validated, you ll find your ARBs in your crypto wallet.

Coinhouse's opinion

Coinhouse expresses a positive view of Arbitrum as a Layer 2 solution widely adopted in the ecosystem.
Arbitrum’s current valuation is seen as an attractive opportunity for portfolio diversification, offering the possibility of choosing an altcoin likely to generate significant gains over the next few years.
It’s important to note that this type of asset carries risks, not least because of the fierce competition in this field.
However, when it comes to selecting a token to include in one’s portfolio, Coinhouse recommends analyzing the Total Value Locked (TVL), and for the time being, Arbitrum is leading the way ahead of its competitors.

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