Over the last few weeks, the Arbitrum (ARB) crypto platform has been among the most talked about topics in the world of crypto. Our social media sentiment tool, PUMP, has also sensed a massive uptick in social media signals related to Arbitrum. The key reason for this sudden interest was the introduction of the ARB coin, Arbitrum’s native cryptocurrency, in late March. One of the largest scalability solutions for Ethereum, Arbitrum operated without a coin of its own for years. Now, the new ARB coin and the generous airdrops accompanying its launch have led to a significant spike in interest in the platform.
What is Arbitrum and How Does It Work?
Arbitrum is a layer 2 scaling solution for Ethereum, designed to address some of the scalability and cost issues faced by the Ethereum network. The platform uses a novel approach to scaling called Optimistic Rollup, which allows for fast, secure, and low-cost transactions on the Ethereum network.
Optimistic Rollup is a scaling technique that allows for off-chain processing of transactions while ensuring the security and integrity of the Ethereum blockchain. With Arbitrum, users can enjoy fast, low-cost transactions that are just as secure as on-chain transfers and operations.
Arbitrum works by creating an off-chain network that is connected to the Ethereum mainnet. When a user wants to make a transaction on the Arbitrum network, they first deposit their assets into a smart contract on the Ethereum mainnet. The smart contract locks up the assets as collateral and creates a corresponding balance on the Arbitrum network.
Once the assets are locked up, the user can then make transactions on the Arbitrum network, which are processed off-chain. The transactions are validated by a group of validators who are incentivized to act honestly and ensure the security and integrity of the network.
When a user wants to withdraw their assets from the Arbitrum network, they can do so by submitting a withdrawal request to the Ethereum mainnet smart contract. The smart contract then releases the locked-up assets, allowing the user to withdraw them from the network.
What Are the Benefits of Using Arbitrum?
There are several benefits to using Arbitrum as a scaling solution for Ethereum, including:
Fast transaction speeds: With off-chain processing, Arbitrum is able to achieve faster transaction speeds than the Ethereum mainnet. Arbitrum was introduced in 2021, at a time when Ethereum featured very low transaction speeds due to being based on the Proof-of-Work transaction validation model. In September last year, Ethereum moved to the much faster Proof-of-Stake version. Some in the industry opined that the critical upgrade to Ethereum would render many scaling services, including Arbitrum, redundant. In reality, Ethereum’s speed gains only made transaction processing on Arbitrum even more efficient and scalable.
Just before Ethereum’s upgrade, in August, Arbitrum launched its new layer 2 processing platform, Arbitrum Nova, which also added to the technical efficiency improvements.
Low transaction fees: Ethereum’s transaction fees have been among the highest in the industry for years. The last year’s upgrade to the Proof-of-Stake validation model hasn’t solved the problem. Arbitrum offers a much more affordable platform for crypto transfers. As of the time of writing, Arbitrum’s average transaction fee is around 10 cents, while transacting directly via Ethereum would cost around $2 per transfer.
Scalability: Arbitrum is able to achieve high levels of scalability by processing transactions off-chain. This allows for a much larger number of transactions to be processed simultaneously, making it possible to handle large-scale applications and use cases.
ARB – Arbitrum’s Native Cryptocurrency
Until March 2023, Arbitrum operated without its own cryptocurrency. Last month, the platform’s much anticipated ARB coin was launched. Due to Arbitrum’s popularity as one of the leading scalability solutions for Ethereum, the ARB coin has attracted significant interest in the crypto community.
ARB was launched with a capped supply of 10 billion coins. 12.75% of this supply was airdropped to eligible users on 23 May, the day of the coin’s launch, in one of the most publicised airdrops in the history of the crypto market.
ARB’s main function on the Arbitrum platform is governance. Holders of the coin can participate in voting on the direction and all changes to Arbitrum’s rules and operational mechanism.
ARB was launched at a price of approximately $5 but immediately dropped to $1.20 on its first day on the market. The coin is still finding its feet in the market and currently trades at $1.34. Though it is still early days for ARB, some crypto investors regard it as a potential HODL coin due to Arbitrum’s significant footprint and confident position in its niche. Despite being on the market for only a month, ARB is already the second-largest layer 2 crypto by market cap, behind Polygon (MATIC). For crypto investors looking for HODL coins of significant standing, ARB is the newest option to consider.
What is Arbitrum and How Does It Work?
Arbitrum is a layer 2 scaling solution for Ethereum, designed to address some of the scalability and cost issues faced by the Ethereum network. The platform uses a novel approach to scaling called Optimistic Rollup, which allows for fast, secure, and low-cost transactions on the Ethereum network.
Optimistic Rollup is a scaling technique that allows for off-chain processing of transactions while ensuring the security and integrity of the Ethereum blockchain. With Arbitrum, users can enjoy fast, low-cost transactions that are just as secure as on-chain transfers and operations.
Arbitrum works by creating an off-chain network that is connected to the Ethereum mainnet. When a user wants to make a transaction on the Arbitrum network, they first deposit their assets into a smart contract on the Ethereum mainnet. The smart contract locks up the assets as collateral and creates a corresponding balance on the Arbitrum network.
Once the assets are locked up, the user can then make transactions on the Arbitrum network, which are processed off-chain. The transactions are validated by a group of validators who are incentivized to act honestly and ensure the security and integrity of the network.
When a user wants to withdraw their assets from the Arbitrum network, they can do so by submitting a withdrawal request to the Ethereum mainnet smart contract. The smart contract then releases the locked-up assets, allowing the user to withdraw them from the network.
What Are the Benefits of Using Arbitrum?
There are several benefits to using Arbitrum as a scaling solution for Ethereum, including:
Fast transaction speeds: With off-chain processing, Arbitrum is able to achieve faster transaction speeds than the Ethereum mainnet. Arbitrum was introduced in 2021, at a time when Ethereum featured very low transaction speeds due to being based on the Proof-of-Work transaction validation model. In September last year, Ethereum moved to the much faster Proof-of-Stake version. Some in the industry opined that the critical upgrade to Ethereum would render many scaling services, including Arbitrum, redundant. In reality, Ethereum’s speed gains only made transaction processing on Arbitrum even more efficient and scalable.
Just before Ethereum’s upgrade, in August, Arbitrum launched its new layer 2 processing platform, Arbitrum Nova, which also added to the technical efficiency improvements.
Low transaction fees: Ethereum’s transaction fees have been among the highest in the industry for years. The last year’s upgrade to the Proof-of-Stake validation model hasn’t solved the problem. Arbitrum offers a much more affordable platform for crypto transfers. As of the time of writing, Arbitrum’s average transaction fee is around 10 cents, while transacting directly via Ethereum would cost around $2 per transfer.
Scalability: Arbitrum is able to achieve high levels of scalability by processing transactions off-chain. This allows for a much larger number of transactions to be processed simultaneously, making it possible to handle large-scale applications and use cases.
ARB – Arbitrum’s Native Cryptocurrency
Until March 2023, Arbitrum operated without its own cryptocurrency. Last month, the platform’s much anticipated ARB coin was launched. Due to Arbitrum’s popularity as one of the leading scalability solutions for Ethereum, the ARB coin has attracted significant interest in the crypto community.
ARB was launched with a capped supply of 10 billion coins. 12.75% of this supply was airdropped to eligible users on 23 May, the day of the coin’s launch, in one of the most publicised airdrops in the history of the crypto market.
ARB’s main function on the Arbitrum platform is governance. Holders of the coin can participate in voting on the direction and all changes to Arbitrum’s rules and operational mechanism.
ARB was launched at a price of approximately $5 but immediately dropped to $1.20 on its first day on the market. The coin is still finding its feet in the market and currently trades at $1.34. Though it is still early days for ARB, some crypto investors regard it as a potential HODL coin due to Arbitrum’s significant footprint and confident position in its niche. Despite being on the market for only a month, ARB is already the second-largest layer 2 crypto by market cap, behind Polygon (MATIC). For crypto investors looking for HODL coins of significant standing, ARB is the newest option to consider.