Blockchain technology has brought several benefits but also some significant challenges. One of these issues is scalability or the ability of the network to handle the increasing amount of data, traffic, or users without compromising performance. Blockchain layer one projects, like Ethereum (ETH), are limited in their ability to process high transaction volumes and this affects confirmation times and transaction fees. A layer 2 solution like Arbitrum addresses this.
Arbitrum, a layer 2 solution on the Ethereum network, aims to provide higher speeds at a lower cost while maintaining security. Its recent token airdrop has excited the crypto community. Unfortunately, the community’s interest has been taken advantage of by bad actors.
What Makes Arbitrum Better?
According to Arbitrum’s developer site, the project offers several benefits.
- Trustless security: security rooted in Ethereum, with any one party able to ensure correct Layer 2 results
- Compatibility with Ethereum: able to run unmodified EVM contracts and unmodified Ethereum transactions
- Scalability: moving contracts’ computation and storage off of the main Ethereum chain, allowing much higher throughput
- Minimum cost: designed and engineered to minimize the L1 gas footprint of the system, minimizing per-transaction cost.
To make things clearer they also provided an image on how it works.
According to their description, Arbitrum will be as easy as using an email. At the most basic level, if somebody wants Arbitrum to process a transaction, then all that is needed is to enter the transaction into the chain’s inbox. The system will see it and execute and produce the desired output. A transaction receipt will also be provided.
Faster Through Optimistic Rollup
To make things faster, Arbitrum is also using optimistic rollup. It is a layer-2 scaling solution that aims to improve the scalability of blockchain networks like Ethereum. It works by processing transactions off-chain and then verifying them on-chain. This simply means any transaction is taken off the Ethereum network to be processed and once done, it will be taken back into the ETH network to be validated.
In optimistic rollup, a separate network is created alongside the main blockchain network. The transactions are processed and validated by a group of validators outside the Ethereum network. Then it will return to the main ETH network for verification or validation.
Will Arbitrum be the top Ethereum Layer 2?
Arbitrum is not the first layer two to be built on top of the Ethereum blockchain and probably won’t be the last. Its recent airdrop has stirred the curiosity of the crypto community whose members expect to earn profit from their free tokens. This led to massive price volatility which saw an all-time high price of $8.67 on March 23, 2023. Its all-time low of $1.11 was also seen on the same date.
It is still too early if Arbitrum will win the top spot for Ethereum Layer 2 projects, but it looks good on paper. The promise of scalability, speed, and cheap gas fees is something users are always looking for.
Featured image from Pixabay
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