What is Arbitrum (ARB)?

Deep Dive

1. Purpose & Value Proposition

Arbitrum exists to solve Ethereum's scalability trilemma–balancing security, decentralization, and scalability. Its core value proposition is enabling faster and much cheaper transactions for decentralized applications (dApps) while leveraging Ethereum's robust security. By moving computation and storage off-chain, it allows users to interact with popular DeFi, NFT, and gaming projects without prohibitive gas fees, making the Ethereum ecosystem accessible to a broader audience.

2. Technology & Architecture

Arbitrum operates as an Optimistic Rollup. This technology works by executing transactions on its own chain (Layer 2), then posting compressed transaction data back to Ethereum (Layer 1) for final settlement. It assumes transactions are valid ("optimistic") but includes a challenge period where anyone can submit fraud proofs if they detect invalid activity. This architecture provides significant scalability improvements while ensuring the security guarantees of Ethereum's base layer.

3. Tokenomics & Governance

The ARB token is fundamentally a governance instrument. With a total supply of 10 billion tokens, its primary utility is voting power within the Arbitrum DAO (Decentralized Autonomous Organization). Holders can delegate their votes to participate in decisions on protocol upgrades, ecosystem grant funding from the treasury, and even elect a Security Council. Notably, gas fees on the network are paid in ETH, intentionally separating the token's value from network usage volatility.

Conclusion

At its core, Arbitrum is a scalable execution layer for Ethereum, governed by its community through the ARB token. How will its focus on pure governance shape its evolution compared to other Layer-2 networks?