What is Arbitrum (ARB)?

Deep Dive

1. Purpose & Technology

Arbitrum is an optimistic rollup, a type of Layer 2 (L2) blockchain. It works by executing transactions off the main Ethereum chain (off-chain) and then posting compressed proof of those transactions back to Ethereum. This design directly tackles Ethereum's scalability limitations, offering users significantly lower fees and higher throughput while inheriting Ethereum's robust security model. Its core tech stack, called Nitro, ensures full compatibility with the Ethereum Virtual Machine (EVM), meaning developers can easily port existing Ethereum applications to Arbitrum.

2. Tokenomics & Governance

The ARB token is a pure governance token. Its primary utility is to grant holders voting power within the Arbitrum DAO, a decentralized autonomous organization that governs the protocol's future. Holders can vote on proposals affecting treasury funds, protocol upgrades, and ecosystem grants. Notably, transaction fees (gas) on Arbitrum are paid in ETH, not ARB. This intentional separation ensures user fees remain stable and aren't subject to ARB's price volatility. The total supply is capped at 10 billion tokens, with the majority allocated to the community treasury and ecosystem.

3. Ecosystem & Differentiation

Arbitrum has grown into one of the largest L2 ecosystems by total value locked (TVL) and daily activity, hosting over 900 dApps across DeFi, gaming, and social finance. A key differentiator is Arbitrum Orbit, a framework that allows developers to permissionlessly launch their own Layer 3 chains built on Arbitrum's infrastructure. This positions Arbitrum not just as a single chain, but as a scalable platform for an entire network of application-specific blockchains.

Conclusion

Fundamentally, Arbitrum is Ethereum-scaling infrastructure governed by its community, where the ARB token serves as a key to collective decision-making rather than a transactional toll. How will its focus on developer tooling and custom chains influence the broader adoption of Layer 2 solutions?