What is Arbitrum (ARB)?

Deep Dive

1. Purpose & Value Proposition

Arbitrum addresses Ethereum’s scalability bottlenecks by moving computation off-chain via optimistic rollups. This reduces gas fees by up to 90% compared to Ethereum mainnet while maintaining compatibility with Ethereum Virtual Machine (EVM) smart contracts. Its core mission is to scale Ethereum without compromising security, making decentralized applications (dApps) accessible for mainstream use (Arbitrum DAO docs).

2. Technology & Architecture

Arbitrum uses optimistic rollups – batches transactions off-chain and submits compressed proofs to Ethereum. Key innovations include:
- Nitro stack: Enhances throughput and lowers latency.
- ArbOS: Custom operating system for rollup execution (e.g., ArbOS 40 introduced native account abstraction).
- Fraud proofs: Validators can challenge incorrect transactions during a 7-day window.

3. Tokenomics & Governance

ARB is a governance token (not a gas token) with a fixed supply of 10 billion. Holders govern:
- Protocol upgrades (via Core Governor with 13-day delays).
- Treasury funds (42.78% of supply) for grants and ecosystem growth.
- Security Council elections (12-member rotating group for emergency actions).

Conclusion

Arbitrum combines Ethereum’s security with scalable infrastructure, governed by ARB holders through transparent on-chain votes. Its success hinges on balancing technical innovation with community-driven decisions. How will decentralized governance adapt as Arbitrum expands into institutional use cases like Robinhood’s tokenized stocks?