What is Arbitrum (ARB)?

Deep Dive

1. Purpose & Value Proposition

Arbitrum addresses Ethereum’s scalability limitations by bundling transactions off-chain (optimistic rollups) and settling proofs on Ethereum. This reduces fees by ~90% and increases throughput without compromising security (CoinMarketCap). It’s designed for developers to deploy Ethereum-compatible dApps seamlessly, making it a hub for DeFi, gaming, and real-world asset (RWA) tokenization.

2. Technology & Architecture

• Optimistic Rollups: Batches transactions off-chain, assuming validity unless challenged.
• Nitro Upgrade: Enhances speed and compatibility with Ethereum’s EVM.
• Stylus: Allows coding in Rust/C++ alongside Solidity, broadening developer access (Arbitrum DAO Docs).
• Orbit: A permissionless framework for launching L3 chains, enabling custom scaling solutions.

3. Tokenomics & Governance

• ARB Token: Used for governance via the Arbitrum DAO, which controls protocol upgrades, funding, and Security Council elections.
• Fixed Supply: Initial 10B tokens, with a 2% annual inflation cap starting March 2026.
• Voting Mechanics: Proposals require 5-3% quorum thresholds, with delegated voting to streamline participation.

Conclusion

Arbitrum is Ethereum’s leading Layer-2, balancing scalability with decentralization through its rollup architecture and DAO-driven governance. Its expanding ecosystem—from DeFi protocols like GMX to Orbit’s customizable chains—positions it as a foundational layer for Web3 innovation. Can Arbitrum’s multi-chain approach outpace competitors as Ethereum scaling demand grows?