Arbitrum
Arbitrum is an Ethereum layer-two (L2) scaling solution. It uses optimistic rollups to achieve its goal of improving speed, scalability and cost-efficiency on Ethereum.
ARB is the governance token for the Arbitrum layer 2 blockchain.
Background
Created by Offchain Labs in 2021 by founders Ed Felten, Steven Goldfeder and Harry Kalodner as a scaling solution for Ethereum. The developers behind Arbitrum announced the shift to a decentralized autonomous organization (DAO) structure — the Arbitrum DAO. ARB holders can vote on proposals that affect the features, protocol upgrades, funds allocation and election of a Security Council.
Launch
The token generation event was on March 23, 2023.
How does it work?
Arbitrum derives its security from the Ethereum network, which provides consensus and finality for Arbitrum transactions. In other words, Ethereum guarantees the validity of the rollup’s off-chain computation and data availability behind the computationThe use of optimistic rollups means Arbitrum executes transactions on the rollup outside of Ethereum, and bundle multiple transactions in a batch before submitting it to mainnet. As the term “optimistic” suggests, the off-chain transactions are assumed to be valid and no proof-of-validity is submitted. In case of a dispute, there is a time period after the rollup is submitted where anyone can challenge the transaction by submitting a fraud proof.
The utility of the ARB token is to enable decentralized governance of the Arbitrum ecosystem. ARB holders govern the Arbitrum network by voting on governance proposals for the Arbitrum One and Arbitrum Nova chains. They can also influence how funds of the DAO treasury will be used. Governance proposals can include upgrades to the chain, changes to network parameters, allocation of grants and bounties, integration of new features and more.
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