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Ethereum\u2019s thorny scalability problem lights a fire under blockchain entrepreneurs who want to make change happen faster. That\u2019s why at least until\u00a0full sharding<\/a>\u00a0is in place, we\u2019ll continue to witness burgeoning layer 2 solutions. One of the strongest players is\u00a0Arbitrum<\/a>.\u00a0<\/p>\n At the time of writing, Arbitrum is the number of layer 2 solution in terms of the\u00a0total value locked<\/a>\u00a0in its protocol, which is approx. $2.47 B.\u00a0<\/p>\n Its adoption in the NFT space is also growing largely due to its low minting and transaction costs. As per an analysis by data intelligence company\u00a0Nansen<\/a>\u00a0in April 2022, the Arbitrum NFT marketplace Treasure<\/a>\u00a0plays a vital role in this, thanks to its free minting model. Nansen further notes that of the 19.3k unique wallets that conducted NFT-related transactions on Arbitrum, a volume of 73.5k ETH came from the Treasure marketplace, accounting for 96.8% of total Arbitrum transactions.<\/p>\n Thus, it\u2019s no surprise that the layer 2 solution,\u00a0developed by\u00a0<\/em>Offchain Labs<\/em><\/a>, was recently added to\u00a0OpenSea\u2019s list of compatible blockchains<\/a>.\u00a0\u00a0<\/p>\n Let\u2019s look at how the underlying technology helps achieve these outcomes.\u00a0<\/p>\n Arbitrum uses a technology called optimistic rollups to speed up transactions. Data from hundreds of transactions collected on the Arbitrum rollup chain is transmitted to the Ethereum mainnet in batches. This not only increases network throughput but also reduces costs.\u00a0<\/p>\n This optimistic rollup system is known as Arbitrum Nitro. It\u2019s basically a widely used fork, known as\u00a0Geth<\/a>, that helps to convert Ethereum into a trustless layer 2. In other words, Arbitrum Nitro\u2019s code is very similar to that of Ethereum.\u00a0<\/p>\n In an optimistic rollup, all transaction batches are assumed to be legitimate unless a network participant reports fraud. Therefore, there\u2019s a dispute period between the time that transactions are processed in the rollup and the time they\u2019re accepted on the mainnet.\u00a0<\/p>\n In Arbitrum, this period is one week during which validators and network participants are incentivized to monitor and report fraud.\u00a0<\/p>\n The Ethereum Virtual Machine (EVM) is a virtual computation engine that corresponds to the part of Ethereum that executes smart contracts. It compiles different types of smart contract codes into a readable format called Bytecode. This format allows other chains to write contracts that Ethereum nodes can read.\u00a0\u00a0<\/p>\n The rollup system of Arbitrum is compatible with EVM at the bytecode level. In this regard, it is particularly advantageous for developers because they can use common languages like Solidity and Vyper to enable compilation.\u00a0<\/p>\n Arbitrum\u2019s rollup chain mentioned so far is called Arbitrum One. It\u2019s fully decentralized, trustless, and permissionless. Here, since all data is submitted to the layer 1 blockchain (Ethereum), anyone can join the network as a validator. Arbitrum One is used by many blockchain companies, including Ox, 1Inch, and Aave. You can find the full\u00a0list here<\/a>.\u00a0<\/p>\n On the other hand, developing dApps using this approach is costly. Some applications may not require this level of decentralization and security. Hence Arbitrum introduced another solution:\u00a0Nova<\/a>.\u00a0<\/p>\n Arbitrum Nova uses\u00a0AnyTrust<\/a>\u00a0protocol which is also built with Nitro. However, instead of submitting all batches to the layer 1 chain,\u00a0which accounts for the highest costs due to Ethereum\u2019s gas fees<\/em>, it manages the data off-chain. If every transaction is genuine and there\u2019s no fraud, this system charges the users significantly low fees. In the event of scams, AnyTrust falls back on Arbitrum One and deploys rollups.\u00a0<\/p>\n There are also many applications that use Arbitrum Nova. They range from Coinbase Wallet to FTX. You can view the complete\u00a0list here<\/a>.\u00a0<\/p>\n<\/div>\nArbitrum-based NFTs<\/h2>\n
Arbitrum Nitro: an optimistic rollup system<\/h2>\n
How does dispute resolution work?<\/h2>\n
Arbitrum has high EVM compatibility.<\/h2>\n
Arbitrum One vs. Arbitrum Nova<\/h2>\n