Arbitrum review: an optimistic rollup for Ethereum

Arbitrum is a layer 2 network for Ethereum developed by Offchain Labs. Its main network launched in 2021. It runs Ethereum-compatible smart contracts at lower cost by moving execution off the main chain.

How it works

Arbitrum is an optimistic rollup. Transactions are executed on Arbitrum, and compressed transaction data is posted to Ethereum. The system assumes the results are correct ("optimistic"), but anyone watching can challenge an incorrect result during a challenge period with a fraud proof. If a challenge succeeds, the wrong result is rejected.

What users notice

• Lower fees than on Ethereum's main chain for most operations.
• Familiar tools: Ethereum wallets and contracts work with little or no change.
• Withdrawal delay: moving assets back to Ethereum through the native bridge takes about a week because of the challenge period; third-party bridges can be faster but add their own risk.

The ARB token

ARB was introduced in 2023 as a governance token. Holders vote, directly or by delegation, on proposals for the protocol and its treasury through the Arbitrum DAO. Network fees on Arbitrum are paid in ETH, not ARB.

Risks to keep in mind

• Rollups are still evolving; some components, such as the sequencer that orders transactions, have been operated centrally.
• Bridges and smart contracts can have bugs.
• Governance decisions can change the protocol.

See the market on the ARB coin page and learn the concept in Layer 1 and layer 2.

This review describes the project's design and is not investment advice. Cryptocurrency prices can be highly volatile.