What is Arbitrum?

Arbitrum (ARB) is a decentralized, open-source Layer 2 scaling solution designed to improve the speed and efficiency of transactions on the Ethereum network. By leveraging Optimistic Rollups, Arbitrum enhances Ethereum’s scalability while reducing transaction costs and maintaining security.

Key features of Arbitrum:

• Optimistic Rollups
  Arbitrum utilizes Optimistic Rollups, a Layer 2 technology that processes transactions off-chain before submitting them to Ethereum in batches. This significantly reduces network congestion and lowers gas fees while preserving Ethereum’s decentralization and security.
  
  
• Lower Gas Fees
  One of the primary advantages of Arbitrum is its ability to reduce gas fees by bundling multiple transactions into a single submission to Ethereum. This makes decentralized applications (dApps) more accessible and cost-efficient for users.
  
  
• ARB Token
  ARB is the native cryptocurrency of the Arbitrum network. It is used for governance, allowing token holders to vote on protocol upgrades and other network decisions.
  
  
• Ethereum Compatibility
  Arbitrum is fully compatible with Ethereum, enabling developers to deploy Ethereum-based smart contracts with minimal changes. This makes it easy for existing dApps to migrate to Arbitrum and benefit from lower costs and higher efficiency.

The difference between Arbitrum and Ethereum
While Ethereum serves as the foundational Layer 1 blockchain, Arbitrum functions as a Layer 2 scaling solution to enhance Ethereum’s performance. By handling transactions off-chain and settling them in batches, Arbitrum allows for faster processing times and lower costs, making it a key solution for improving Ethereum’s usability.