Getting started with Ethereum layer2 leader Arbitrum

In the second half of last year, the entire crypto market was in deep bear trouble, but Arbitrum ecological representative projects GMX and Treasure DAO still grew against the trend. Since entering 2023, with the overall recovery of the market, the Arbitrum ecosystem has become more comprehensive flowering.

Especially after Arbitrum announced the issuance of the governance token ARB, until now, Arbitrum is still a hot topic of discussion in major communities.

But how much do you know about Arbitrum? Why does Arbitrum issue Token ARB? What's the use? Today I will explain to you the vernacular blockchain.

01
What is Arbitrum?

Arbitrum is an Ethereum Layer2 extension solution based on Optimistic Rollup technology. Offchain Labs, a team composed of well-known blockchain researchers and software engineers, launched in 2021 Created, aims to solve the congestion and high gas fee problems on Ethereum.

It can also be understood that Arbitrum is the auxiliary chain of Ethereum. The operating principle is simply that Arbitrum packages many transactions together, settles them on the Arbitrum chain first, and then submits the transaction data to the Ethereum main chain.

Among all Layer 2, Arbitrum is the first to launch the mainnet in Layer 2, occupying a certain first-mover advantage. At the same time, Arbitrum is nearly 100% compatible with Ethereum EVM, allowing applications on the Ethereum network to be seamlessly migrated to Layer 2. When the mainnet was launched, 74 projects led by Uniswap V3 were deployed on it.

As shown in the figure, Arbitrum’s TVL accounts for nearly 66% of the total volume of Layer 2 so far, and it can be said to be the well-deserved leader in Layer 2.

The current TVL market share ranking of the top ten Layer2 projects, source: L2beat

In the Layer2 track, competition There are many players, but compared with competing products, in addition to the first-mover advantage, Arbitrum has significant advantages:

From the data point of view, because it has EVM equivalence and development threshold The rapid maturation of low-volume and large-scale applications has formed an effective ecological barrier. Arbitrum's number of transactions and active addresses far exceeds its opponents, and has formed a trend, with TVL rising all the way.

In addition, in terms of user experience, because Arbitrum is EVM compatible, it can be used directly on the Ethereum Little Fox wallet MetaMask, which is more attractive to users than many other incompatible competitors.

With its sudden rise in less than two years, Arbitrum has become one of the most popular layer 2 blockchains on Ethereum. It must be said that its strength cannot be underestimated.

02
What is ARB

ARB is the native Token of the Arbitrum network. The standard used is Ethereum ERC-20. The governance and incentive tokens of the Arbitrum network are mainly used to reward verification nodes, participate in network governance, etc. Specifically:

· Reward verification nodes: Participate in the Arbitrum network The verification nodes will receive ARB rewards in return for their contributions. That is, validators need to pledge a certain amount of ARB on the Arbitrum network as an incentive to maintain network security and reliability. If a validator violates network rules or malfunctions, they will lose a portion of their stake to encourage them to comply with network rules and keep nodes running stably.

· Participate in network governance: ARB holders can participate in the governance of the Arbitrum network ecosystem, because Arbitrum was also established when the airdrop was conducted on March 23 DAO (Decentralized Autonomous Organization), DAO members holding ARB will be able to participate in the governance of the Arbitrum chain, such as voting on some important protocol changes and proposals, or providing certain rewards to users to encourage users to participate in the construction of the ecosystem And development.

However, it should be noted that ARB cannot be used as transaction gas, that is, ARB is just a governance token and is not used to pay any fees on the Arbitrum chain. Currently, the gas fee paid by users interactively on the Arbitrum chain is still ETH.

Generally speaking, apart from its function of not being responsible for gas fees, ARB is of great significance to the operation and development of the Arbitrum network and can effectively promote the security, stability and development of the Arbitrum ecosystem.

03
Summary

To sum up, Arbitrum’s advantages have attracted many DeFi native projects, brought a stable user base to the Arbitrum ecosystem, and created a highly inclusive environment for nurturing innovative DeFi applications.

The future development of Arbitrum at the DeFi level is worth looking forward to.

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