Arbitrum

Arbitrum is the leading Ethereum layer-2 scaling solution, built by Offchain Labs and launched in August 2021. It uses optimistic rollup technology to process transactions off Ethereum's mainnet while inheriting its security guarantees. The result: transactions cost a fraction of what they do on Ethereum L1, with throughput measured in thousands of transactions per second.

The ARB token, launched through an airdrop in March 2023, serves as the governance token for the Arbitrum DAO. Token holders vote on protocol upgrades, treasury allocations, and ecosystem grants. The Arbitrum DAO treasury controls a significant fund dedicated to growing the ecosystem, making it one of the best-funded DAOs in crypto.

Arbitrum comes in two flavors. Arbitrum One is the main chain where most DeFi activity happens. Arbitrum Nova is an AnyTrust chain optimized for high-volume, low-cost applications like gaming and social media. Both chains settle their transaction data on Ethereum, meaning they inherit Ethereum's security while offering dramatically better performance and lower costs.

The Arbitrum ecosystem has become the largest L2 by total value locked, hosting major DeFi protocols like GMX, Camelot, Radiant Capital, and Pendle. Its EVM compatibility means Ethereum developers can deploy their existing smart contracts on Arbitrum with minimal changes. Arbitrum Orbit lets anyone launch their own L3 chain that settles on Arbitrum, creating a layered scaling architecture. The combination of genuine Ethereum security, low costs, and a thriving DeFi ecosystem has made Arbitrum the dominant force in the L2 space.