What is Arbitrum (ARB)?
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 7 min
In short
Arbitrum is a layer 2 network that executes Ethereum transactions off-chain in batches and posts the data back to Ethereum. Live since 2021, it uses the optimistic rollup approach. ARB is a governance token; gas is paid in ETH.
Key points
- A rollup: transactions are batched and their data is posted to Ethereum
- Results are assumed valid and challenged through fraud proofs if disputed
- That challenge window means withdrawals back to Ethereum take time
- Gas is paid in ETH; ARB is used for governance voting
Definition
A layer 2 network that executes transactions outside Ethereum and posts results and data back to it, borrowing Ethereum's security while lowering fees.
On Ethereum itself, every node executes every transaction, which caps throughput and raises fees. Rollups keep that structure but move execution outside it. Arbitrum accepts transactions, orders them, executes them in batches, and posts both the transaction data and the resulting state to Ethereum. Because the data lives on Ethereum, anyone can reconstruct the state and recover assets even if Arbitrum's operators disappear.
The name optimistic rollup comes from treating posted results as correct by default. Anyone who believes a result is wrong can submit a fraud proof within a challenge window and have Ethereum adjudicate. That is why withdrawing from Arbitrum to Ethereum normally involves roughly a week of waiting. Third-party bridges will front the funds for immediate access, at the cost of a fee and counterparty risk.
The 2022 Nitro upgrade rewrote the execution environment to align closely with Ethereum's own implementation, improving both compatibility and performance. Developers can port Solidity contracts with minimal change.
It hosts the full range of Ethereum applications: exchanges, lending, derivatives and games. ARB was distributed in 2023, moving protocol changes and treasury decisions to DAO votes.
Watch out for
- · The sequencer that orders transactions is currently run by a single operator; if it stops, new transactions cannot be accepted
- · An administrative body holds contract upgrade powers, so the network is not fully autonomous
- · Standard withdrawals must wait out the challenge period
Frequently asked questions
Do I pay gas in ARB?
No. Gas on Arbitrum is paid in ETH. ARB exists for governance voting.