Arbitrum’s & ARB: journey to decentralization

Arbitrum is a massive DAO created in 2021 and conceived even earlier. It offers a variety of Layer 2 products, which are mostly aimed at increasing the scalability of participating projects. It is based on the Ethereum blockchain, with which it has a close historic and conceptual relationship.

It has a strange history, which is also worth noting. It is unique in many small ways, which aren’t necessarily good. The solutions they offer are great and allow you to create a sublime system of rollups, smart contracts, subchains, and so forth for your individual project. They are also only just releasing their governance token, which is a milestone.

Arbitrum’s story

Arbitrum was launched in 2021, although some of its ideas are claimed to date to the pre-Ethereum days of blockchain technology.

It’s been in development for a long time, and it’s not even fully out yet. Although operational and thriving since 2021, it was fairly centralized at this point. The DAO has been in sole possession of Offchain Labs, a blockchain tech company. Coincidentally, that wasn’t even a public governance process.

The network is currently in the first stages of decentralization, which means they’ll basically release a number of ARB tokens, distributing them among the active participants. This will create a community-driven governance mechanism, where people will be able to vote on the new features and direction for Arbitrum.

There isn’t a strict timeframe, but there’s talk that full decentralization is already underway.

Main components

There are two smaller ecosystems in the Arbitrum network, meant for different products. They have their differences, which enable them to more efficiently focus on the tasks they are given. There are currently two.

Arbitrum One is the original chain, created mainly for their rollup solution. It’s supposed to be more effective with plain financial tasks and decentralized finance, which include rollups. It is what you’d call the mainnet for the Arbitrum infrastructure and what they started with.

Arbitrum Nova was released later when they decided to expand and include other products in their portfolio. This additional network was designed originally for their app-enhancing product, AnyTrust. It has various features that favor the development and modification of apps.

Both work as frameworks for the L2 solutions built atop the Ethereum network. They are not part of an independent blockchain. Everything you do on these solutions is traced back to some process or task on Ethereum. Their job is to make your life easier while working with Ethereum. So, what are these solutions?

Arbitrum solutions

The Arbitrum Layer 2 solutions are a number of tools that enhance the usual performance of the baseline Ethereum network, which is the Layer 1. There are four main products on Arbitrum.

Arbitrum rollup

Rollup is Arbitrum’s flagship product, an optimistic rollup solution meant to reduce the workload when it comes to processing transactions. It works by bundling a large number of transactions together, processing them in bulk, and releasing them back to Ethereum without compromising the security.

The optimistic part comes from the way data reenters Ethereum — it’s not executed again, but accepted at face value. It makes the entire procedure less costly by not prioritizing individual transactions. This massively reduces the fees, which also means you get to process more data at a time.

AnyTrust

AnyTrust is the solution built in the Arbitrum Nova framework. Curiously, it can also host rollups, as well as anything else, really.

It’s basically a chain that operates with a different consensus mechanism. It takes the original proof-of-stake protocol from Ethereum but makes sure that all participants besides the two are proven to be honest. On Ethereum proper, the threshold is 2/3 of the consensus committee.

In layman's terms, much of the workload in this relationship goes to the participants, which reduces the costs and speed of transactions. As such, you can count on a very low-cost experience for your decentralized apps. It also ensures higher security because more people are expected to prove their worth.

Orbit

Orbit Chains are self-managed varieties of AnyTrust and Rollup chains. You can basically create your own small ecosystems that better fit your needs. They are customizable, and there are many advantages to it. However, you’ll also have to set up many functions yourself, which is time-consuming. Regular chains would often do.

Stylus

Stylus is a simple way of writing smart contracts in various languages. Rust and Solidity are there, and the result is always EVM-compatible smart contracts that can be used in a variety of environments. It’s just a more flexible, simple way to go about writing smart contracts on the basis of Ethereum.

ARB token

ARB token is the governance token used on Arbitrum. The consensus mechanisms are in Ether, but ARB can be staked to gain voting powers on Arbitrum proper. These voting powers are put in use when a vote comes up on some decision regarding the future of the project.

There is a unique way of making a vote. For instance, you can appoint a delegate in your stead or basically give your voting powers to someone else if you want to support their agenda. In some cases, the vote can be accelerated by the Security Council when a quick result is needed. This sets apart Arbitrum as a more centralized platform even when it’s going decentralized. They might get rid of this feature and probably should.

ARB is already listed on many markets, but its use is currently limited. It’s been released in waves, and the main wave hasn’t arrived yet. The token was first released in March, and it’s been mostly in decline since.