Arbitrum: making transactions faster and more affordable

In our next look at networks supported by 1inch, we explore Arbitrum – a Layer 2 solution that boosts Ethereum's speed and lowers fees while maintaining its security and decentralization.

What is Arbitrum?

Arbitrum is a Layer 2 scaling solution designed to extend the capabilities of Ethereum by offering faster and more cost-efficient transactions. By using Optimistic Rollups, Arbitrum alleviates congestion on the Ethereum network, providing users with a smoother and cheaper experience.

Arbitrum stands out for its compatibility with Ethereum, allowing developers to deploy their existing smart contracts with minimal adjustments. For users, this means interacting with dApps without the burden of high fees or sluggish performance.

December 2024 marked a historic milestone as Arbitrum reached $20 bln in total value locked (TVL), becoming the first L2 to achieve this figure, as stated in their post on X. This surge demonstrates growing confidence in Arbitrum's scaling capabilities across DeFi ecosystems.

How does Arbitrum work? 

Arbitrum leverages Optimistic Rollups, which aggregate multiple transactions off-chain and submit them to Ethereum in batches. This process reduces Ethereum's computational load, lowering gas fees and accelerating transaction speeds. Transactions on Arbitrum are assumed valid by default, with a challenge period to dispute fraudulent activity.

The term "Arbitrum Rollups" reflects the platform's unique approach to scaling, blending the principles of Optimistic Rollups with Arbitrum's design optimizations. Arbitrum Rollup is a trustless and permissionless protocol, ensuring all chain data is posted on L 1. This guarantees that data availability relies directly on Ethereum's security properties, allowing any party to validate the chain and maintain its safety.

Benefits of Arbitrum

• Faster transactions – Enhanced speed for swaps, dApps and DeFi protocols.
• Lower gas fees – Significant cost savings compared to L1.
• Robust security –  Ethereum L1 security combined with improved scalability.

Key features of the Arbitrum ecosystem

• Arbitrum Rollups – The core technology enabling faster and cheaper transactions by batching them off-chain before submitting to Ethereum. Arbitrum Rollups are fully trustless, inheriting Ethereum's data availability guarantees.
• Arbitrum One – The flagship chain, serving as the primary L2 network for scaling Ethereum-based applications.
• Arbitrum Nitro Stack – A major upgrade to Arbitrum Rollups, Nitro enhances throughput, lowers fees and improves Ethereum compatibility by introducing advanced compression and faster fraud proofs.
• Arbitrum AnyTrust – The protocol offers lower fees by introducing a Data Availability Committee (DAC). AnyTrust achieves this by adding a trust assumption, where at least a subset of committee members must remain honest.
• Orbit Chains –  Layer 3 blockchains built on Arbitrum's technology. 
• Developer-friendly environment – Comprehensive support for Ethereum Virtual Machine (EVM), allowing developers to deploy dApps with ease.

Use cases on Arbitrum

• DeFi protocols – Popular platforms like Uniswap, SushiSwap and Aave leverage Arbitrum for lower fees and faster transactions, enhancing the overall DeFi experience.
• NFT marketplaces – Arbitrum's low fees and speed make it ideal for minting, trading and collecting NFTs without the high costs typically associated with Layer 1 networks.
• Gaming and metaverse – Blockchain games and virtual worlds on Arbitrum provide users with smoother, low-cost gameplay and in-game economies, fostering greater engagement.
• AI platforms –  AI-powered dApps on Arbitrum analyze network patterns to enhance performance, predict demand and build scalable, intelligent decentralized infrastructures tailored to user needs.
• DePIN (Decentralized Physical Infrastructure Networks) – Arbitrum supports DePIN projects that coordinate decentralized resources like storage and wireless networks, enabling participants to earn tokens for contributing real-world assets.
• Orbit chains – Projects that require their own blockchain environments can build Orbit chains on Arbitrum, gaining dedicated scalability while remaining connected to Ethereum’s ecosystem.

1inch on Arbitrum 

1inch has supported Arbitrum since 2021, providing users with access to cost-efficient, fast and seamless swaps. By leveraging Arbitrum’s scalability, 1inch users benefit from reduced fees and enhanced transaction speeds.

Why use 1inch on Arbitrum?

• Cost-efficient swaps – Lower fees for token swaps through the 1inch dApp.
• Faster transactions – Accelerated transaction finality for an improved DeFi experience.
• Expanding ecosystem – A continuously growing ecosystem of dApps and protocols integrated with Arbitrum.

 Stay tuned for more insights into the networks supported by 1inch!