What is Arbitrum?

Paul Sazan
| Editor:
November 6, 2023
5 min read

As a leading player in the blockchain industry, the Ethereum blockchain is no stranger to challenges, including high gas fees and network congestion. However, with the introduction of layer-2 scaling solutions like Arbitrum, this may soon change. Since launching its mainnet last year, Arbitrum has been delivering a fast, cheap, and scalable network for investors, addressing important issues that still linger within the Ethereum ecosystem. As a result, developers have quickly embraced the platform and it is now ranked as the seventh biggest blockchain by total value locked. With speculation about an upcoming ARBI cryptocurrency release, let's explore the Arbitrum ecosystem and the impact it's having on the industry.

What is Arbitrum?

Arbitrum is a layer 2 solution for the Ethereum blockchain developed by a New York-based company called Offchain Labs. Layer 2 solutions are protocols that run on top of a Layer 1 blockchain (like Bitcoin or Ethereum) to improve scalability, privacy, and other characteristics of the blockchain.

Ed Felten started researching roll-up technology in 2014 and continued with Steven Goldfeder and Harry Kalodner at Princeton University after his time as President Obama's Deputy CTO. They invented Arbitrum to scale Ethereum securely after 8 years of research and development.

Arbitrum founders: Ed Felten, Steven Doldfeder, and Harry Kalodner.

Arbitrum founders. Source: Offchain Labs website.

Arbitrum network is a promising solution for addressing the scalability limitations of the Ethereum blockchain. Its layer-2 scaling functionality allows for faster and cheaper transactions by reducing congestion on the main network. Furthermore, the platform leverages the security of the Ethereum mainnet to ensure the validity of transactions while still providing a separate layer for smart contracts to run.

The success of Arbitrum’s mainnet launch has led to its adoption by several developers for hosting their dApps. This is a testament to the platform’s efficiency and potential for scalability as more users join the network.

Additionally, Arbitrum compensates nodes for validating smart contracts, providing incentives for maintaining the network’s functionality and security.

How does Arbitrum ecosystem work?

Arbitrum One ecosystem is a layer-2 mainnet used for running smart contracts that will later be validated by the Ethereum network, which is layer-1 of the Ethereum blockchain.

Transaction fees in the Arbitrum ecosystem are paid in ETH. The dev team expects that eventually, the fees for each transaction will be considerably lower (up to 50 times lower, in fact) than the layer-1 network. This means that it's going to be about 50 times cheaper to run smart contracts on Arbitrum, rather than on Ethereum mainnet, which incentivizes further decentralization.

In May 2021, Arbitrum launched its Beta version, which attracted the attention of developers in the decentralized finance (DeFi) space, who are always looking to reduce transaction fees and improve user experience on the Ethereum network.

As a result, there are now various new dApps available in the ecosystem, including the GMX decentralized exchange and the DeFiEdge liquidity management platform.

Arbitrum protocol has also gone through several upgrades, with the latest being the Arbitrum Nitro update launched in August 2022. It focuses on improving throughput and interoperability.

Speaking of throughput, Ethereum only processes 14 transactions per second (at least until ETH 2.0 is rolled out completely). Compare that to Arbitrum, which can process up to 40,000 transactions per second. Additionally, while Ethereum transaction fees can cost up to several dollars, the fees on Arbitrum transactions are relatively low, costing only a few cents per transaction.

Apart from this, Arbitrum also allows seamless integration with the Ethereum Virtual Machine (EVM) to facilitate the easy development of decentralized applications.

Arbitrum uses optimistic roll-ups to process Ethereum transactions. These transactions are verified on a side chain before being added to the main Ethereum blockchain via the Arbitrum bridge.

Arbitrum Foundation offers users and dApps devs a more cost-effective and faster way to run their operations on Ethereum by utilizing the layer-2 scaling solution that Arbitrum provides.

Arbitrum DAO

Arbitrum DAO is a decentralized autonomous organization on the Ethereum blockchain that facilitates community-driven governance. Token holders can suggest and vote on changes through the $ARB token. There is also a treasury system and a Security Council responsible for the organization's security. The DAO is a powerful tool for decentralized governance and community management.

ARB token

Arbitrum released its native governance token, ARB, on March 23, 2023. 2.75% of the total ARB tokens were distributed to eligible recipients and DAOs.

ARB tokens enable decentralized governance of the Arbitrum ecosystem. Holders can vote on governance proposals and influence how the Arbitrum DAO treasury funds are allocated. These proposals can include upgrades to the Arbitrum chain, changes to network parameters, granting and bounty allocation, and integrating new features.

ARB tokens are not used for gas fees like ETH on the Ethereum network. Instead, fees on the Arbitrum platform are paid in ETH or any other ERC-20 token supported by DApps. Thus, ARB holders can stake their tokens and earn fees for securing the network rather than spending them to use the platform.

Arbitrum price and tokenomics

At the time of writing this article (08.05.2023), Arbitrum price is around 1.17 USD with a 24-hour trading volume of 319,887,486 USD.

All time high of 8.67 USD was reached on March 23, 2023. Ironically, the All-time low was reached on the same day. The price went as low as 1.11 USD.

ARB to USD price according to CoinMarketCap.

The circulating supply of Arbitrum token is 1 275 000 000 ARB. The total supply of ARB tokens is 10 billion, and the funds' allocation is as follows: 42.78% (4.278 billion) for the Arbitrum DAO treasury, 26.94% (2.694 billion) for Offchain Labs teams and advisors, 17.53% (1.753 billion) for investors, 11.62% (1.162 billion) for user airdrops, and 1.13% (113 million) for DAO airdrops.

With a market cap of 1,493,145,948 USD, ARB ranks #37 according to CoinMarketCap and #39 according to CoinGecko.

ARB in Atomic Wallet

ARB is fully supported in Atomic Wallet.

You have access to all the info you need to know about a currency. You can keep track of the Arbitrum price, market cap, price change over the last week, trading volume, and other useful data.

Hold and manage ARB

If you already purchased Arbitrum and wish to keep it in a decentralized, non-custodial wallet, Atomic Wallet will suit your needs perfectly. It's easy to deposit ARB into it and store it safely.

Atomic Wallet interface with Arbitrum price chart

Exchange ARB

You can also exchange your Arbitrum tokens in Atomic Wallet for another currency if you are interested in leveraging the price swings and giving other tokens, like PEPE a shot.

You can also buy Arbitrum with other crypto using the Exchange feature in Atomic Wallet.

In summary

Why does Arbitrum chain exist?

Arbitrum is a layer 2 scaling solution aimed at alleviating the scalability limitations and high transaction fees of Ethereum. 

What makes Arbitrum unique?

Arbitrum's architecture is designed to leverage the Ethereum mainnet's security and decentralization while providing a separate layer for smart contracts to run. It utilizes optimistic rollups, which validate transactions off-chain before adding them to the main chain, thus improving the network's throughput. 

What's the Arbitrum price?

Arbitrum token's current price is 1.17 USD (as of 08.05.2023).

What's the ATH?

The all-time high is 8.67 USD (23.03.2023)

What's the ATL?

The all-time low is 1.11 USD (23.03.2023)

What's the trading volume?

Its 24-hour trading volume of 319,887,486 USD (as of 23.05.2023).

What's the market cap?

The current market cap is 1,493,145,948 USD.

What's the max supply?

10 billion ARB.

What's the circulating supply?

1 275 000 000 ARB.


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