Deep Dive into Arbitrum

• Designed to improve the scalability plus efficiency of the Ethereum network by creating a secondary network known as a sidechain which operates alongside with the main Ethereum blockchain.

• As a layer 2 scaling solution Arbitrum is fast, inexpensive and allows users to make transactions quickly with less fees achieved by innovative technology known as Optimistic Rollups.

• Optimistic Rollups bundle up multiple transactions into a single batch thus reducing the vast amount of data needed to be stored onto the blockchain.

• Arbitrum's main advantage is the support of a wide range of Ethereum based application including decentralized finance protocols (DeFi), gaming platforms and NFT marketplaces due to its high degree of compatibility with existing Ethereum tools and infrastructure.

Overview of how Arbitrum chain works

• Communications between Ethereum mainnet and the Arbitrum side is managed by a set of smart contracts which serve as the gateway for moving data and assets between the two chains.

• To make a transaction on the Arbitrum chain, users submit it to the Arbitrum network where it is verified by set of validators after checking its validity before executing the transaction on the sidechain.

• Soon as the transaction os verified it gets bundled up with other transactions using technology known as optimistic rollups into batches and sent to the Ethereum mainnet for settlement which allows for multiple transactions to be processed in a single batch further reducing the data needed to be stored on the blockchain.

• As batches of transactions get processed on the Ethereum mainnet the results get sent back to the Arbitrum chain to be verified by validators and once verified the transaction is considered complete and the user account balance gets accordingly updated.

• For security of Arbitrum validators are required to stake a certain amount of cryptocurrency as collateral. Any dishonesty or failure to validate transactions risks losing their stake. Arbitrum chain uses a fraud proof system detecting and penalizing any invalid transactions.

Security of Ethereum

• Rooted within the security of Ethereum, Arbitrum is a layer 2 scaling solution for Ethereum which operates on top on the Ethereum blockchain and relies on it security to secure it.

• A set of smart contracts on the Ethereum mainnet serve as the gateway for moving assets and data between the two chains which in turn ensure that any transactions on the Arbitrum chain are valid and secure.

• Staking of a certain amount of cryptocurrency as collateral is required for validators to ensure the security of the Arbitrum chain, any dishonesty or failure to validate transactions correctly results in risk of losing their stake.

• Arbitrum is able to offer fast and efficient scaling solution for Ethereum whilst maintaining high level of security and capability with with the main Ethereum network by leveraging Ethereum's security and infrastructure.

Data Availability

• An important concept in the context of blockchain and layer 2 scaling solutions such as Arbitrum is data availability, it refers to the ability of all participants in the network access and verify the data that is stored in the blockchain.

• Data availability within Arbitrum is ensured via a process known as “Fraud Proofs,” where a transactions gets executed on the Arbitrum chain bundled up with others into a batch then sent to the Ethereum mainnet for settlement.

• Using fraud proofs to ensure data availability this enables Arbitrum to maintain a high level of security and reliability whilst working with even large amounts of off chain data.

AnyTrust

• Rollup protocol essential feature which helps strengthen the integrity of L2 transaction and allows any honest verifier regardless of their location or background to forcefully ensure transactions are executed correctly.

• AnyTrust brings peace of mind knowing that you or someone you hire can take the necessary steps to make sure transactions are done correctly without the need of any third party or centralized authority.

• This feature also simplifies the process of verifying transactions whist streamlining the entire experience and ensuring that all parties have a clear understanding of whats happening.

Emergency Exit Feature

• Data availability is also a key feature which allows users data and assets to be recovered from L1 at anytime preventing any potential loss.

• Although Arbitrum’s emergency exit mechanism is not defined explicitly, it implements several security mechanisms in order to ensure users can exit the system in case of an emergency.

• A transaction request can be initiated by users to the inbox contract on L1 to force a withdrawal, a feature that provides users additional control of their assets whilst ensuring they can be withdrawn at any time.

• Further guarantee from the AnyTrust mechanism is that the withdrawal transaction is processed correctly by L2 prevent any loss of assets.

7 Day Challenge Period

• As a multi-round interactive rollup solution Arbitrum aims to make sure the entire system is safer and faster first by assuming that the assertion made by the verifier is accurate only challenging if other verifiers reject it during the challenge period.

• The challenge period has been carefully optimized to ensure the best user experience proposed by a model which calculates the optimal period based on several factors.