TLDR; Arbitrum is an L2 scaling solution for Ethereum, offering a unique combination of benefits:
- Trustless security: security rooted in Ethereum, with anyone party able to ensure correct Layer 2 results
- Compatibility with Ethereum: able to run unmodified EVM contracts and unmodified Ethereum transactions
- Scalability: moving contracts’ computation and storage off the main Ethereum chain, allowing much higher throughput
- Minimum cost: designed and engineered to minimize the L1 gas footprint of the system, minimizing per-transaction cost.
Some other Layer 2 systems provide some of these features, but after our research, no other system offers the same combination of features at the same cost.
Ethereum is delivering on its vision of creating an open financial internet built on top of core values such as permissionlessness and trustless systems. Ethereum has built a parallel financial universe that’s counter what the banking industry has created. This is why the FluidFi tech team leverages their technology to create a better banking model for the future. There are multiple tools on Ethereum that empower people to take control of their own financial destiny and become sovereign individuals. Spending a short time playing with DeFi protocols, for example, can provide you a lifetime of financial education. Because of the increase in innovation and use cases, more and more people are using Ethereum which can lead to high gas fees and low transaction speeds.
TLDR; more and more people want their legacy dollars to interact with a new technology stack.
Scaling is something that Ethereum has been transparent about since day one. While anyone can spin-off and create a faster chain, it’s difficult to scale a blockchain with core values such as permissionlessness and trustlessness built into it.
While full Ethereum scaling with Eth2.0 and sharding is still in development, actual scaling is already here today. Optimistic rollups, zk… provide the security guarantees of L1 Ethereum while significantly reducing transaction costs and increasing throughput today.
What are Optimistic Rollups
Optimistic Rollups are a layer 2 scaling solution that takes processing pressure off of Ethereum layer 1. The goal of optimistic rollups is to decrease the time it takes to confirm a transaction on Ethereum while increasing throughput.
Optimistic roll-ups can increase throughput 100x which vastly decreases the cost of gas and time of transaction.
What is Arbitrum
Arbritrum is a layer 2 scaling solution that has gone live on the Ethereum mainnet. Transactions are moved off the mainnet and processed on layer 2. Transaction results are then batched and posted to layer 1.
Users will be able to do everything they already do with DeFi but with much smaller fees and faster transaction speed. This includes lending, trading, yield farming, and providing liquidity. DeFi protocols can easily port their smart contracts on Arbitrum with little to no changes.
Ethereum can currently handle 15 to 45 transactions per second. Arbitrum could increase transaction throughput to 2,000 – 4,000 transactions per second.
Why FluidFi Chose Arbitrum
If we want to create a better banking model, we have to stay agile and adopt the best possible technology to do so. This is counter to the current banking system which is slow, closed off, expensive, and clunky to deal with.
Even our name, FluidFi, is counter banking. The definition of Fluid is: “Having particles that easily move and change their relative position without a separation of the mass and that easily yield to pressure: capable of flowing.”
Other definitions are:
“Subject to change or movement” and “Available for various uses.”
This is one of the many benefits of replacing banks with code – There’s always a way to build for lower fees and a better user experience. We can always be flexible and adjust.
While Ethereum transactions can be slow and expensive, it’s still better than the current banking system.
Using Arbitrum provides a bridge for faster transactions and lower gas fees until ETH 2.0 launches. It also gets us closer to replacing banks with code!
Other projects joining the Arbitrum network are 1inch, Aave, Alchemy, Balancer, Chainlink, and Coinbase Wallet.
Bankless Home Work
Quickstart Guide: https://developer.offchainlabs.com/docs/user_quickstart
Uniswap Announcement: https://twitter.com/haydenzadams/status/1397675094001045508
Etherscan is coming to Arbitrum: https://offchain.medium.com/etherscan-is-coming-to-arbitrum-4f41edaff100
App Rollout Page: https://portal.arbitrum.io/
Chainlink Tweet: https://twitter.com/ChainLinkGod/status/1397981952846622720
Optimism vs. Arbitrum: https://twitter.com/krzKaczor/status/1395812308451004419