Why is Arbitrum important?

John Jairo
5 min readOct 18, 2022

Arbitrum has focused on providing investors with a cheap, fast and scalable network, elements that Ethereum is still struggling with despite its Merge upgrade in September 2022. Arbitrum is a decentralized protocol, which means that it runs on its own blockchain, but it’s also not limited by it.

What is Arbitrum?

As a result, developers have flocked to Arbitrum to build decentralized applications (dApps), and it is now ranked the seventh biggest blockchain by total value locked (TVL), according to DeFi Llama.

TVL by L2 — Source: L2 Beat

That means you can use this system in any environment: private blockchains, public blockchains (like Ethereum), or even on your own computer without any additional software installed!

In addition to having its own unique features like being able to securely store data across multiple parties (called “multiplexing”) and allowing users to write smart contracts without having code knowledge or technical skills required — Arbitrum has another key feature: Trustless Systems!

This means that no central authority controls what happens within an ecosystem using Arbitrum;

Instead, everything happens through consensus between all participants involved throughout the networked ecosystem itself rather than relying on any one individual or entity making decisions about how things should work together based solely on their personal preferences alone.

What is an Arbitrum Token and Why are they Valuable?

Arbitrum takes the best of decentralized and centralized systems. It lets you write scalable, secure smart contracts with the power of a real-world runtime.

This will allow them to participate in this ecosystem while also earning money through their efforts as arbitrators, validators, oracles, or otherwise contributing value toward it.

This allows them to create complex applications with built-in accountability, transparency, reliability, and flexibility: all without having any single point of failure or central authority required for operation.

Arbitrum provides an open source framework for developing decentralized applications (dApps) while preserving their security through its hybridization model which combines traditional distributed ledger technology (DLT) protocols like Bitcoin’s Proof-of-Work (PoW) with blockchain consensus algorithms such as Byzantine Fault Tolerant (BFT).

Arbitrum Rollup was created as a migration path from Ethereum to Ethereum 2.0 while keeping users’ tokens and contracts on Ethereum.

In the two weeks after the merger, smart contract implementations increased by 14%. Despite the 62% drop in the price of Ethereum, the execution of smart contracts increased by 40% to an all-time high

Source: Alchemy

Arbitrum Rollup is EVM-compatible and supports Solidity and Web3.js, so you can get started quickly.

In 2018, only 146,000 developers installed either of these libraries on a weekly basis. But that has increased steadily every year and in 2022, that number had increased 10x: a whopping 1,536,548 downloads per week. Compared to Q3 2021, the number of downloads increased by 3x this quarter.

It achieves scalability through rollups, which bundle many transactions into one transaction on Ethereum.

Source: Alchemy

This metric alone points to a large and growing interest in building applications on Ethereum, but we didn’t stop there.

Smart contracts represent the core logic for DeFi protocols and NFT minting contracts, similar to how server logic determines application and database behavior for many internet products today. In other words, an increase in smart contract deployment indicates healthy developer activity and growth.

Then Arbitrum will bundle them together into one transaction that includes all 10 values in one go, instead of having to execute them one after another in order to achieve the same result as if they were all executed separately (which can take hours).

These individuals will be able to view your transactions, but only after you have sent them through a process called Proof of Stake (PoS).

At the time of writing, there is not an Arbitrum crypto token. Ed Felton, co-founder of Offchain Labs, stated in 2019 that they don’t plan to launch a separate Arbitrum token.

For those looking at how to invest in Arbitrum, there is no direct method, let alone any ARBI price predictions. However, there is now some speculation regarding the potential launch of an ARBI cryptocurrency.

After the layer-2 solution Optimism announced its OP token in April, Offchain Labs co-founder Steven Goldfeder posted a tweet, which suggested an ARBI token was in the works. He said: “The appetiser is always served before the main course.”

How to Buy Arbitrum Tokens?

After the successful completion of Nitro in Arbitrum, a much-anticipated red update that increased transaction performance and reduced rates, Arbitrum will experience greater growth in users and activity.

However, at the time of writing, there is not an Arbitrum crypto token. Ed Felton, co-founder of Offchain Labs, stated in 2019 that they don’t plan to launch a separate Arbitrum token.

There are several catalysts on the horizon that are prepared to benefit from this greater transaction capacity and help to boost this trend. The first is the Arbitrum Odyssey, an event designed to encourage the use of applications in the L2. Odyssey should attract both users and attention to the red

After the layer-2 solution Optimism announced its OP token in April, Offchain Labs co-founder Steven Goldfeder posted a tweet, which suggested an ARBI token was in the works. He said: “The appetizer is always served before the main course.”

An Arbitrum Token is valuable because it is required for taking actions on an Arbitrum Rollup.

When you send a transaction, it will only be included if you have enough tokens to pay the fee.

The token holders can vote to elect new contract executors or add new accounts as validators by locking up a certain amount of their tokens.

Note that there’s no guarantee that your staked tokens will be returned at any point in time; however, this does not affect their value — they simply represent ownership in the Rollup itself and its associated contracts themselves!

Holding crypto thesis.

I explain to you why Arbitrum still is modestly undervalued, since, Arbitrum is one of the leaders in this growth of implemented smart contracts helping to increase 36% of verified smart contracts in 2022.

To date, the Arbitrum ecosystem has been bootstrapped organically. Despite having no network-wide incentives, Arbitrum is still the largest L2 by TVL at more than $2.42B. A token is poised to push that figure even higher, as it is likely to be used to incentivize liquidity and encourage the migration of even more popular, L1-based applications.

While these catalysts have caused the rollup to be the talk of the metaverse, adoption of the network is still in its early innings — Per Nansen, just 0.45% of Ethereum addresses have used Arbitrum.

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John Jairo

1/3 Crypto Investor + 1/3 Trading Programmer + 1/3 DeFi Researcher = Research Engineer