27 Dec, 2025
2 minutes
Arbitrum (ARB) is a Layer 2 scaling solution that has been created on the Ethereum network. It has been designed to ensure fast transactions and small gas prices. However, it emerged as a response to the popularity that has been experienced by Ethereum. Now, some of the challenges faced by most users on the network provided by Ethereum are congestion and slowness in transactions. These challenges have been addressed through 'Optimistic Rollup' technology offered by ARB.
Numerous newcomers have sought to know or ask the question of what is Arbitrum, what is the meaning of Arbitrum crypto, as well as the meaning of Arbitrum. To provide a brief overview of the meaning of Arbitrum, the meaning of Arbitrum is defined as the procedure or process through which the transactions are processed off the chain but are eventually finalized on Ethereum. The chief token of this process and the anwer on the question what is Arbitrum is a native token ARB.
Among the most popular layer 2 scaling solutions that have been broadly accepted is Arbitrum because it offers the following:
Much lower gas fees
Faster transaction processing
Ethereum full smart contracts compatibility
A strong and healthy DeFi and dApp ecosystem
Arbitrum is a Layer 2 scaling solution that makes Ethereum faster, cheaper, and more efficient with no sacrifice in security. To begin the discussion on Arbitrum, one needs to know the challenge which Arbitrum solves. Ethereum is quite secure and decentralized but faces issues with network congestion and high gas costs during peak times. This gets resolved with the help of Arbitrum.
They have implemented a technology called Optimistic Rollups. What this means is that multiple transactions are packed or rolled up into a single transaction, then posted on the Ethereum chain. The result is less work being done on the main chain.
This is how the whole process works:
Transactions are sent on Arbitrum and not on Ethereum.
These are transactions handled by the Arbitrum system.
A condensed summary of all the transactions is sent to Ethereum.
If nobody calls into question a certain batch, after a specified period of time, that batch is considered finalized.
Therefore, this technology empowers Arbitrum with the full power of security provided by the Ethereum network.
Off-Chain Execution, On-Chain
The heart of the Arbitrum network architecture is its two-layer structure:
Execution Layer: It has the ability to process smart contracts and transactions quickly.
Settlement Layer: It relies on the Ethereum platform to validate the results and ensure correctness.
Thanks to this hybrid design, developers are able to simply deploy their Ethereum contracts onto the Arbitrum platform with little to no changes.
One of the important things brought by Arbitrum is the idea of the Arbitrum Virtual Machine, which works in a similar fashion to the Ethereum Virtual Machine, or EVM, but is optimized for L2 execution. This makes it easy for devs to move their dApps to their network, while also taking advantage of faster execution times and lower costs.
Arbitrum operates under the assumption that a transaction is valid until it can be proven otherwise, hence the name 'optimistic Turing universal virtual machine. Anyone can dispute a wrong answer by submitting a fraud proof. This guarantees that
High security
Creditable verification
Protection against malicious actors This provides a guarantee that even though a transaction occurs in an off-chain manner, the Ethereum environment always enforces the correctness of the
However, the economics underlying the system differ vastly from traditional Proof of Work blockchains. Thus, one has to examine the economics underlying coin distribution, incentivizing the network, and the overall markets. However, note that the coin is non-mineable and is actually the name for layer two scaling on Ethereum. Thus, the dynamics underlying this asset could be attributed to governance dynamics, overall development on the particular network, and demand for scaling solutions.
The native token, ARB, has a capped total supply of 10 billion, distributed under different categories as follows. They proposed an initiative to improve the sustainability of the
Investors & Team
Airdrops in the Community
Ecosystem development
Ecosystem development Tokens vest at a steady pace through a long-term vesting schedule designed not to disrupt token supply in the system. Further, there is a token cap set at a
As opposed to other platforms such as Bitcoin and Ethereum (prior to the Merge event), Arbitrum does not employ mining. It depends on the cooperation of the Ethereum validators and an independent Arbitrum fraud proof. Instead of ARB being distributed to miners, it serves the primary purpose of:
A governance token for protocol-level decision-making
An instrument for ecosystem incentives
A system of providing funds for upgrading and developments«
The total supply of its token, ARB, is fixed at a maximum of 10 billion tokens. These ARBs are distributed under different categories as follows:
The Arbitrum DAO and Treasury
Investors & Team
Airdrop Communities
Ecosystem Development
Under the vesting schedule, which gives the token in a balanced manner, the tokens vest over a longer period of time.
The value of ARB is affected by:
Total Layer 2 Scaling Solution Adoption
Gas Prices in Ethereum: Higher Layer 1 Prices Tend to Drive Layer 2 Volume
The number of decentralized applications (dApps) on the Arbitrum network
Marketplace sentiment with regards to Governance Tokens
Cross-chain liquidity growth Despite Arbitrum's continued leadership within the TVL (Total Value Locked) metrics for the L2 model, the future for the associated token rests with the development of the ecosystem and continued market appetite for scalable, affordable Ethereum transactions.
It's easily available for buying, holding, and generally interacting with. Since ARB is a well-established Layer 2 token with wide exchange availability, investor and user onboarding can be very minimal.
You can acquire ARB through several sales channels, depending on your preference for a method and location. Most users receive ARB by:
Buying it on centralized exchanges.
Purchasing other cryptocurrencies in exchange for ARB on decentralized exchanges.
Using fiat on-ramp services that support the Arbitrum network
Being one of the leading Layer 2 assets, liquidity is commonly strong, which ensures efficient trading and competitive rates.
ARB token will be compatible with any wallet that supports Ethereum, as it follows the standard ERC-20. Thus, the following wallets are compatible for storing ARB:
Hardware Wallets - Most secure for keeping large sums
Software Wallets
Mobile/Desktop Wallets for Daily Use
Browser wallets: Examples include MetaMask, especially helpful for dApps on Arbitrum.
When it comes to the ARB token, users have to make sure that they add the correct network for Arbitrum One Network in order not to incur higher gas costs or engage with legacy apps.
According to the research, ARB has several functions on the Arbitrum network:
Layer 2 Transactions: The users can pay for particular ecosystem actions within the Arbitrum Network.
User Engagement in DeFi: ARB is being used vastly in liquidity pools, staking, and yield
dApps Availability: Several dApps developed on the Arbitrum network either use ARB directly or provide rewards for using it. It is worth considering that even if the market performance for one dApp does not look
This is due to the significantly minimized transaction fees on Arbitrum compared to Ethereum. This means that those using ARB tokens experience faster and cheaper transactions on the network.
Arbitrum is largely employed as a scalability mechanism on the Ethereum network in order to conduct faster and cheaper transactions. Users of Arbitrum include those looking to use decentralized applications (dApps), cryptocurrency trading on decentralized exchanges (DEXs), DeFi services, as well as Ethereum to Layer 2 asset bridges.
It is a Layer-2 blockchain, meaning that it is developed on the Ethereum network. Despite having their own layer, it is secure through the Ethereum network. In this case, the token used is referred to as ARB. This token serves the purpose of governance, except for any fees that may be required.
The reason it may be regarded as a promising token is because it is associated with one of the most popular L2 scaling solutions. Yet, it is possible that its worth will change according to various marketplace conditions, and it would be important for one to conduct their own research accordingly.
It is possible to bridge your ETH along with ERC-20 tokens on the Arbitrum chain using either the official Arbitrum Bridge or through connection points such as the major centralized exchanges that support deposits on the Arbitrum Network.
Yes, because it shares the paradigm of security in line with Ethereum, and it uses well-proven cryptographic primitives. Possibly, there is not another blockchain where one feels completely secure. However, it's certain that it is currently the safest and most proven Layer-2 solution on the market.
