This is your comprehensive guide to all things Arbitrum and Arbitrum NFTs – a layer 2 scaling solution for Ethereum. We’ll explore the basics of Arbitrum, delve into the various use cases within the ecosystem, and highlight some of our favorite projects.
Whether you're day one casual or L2 power user, this article will help you break through the Twitter noise and discover the potential of Arbitrum.
What is Arbitrum?
Let’s start with the basics. Arbitrum is a scaling solution designed to address the scalability and high transaction fee issues on the Ethereum network. Most Layer 2s (protocols built on mainnet networks like Ethereum) solve for this problem in their own unique way.
What makes Arbitrum more scalable? Well, Ethereum is open-source. So anyone can read the code. Developers took the best goodies from Ethereum, identified key problems they wanted to solve for, and spun up a new offspring that fixed their problems. In essence, scalability was the focus of Arbitrum’s birth.
Developed by Offchain Labs in 2021, Arbitrum aims to enhance the user experience and expand the possibilities of dApps – with scalability and low transaction costs at its foundation.
What are Arbitrum tokens?
Arbitrum has its own native coin, known as the Arbitrum Token ($ARB).
This token is utilized within the Arbitrum ecosystem for various purposes, such as gas fees and network governance. So if you are transacting within the Arbitrum network, you can use ARB to cover your costs. If you are a developer, you can make governance decisions based on how many tokens you hold.
Arbitrum supports the seamless transfer of Ethereum-based assets to the layer 2 solution, allowing users to utilize their existing ERC-20 tokens and NFTs on Arbitrum. That’s how we get Arbitrum NFTs. These assets, known as Arbitrum L2 tokens, provide compatibility and interoperability between the Ethereum network and Arbitrum.
In June 2023, Circle announced a native $USDC token built on Arbitrum.
According to Circle, businesses can now access on/off-ramps for Arbitrum USDC and readily swap USDC across supported chains – avoiding the costs and delays associated with bridging. This is a big deal – USDC is a stablecoin pegged to the US dollar, and thousands of enterprises interact with Circle to use USDC as part of their treasury.
Understanding the Arbitrum ecosystem
So we know what Arbitrum is, and we know it has a token. Let’s get a bettter understanding of the Arbitrum ecosystem – comprising various components that contribute to its functionality and growth.
One crucial element is the Arbitrum Bridge, which facilitates the movement of assets between Ethereum and Arbitrum. Remember we spoke about L2 tokens like Arbitrum NFTs? This is an example of where a Bridge comes in handy.
The Bridge allows users to deposit and withdraw their funds, bridging the two networks (Ethereum and Arbitrum) seamlessly. Moreover, users can add Arbitrum to their crypto wallet by following a simple process.
This integration grants them access to the Arbitrum network, where they can interact with decentralized applications built on Arbitrum.
What is an Arbitrum DEX?
An Arbitrum DEX refers to a decentralized exchange that operates on the Arbitrum network.
These type of exchanges leverage the benefits of Arbitrum's scalability and low transaction fees to provide efficient and cost-effective trading experiences. Users can swap their tokens and engage in trading activities without the bottlenecks commonly encountered on the Ethereum mainnet.
With Arbitrum's enhanced throughput, DEXs on this layer 2 solution offer a more seamless and enjoyable trading experience. You're welcome.
Some Examples of Top Arbitrum Projects
The Arbitrum ecosystem has witnessed the emergence of several innovative projects. ETH maxis like Bankless (yeah you heard me) absolutely geek out over this stuff. Here are some of the top Arbitrum projects by TVL (total value locked) as of February 2023:
One notable example is Uniswap (mentioned above), an industry-leading DEX that allows users to quickly and efficiently swap tokens within their compatible chains. You can really feel the difference using Uniswap on Arbitrum.
Notably, GMX tops the list – practically 4x the TVL of Uniswap on Arbitrum. GMX is another DEX that offers high-leverage trading. That’s defi talk for high-risk, high-reward.
How to buy Arbitrum:
To buy Arbitrum, you first need to acquire Ethereum (ETH) since Arbitrum is built as a layer 2 solution on top of Ethereum.
Once you have ETH, you can visit supported exchanges and platforms to swap your ETH for ARB tokens (like the ones we mentioned here). It's crucial to ensure that you are using a reliable and reputable exchange to safeguard your assets.
Following the token acquisition, you can then bridge your ARB tokens to the Arbitrum network to participate in the ecosystem and start playing around.
What are Arbitrum NFTs?
We touched on them above, but we’ll get a bit more granular here.
Arbitrum NFTs are non-fungible tokens that exist and operate on the Arbitrum network. These NFTs retain all the unique properties and characteristics associated with traditional Ethereum NFTs, such as digital artwork, collectibles, and in-game assets. But with a little developer hot-sauce you won’t find on L1 ETH.
By leveraging Arbitrum's scalability and cost-effectiveness, Arbitrum NFT creators and colllectors can enjoy a more seamless and affordable experience when minting, trading, and interacting with Arbitrum NFTs. This opens up new possibilities for artists, creators, and collectors who can now explore the vibrant world of NFTs without the limitations of high gas fees.
One prominent example of an Arbitrum NFT is The Lost Donkeys, a Game-Fi and PFP project living on Arbitrum. Birthed as a free mint May 2022, in just over a year they have done over $1.1m in third party sales volume.
Benefits of Arbitrum
When compared to other layer-2 solutions, Arbitrum has many benefits, including:
Considering Arbitrum is a layer-2 solution, the highly efficient rollup technology cuts costs to a minimum. Even though transaction costs are lower, Arbitrum still provides nice incentives for its validators.
High EVM compatibility
Arbitrum is EVM-compatible, meaning that developers from the Ethereum blockchain can use any language, such as Solidity and Vyper, to build on Arbitrum. No new language is necessary to learn.
Developers can use tools that already exist on Ethereum, which means there are no plugins that are necessary to download. It’s basically a turn-key solution for Ethereum developers.
Arbitrum has fostered partnerships with multiple Ethereum DApps and infrastructures, including DODO, Sushiswap, Uniswap, and many more.
Arbitrum is a leading blockchain solution
You know how someone brings up yellow cars and then you start seeing them everywhere? That’s going to happen with Arbitrum. Look around Twitter and eavesdrop on developer happy hour convos and you’ll hear it over and over.
Arbitrum is revolutionizing the Ethereum ecosystem by providing a scalable and cost-effective layer 2 solution. With a relatively liquid native token, ARB, and seamless interoperability with Ethereum, Arbitrum offers users a smooth experience to enjoy the benefits of dApps and NFTs.
So yeah, we’re hyping it up. But the Arbitrum ecosystem is still in its infancy and growing, attracting more innovative projects and helping to facilitate the growth of the crypto community with their shameless shillers looking to promote their projects and pump their bags.
I highly recommend playing around and exploring Arbitrum if you want to expand your knowledge of the web3 ecosystem. Dive into the Arbitrum ecosystem, add some ARB to your wallet, explore the Arbitrum DEXs, scoop some cheap Arb NFTs, and you may stumble on a hidden gem or two.
Disclaimer: The information provided in this article is for informational purposes only and should not be considered financial or investment advice. Always do thorough research and consult with a professional before making any investment decisions in the cryptocurrency space.