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ARB is the native utility token of the Arbitrum ecosystem and plays a critical role in maintaining its functionality and security. ARB can be used for staking, governance, and fee payment. Validators who stake ARB are responsible for executing and verifying transactions in the Arbitrum Rollup. By staking, validators have an economic incentive to act honestly and maintain the security of the network.
Arbitrum is an Ethereum Layer 2 protocol designed to enhance the scalability, speed, and efficiency of dApps built on the Ethereum blockchain. As the number of users and transactions on Ethereum has increased, it has faced challenges in terms of congestion, slower transactions, and high gas fees. Arbitrum addresses these issues by utilizing Optimistic Rollups, an approach that allows off-chain computation of smart contracts while still maintaining the security of the Ethereum mainnet. This innovative approach helps to reduce transaction costs and increase throughput, enabling a better experience for users.
The core innovation behind Arbitrum lies in its unique consensus mechanism that leverages off-chain validators to execute and verify transactions. Instead of executing all transactions on the mainnet, which can be slow and expensive, Arbitrum validators run transactions off-chain in a parallel environment, known as the Arbitrum Rollup. This allows multiple transactions to be batched together and executed simultaneously, thus reducing the computational load on the mainnet. Once these off-chain transactions are completed, a single cryptographic proof representing the sum of batched transactions is submitted to the Ethereum mainnet, ensuring the security and finality of the transactions.
The emergence of Arbitrum as an Ethereum Layer 2 solution has significant implications for the broader blockchain ecosystem. By providing a more scalable and cost-effective platform for dApps, Arbitrum can attract new users and developers, further driving innovation in the decentralized space. As Ethereum continues to evolve and expand its capabilities, the role of Layer 2 solutions like Arbitrum becomes increasingly important in maintaining the network’s viability and fostering its long-term success.
*Data from: https://arbitrum.io/
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