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2. Intermediate Course

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  1. 1. What is Layer 0 in Blockchain technology?
  2. 2. What is layer 1 in Blockchain?
  3. 3. Second layer (layer 2) - what is it? 
  4. 4. Blockchain and its layers - What is layer three in Blockchain (L3)?
  5. 5. Ethereum 2.0 - What is it? 
  6. 6. Ethereum Proof-of-Stake (PoS) - what should you know?
  7. 7. Ethereum London Hard Fork - what is it ? 
  8. 8. What is the Ethereum Name Service (ENS) and how does it work?
  9. 9. Arbitrum: Ethereum scaling solution - everything you need to know
  10. 10. Polygon 2.0 - the value layer for the Internet
  11. 11. Ethereum ERC-4337 - what is it and how does this standard work?
  12. 12. What is an ERC20 token and how is it created?
  13. 13. The ERC-721X VS ERC-721 Standard – Key Differences!
  14. 14. What is cryptocurrency burning?
  15. 15. Examples of the use of WEB3 on the blockchain
  16. 16. What is Web5? 
  17. 17. Blockchain Oracle - what are oracles? 
  18. 18. Polkadot - Decentralized blockchain and DOT cryptocurrency
  19. 19. Polkadot Parachain - Next-generation blockchain
  20. 20. Interoperability in the world of cryptocurrencies and blockchain
  21. 21. What is Blockchain sharding?
  22. 22. Mainnet versus Testnet on the Blockchain. The complete guide!
  23. 23. MINA Protocol: the lightest blockchain in the world!
  24. 24. Sustainable Blockchain - Proof of Useful Work & Flux
  25. 25. Cosmos SDK: Building the Blockchain Ecosystem
  26. 26. What is cross-chain interoperability in Blockchain technology?
  27. 27. Blockchain trilemma - explanation of the problem. What is the impact on cryptocurrency payments?
  28. 28. Non-fungible tokens and NFT exchanges
  29. 29. How to make money with NFT?
  30. 30. What is the NFT licence fee?
  31. 31. NFT Gas Fee - what is it? How can you reduce your gas fee?
  32. 32. The main differences between static NFT and dynamic NFT
  33. 33. What is minting an NFT?
  34. 34. What are NFT Ordinals? A guide to Bitcoin NFT.
  35. 35. What is KnowOrigin NFT, and how does it work?
  36. 36. ERC-6551 - the new NFT standard. What does it bring to the non-exchangeable token sector?
  37. 37. What is NFT Lending all about? An innovative solution in the world of cryptocurrencies!
  38. 38. The Metaverse – a new virtual world
  39. 39. Metaverse – TOP 15 virtual reality projects
  40. 40. Technical analysis – is it worth using?
  41. 41. Trading order types: stop loss, trailing stop loss, LIMIT
  42. 42. Market Cap versus Fully Diluted Market Cap - the most important differences you should know!
  43. 43. Set up of Stop Loss and Take Profit orders
  44. 44. What are DeFi liquidity pools?
  45. 45. Real Yield in DeFi - what is this trend? What does it consist of?
  46. 46. Vampire Attacks in Decentralized Finance (DeFi): Explanation and Examples
  47. 47. What are wrapped tokens 
  48. 48. What are security tokens?
  49. 49. What are Social Tokens? 
  50. 50. Liquidity Provider Tokens (LPs). What are they, and why are they so important?
  51. 51. What is the Lightning Network, and how does it work?
  52. 52. What is Play-to-Earn (P2E) and how does it work?
  53. 53. Cryptocurrency steps - What is move to earn M2E?
  54. 54. Segregated Witness - what is Segwit Bitcoin all about?
  55. 55. What are Decentralized Cryptocurrency DEX Exchanges?
  56. 56. What is Curve Finance?
  57. 57. What is GameFi and how does it work?
  58. 58. What is Proof of Reserves (PoR)? How does it work?
  59. 59. DAO Investment: A revolution in the world of finance and investment
  60. 60. What is MakerDAO and DAI Stablecoin?
  61. 61. What is the SubDAO protocol, and how does it work?
  62. 62. How to Create Your Own Decentralized Autonomous Organization (DAO)?
  63. 63. Atomic Swap: What is an atomic swap, and how does it work with cryptocurrencies?
  64. 64. What Is Cryptocurrency Vesting? What Are Its Advantages?
  65. 65. What Is the Metaplex Candy Machine Protocol? How Does It Work?
  66. 66. What Is the BNB Greenfield Ecosystem?
  67. 67. What Is Slashing in Cryptocurrencies?
  68. 68. Royalties – What Are They? How Does This Type of Licensing Fee Work?
  69. 69. What is TradFi? The importance for cryptocurrencies!
  70. 70. What is the Real World Asset (RWA) trend in cryptocurrencies? Explanation and examples!
  71. 71. Pyth Network: a powerful oracle harnessing the power of Solana!
  72. 72. What are stables in the world of cryptocurrencies?
  73. 73. What Is Binance Oracle?
  74. 74. Shibarium: A new era in the Shiba Inu ecosystem?
  75. 75. What is an ETF? How will an exchange-traded fund on bitcoin work?
  76. 76. Symmetric and asymmetric encryption - key cryptography techniques!
  77. 77. Hedging in cryptocurrencies - great portfolio protection against risk!
  78. 78. How to create your own cryptocurrency? 
  79. 79. What is a Dusting Attack in cryptocurrencies? How to protect against it?
  80. 80. What is a Black Swan?
Lesson 9 of 80
In Progress

9. Arbitrum: Ethereum scaling solution – everything you need to know

Arbitrum is nothing more than a layer 2 chain built on top of Ethernet. It was designed to solve congestion problems on Ethereum’s main network. Arbitrum was developed by Offchain Labs, a New York-based technology company.

So the Arbitrum chain itself is a scaling solution for the main Ethereum network chain. How. Arbitrum records transactions on Ethereum, “holds them” and then forwards them to the main chain of the network. This effectively eliminates the problem of ecosystem congestion.

The inventor of Arbitrum was Offchain Labs, as mentioned in the paragraph above. The chain was founded in 2018, and its creator was Ed Felten.

According to the inventor, the idea for Arbitrum came to him while he was still working at Princeton. At that time, he had already started working on it. However, he focused on it fully after he left his job.

Arbitrum – how does it work?

The Ethereum blockchain has several issues. One of them is the speed of transaction processing. The blockchain network can only process a certain number of transactions in a certain amount of time. If this number is higher, a queue forms on the chain. This can lead to congestion.

Ethereum is a popular ecosystem for creating dApps. This leads to even more transaction delays. Simply put, more and more transactions are pushed onto the chain and it takes even longer than usual for them to complete.

To solve this problem, we have two solutions. The first, of course, is sharding. We have explained how this works in the section “What is sharding?”.

The whole process of sharding is quite complicated. Moreover, it is currently not yet at a stage where the problem of transaction time has been effectively solved. What does this mean in practise? That dApps and other applications that want to execute transactions quickly will have to look for another solution.

Another solution is roll-ups and confirmation of off-chain data. Smart contracts are redirected to operate freely in the off-chain system. This allows them to redirect transactions and add them to the Ethereum chain at a later date. Rollups execute transactions off the Ethereum blockchain, then reduce the data in the chain and potentially reach consensus.

This is a huge advantage for the network. Transactions can be confirmed in real time, while the consensus itself is reached a little later in the Ethereum main chain. And because the transactions are contained in Layer 1 blocks, they maintain the same level of security.

Such actions are performed by roll-ups of Layer 2 chains. Arbitrum is one of them.

Arbitrum is an optimistic roll-up chain. That is, data is passed on with the assumption that it is valid by default. Because of these optimistic assumptions, the Arbitrum chain ranks slightly higher above zero-knowledge tier two chains.

And why? Because optimistic roll-ups are inherently cheaper than those using zero knowledge. Moreover, we have gas fees, which are also cheaper in this case. The third plus is the lower cost of data processing outside the chain.

And the last and perhaps most important advantage of this type of roll-up is that it is compatible with the Ethereum Virtual Machine (EVM). Therefore, Tier 1 applications can easily connect to Arbitrum and receive faster confirmations.

Do not remember what Ethereum Virtual Machine is? Look it up here!

How can you benefit from Arbitrum?

It is simple. We can use the chain by using decentralized applications like Aave, 1inch or Gnosis Safe for it. It is also possible to use it via the token bridge Arbitrum. In this case, you first need to connect your wallet to the bridge and deposit a certain amount of money.

Of course, using the Arbitrum chain comes with the need to pay for gas – at Ethereum rates.

Interestingly, Arbitrum is expected to develop new features in the near future. These include AnyTrust Chains and Sidechain, which will lower fees while increasing speed.

Ethereum, gas fee and The Merge

In late 2022, Ethereum entered a new phase of its life. It underwent an update to The Merge, which took a big step towards sharding. This move was intended to reduce congestion on the network’s main chain and make it easier to confirm transactions. Unfortunately, these problems remain despite The Merge. Well, in life, not everything always works out. Therefore, the popularity of chains and solutions like Arbitrum will continue to grow.

Arbitrum’s native token

And at this point we will surprise you. Most Tier 2 solutions have their coins that they use to reward validators, among others. Arbitrum is the only solution that does not have its coins.

This just means you cannot invest directly in Arbitrum. However, according to a tweet by Steven Goldfeder, co-founder of Offchain Labs, we can hope that one day such a coin will be created. In April 2022, he posted a tweet hinting at the minting of “Arbi”. At this point, we have no further information. We have no choice but to wait.


Tier 2 solutions like Arbitrum have caused a stir in the cryptocurrency industry recently. And why? Because they could be the solution to many of the problems affecting Ethereum.