In-Depth Analysis of Ethereum Layer 2 Project Arbitrum

1. Project Overview

Arbitrum is a layer 2 scaling solution for Ethereum developed by the Offchain Labs team, based on Optimistic Rollup technology. Its main features include:

• Adopting a multi-round fraud proof mechanism to verify transaction validity
• Highly compatible with EVM, low migration costs for existing projects
• Using WebAssembly architecture and Geth to replace the original AVM architecture
• Launched technology upgrades such as Nova and Stylus to further enhance performance.

Currently, Arbitrum is the largest Layer 2 network by TVL, accounting for 55.97% of the total Layer 2 TVL.

2. Technical Features

The core technical features of Arbitrum include:

• Multi-round fraud proof: Divide the fraud proof into multiple interactive steps to reduce the gas consumption of a single challenge.
• High EVM compatibility: nearly 100% compatible with EVM, low project migration costs
• Nitro Upgrade: Adopting WASM architecture and replacing the original AVM with Geth to enhance performance.
• Stylus: Supports development of smart contracts in languages such as Rust, C
• Nova Chain: Based on AnyTrust technology, suitable for cost-sensitive applications

3. Ecological Development

The Arbitrum ecosystem is developing rapidly, mainly reflected in:

• Leading DeFi protocols are deploying Arbitrum versions
• Native projects like GMX, Camelot, etc. performed outstandingly.
• Hold the Odyssey event to attract a large number of users
• The gaming ecosystem is thriving, such as TreasureDAO and others.

Currently, the monthly active addresses on Arbitrum exceed 600,000, an increase of 51.2% compared to September last year.

4. Analysis of Popular Projects

DeFi project

• GMX: Decentralized perpetual contract trading platform, TVL nearly 500 million USD
• Camelot: Native DEX with multiple innovative features
• RDNT: Cross-chain lending protocol, TVL surpasses AAVE V3

Game Project

• TreasureDAO: Creating a "Decentralized Nintendo" ecosystem
• TridentDAO: proposed "Risk To Earn" model

5. Future Outlook

The future development focus of Arbitrum includes:

• Continue to optimize technology, improve TPS and reduce costs
• Push into decentralization, including sorters, validators, etc.
• Rich ecological applications, especially in the social and NFT fields.
• Launching a token economic model to improve the governance mechanism.

Overall, Arbitrum is expected to continue its explosive growth in 2023, solidifying its position as the leader in Layer 2.