An Arbitrum Odyssey, Part 1: Bridge Week

Arbitrum is an EVM compatible L2 optimistic rollup with over $1.24 billion of TVL, 89 protocols live, and a 74% market share among L2s by TVL. It is the leading Ethereum scaling solution in virtually every category and has accomplished this without a native token. With Optimism’s recent launch of OP and Arbitrum Odyssey having launched June 21, a token may arrive sooner rather than later.

This is the first in a new “An Arbitrum Odyssey” series, intended to be a canonical guide to earning NFTs and positioning for any future airdrop. Skip to the “Let the Games Begin: Bridge Week” section of this article if you would like to get right to the tutorial.

What is Arbitrum?

2021 marked an explosion of alternative L1s, NFTs, and Gaming. The latter two use cases gave birth to the former because of high transaction fees on Ethereum mainnet pricing participants out of using the network. Launching and scaling an alternative L1 is an enormous task. There are needs for developers and tooling, attracting user mindshare and liquidity, creating sufficient throughput while maintaining decentralization without making transactions too expensive, and building infrastructure that enables secure bridging. Most importantly, any new L1 needs to establish a sound security model to avoid network attacks. Arbitrum is different in regards to the last point.

As an L2 scaling solution utilizing optimistic rollups, Arbitrum’s network inherits security from Ethereum. Therefore, the Offchain Labs team did not need to spend resources building out Arbitrum’s network infrastructure for security in the same way alternative L1s must do. Being EVM compatible, Dapps native to Ethereum mainnet are easily able to deploy to the Arbitrum Virtual Machine (AVM). Transaction fees on Arbitrum currently range between $0.20-$1.00.

Risks

Users need to be aware of the experimental nature of this technology and the trust assumptions being made when interacting with Arbitrum. Arbitrum relies on fraud proofs to ensure state correctness. There is a 7-day challenge period where whitelisted actors can submit a fraud proof whereby interactive proving is used to determine who is correct in the dispute, with minimal work required by the L1 contract on Ethereum. There is an important trust assumption here that at least one honest validator is inspecting the published state. The long challenge period means that withdrawing funds from Arbitrum back to Ethereum through their official bridge takes around seven days.