Arbitrum & Arbitrum Nitro

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Optimistic Rollup

Optimistic Rollup refers to a type of rollup that is optimistic in the sense that when an assertion is posted, it does not contain an accompanying proof guaranteeing its validity. Instead, when the assertion is posted on-chain, the validator making that assertion posts a bond, and there is a time window in which anyone can post their own bond and challenge the assertion, if they think it’s wrong. ()

This is sometimes called a “fraud proof”. If the asserter is wrong, they will lose their bond. If the challenge period expires with no successful challenges, the assertion is accepted and becomes final.

All Optimistic Rollups are interactive --as the asserter first posts an optimistic assertion and another validator can trigger the dispute resolution process by responding with a challenge. However, we can further classify Optimistic Rollups by how many rounds of interaction are required to resolve disputes. In multi-round interactive rollup, like Arbitrum Rollup, there is an initial challenge window during which a challenger can post a bond and claim that the assertion was wrong. What follows is a back-and-forth interactive protocol between the asserter and the challenger, with an on-chain contract acting as a referee for the protocol. In the end the referee determines that one party made a false claim, and punishes that party by taking their bond.

The idea is to minimize the amount of on-chain work to resolve the dispute by using an interactive protocol between the two disputants to narrow down the dispute as far as possible before the on-chain referee has to evaluate evidence about the contract’s behavior “on the merits”.

Compared to other Rollup approaches, Arbitrum Rollup's design shines in that the amount of data on chain is quite low, and it can support arbitrary EVM smart contracts and works with all Ethereum developer tooling. In the rest of this page, we'll focus less on how Arbitrum achieves its properties and more on the developer and user experience of Arbitrum Rollup.

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Arbitrum Rollup

An Arbitrum Rollup chain is a super scaled Layer 2 (L2) chain. Like all Rollups, the Arbitrum Rollup chain is built on top of and secured by the Ethereum blockchain, and all transaction data is logged on Ethereum.

From a user and developer perspective, interacting with Arbitrum feels exactly like interacting with Ethereum. Arbitrum supports the same RPC interface as Ethereum, supports all EVM languages, and natively supports all Ethereum tooling without any special adapters. The only way in which an Arbitrum Rollup chain does not resemble Ethereum is the cost: transactions on Arbitrum cost a small fraction of what they would if run natively on Ethereum.

Porting contracts from Ethereum to Arbitrum is fast and simple; there's no need to change any code or download any new software. Arbitrum has full support for the EVM just like Ethereum. This means that all smart contract languages that work with Ethereum (e.g. all versions of Solidity, Vyper Yul), also work natively with Arbitrum. Similarly all standard frontend Ethereum tooling (e.g. Truffle, Hardhat, The Graph, ethers.js) also work natively with Arbitrum.

Although developers and users don't need to download any custom software to deploy contracts and interact with the Arbitrum Rollup chain, some users may want to validate the chain for themselves.

When using Arbitrum Rollup, your security is guaranteed by the fact that any single honest user can guarantee that the system runs correctly. Validating the Arbitrum chain is fully permissionless; all you need to do is download the Arbitrum Validator node software and point your node at the chain. To issue or dispute an assertion, you simply need to place a stake that you'll get back after the claim is resolved (assuming you acted honestly).

In short, Arbitrum enables you to interact with and deploy smart contracts at a fraction of the cost of using Ethereum natively, and using all the same tooling you use to interact with Ethereum today without compromising on security or decentralization. No custom tooling is required to use the chain, but anyone can elect to validate the chain.

Comments by dcbuilder

Arbitrum is an L2 built by the Offchain Labs team. The network itself is called Arbitrum One and it utilizes optimistic rollups in order to scale Ethereum. Arbitrum One utilizes fraud proofs and has on-chain call data availability, meaning that all of the data of each transaction is fully sequenced, bundled, and submitted to mainnet.

Since it utilizes fraud proofs, there is a dispute time delay (DTD) of about 7 days. 【so even single honest user could challenge the nodes】Once the DTD passes, the state changes on the network can be considered valid and users can withdraw their available balances through the native bridge. There are other centralized bridges that we'll discuss later that allow you to bypass this fraud proof period by having cross-L2 liquidity pools.

Arbitrum One is currently the L2 Network that has the highest TVL(Total Locked Value as a reference point. TVL represents the amount of assets that are currently being staked in a specific protocol). A great website that allows us to inspect these metrics is L2Beat. There are many protocols and applications that already support Arbitrum, including supporting infrastructure that makes the switch to using the Arbitrum layer 2 almost seamless. The only current issue with using L2s is that it needs to accrue more liquidity and innovative solutions like cross-L2 AMM structures like dAMM (invented by Starkware and Loopring) and liquidity protocols like Connext and Hop need to get enough liquidity and become trustless enough to the point that all of these scaling solutions can share the same infrastructure so as to not cause ecosystem fragmentation.

Arbitrum Nitro

Arbitrum Nitro is an upgrade to the Arbitrum One L2 which replaces the custom-designed AVM (Arbitrum VM) with a Web Assembly (WASM) target that will take care of fraud proofs. This will also make the entire system more compatible with EVM. Another change is that EVM-emulator is being replaced by Geth which is the most run Ethereum client today. The ArbOS component is also modified to provide cross-chain communication, and a new and improved batching and compression system to minimize L1 costs.

This upgrade will be rolled out seamlessly so users won't have to do anything, the upgrade is estimated to increase execution speeds by 20-50x and considerably reduce transaction costs. For more information read Offchain Labs' Medium post.

Future of Arbitrum

Arbitrum is not only an optimistic rollup as the Offchain Labs team has announced that they will release other scalability solutions based on zk-proofs whilst also improving their Arbitrum One optimistic rollup L2. This is a good example of the trend of zk-ification where many projects are pivoting towards a zk future as the execution environment is much more flexible and arguably more scalable once the technical implementation of the zk-L2 is better researched and allows for generalized EVM computations.

Comments from Enzo

Fraud proof has a dispute time delay (DTD). The longer it is, the higher the probability to detect incorrect state transitions, but the user experience is also bad since they have to wait for a long time.

Bibliography:

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https://developer.offchainlabs.com/docs/rollup_basics⁠

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