Arbitrum is a rollup chain designed to enhance the scalability of Ethereum by bundling multiple transactions into a single transaction. This process reduces the load on the Ethereum network, allowing for faster and more cost-effective transactions. As a Layer 2 solution, Arbitrum aggregates and processes transactions off-chain before submitting them to the Ethereum mainnet, combining efficiency with the security and decentralization of Ethereum.
In essence, a rollup chain like Arbitrum collects numerous transactions, processes them off-chain, and then submits a consolidated transaction to Ethereum. This method allows users to experience significantly faster and cheaper transactions without compromising on the underlying security provided by the Ethereum network. By handling transaction processing off-chain, Arbitrum alleviates congestion on the mainnet, making it an essential tool for scaling Ethereum-based applications.
The native token of the Arbitrum network is called ARB. This token is used to pay for transaction fees on the Arbitrum network and also plays a crucial role in the governance of the protocol. ARB holders can participate in decision-making processes, such as proposing and voting on protocol upgrades or changes. As the demand for Ethereum-based applications continues to grow, rollup chains like Arbitrum and their native tokens are vital for maintaining and improving network scalability.