Summary
Feature | Arbitrum | Optimism | Polygon |
---|---|---|---|
Mainnet | Ethereum | Ethereum | Ethereum |
L2 Type | Optimistic Rollup | Optimistic Rollup | Sidechain, ZK Rollup |
Token | ARB | OP | MATIC, POL |
Use Case | Efficient Transactions | Compatible with EVM | High Volume Applications |
Pros | Speed, Low Fees | EVM Compatibility | Functionality, ZK Security |
Cons | Challenge Period | Limited Languages | Complexity for Users |
Arbitrum, Optimism & Polygon: Layer 2 Solutions for Ethereum
The Ethereum blockchain has successfully upgraded to adopt the Proof of Stake (PoS) consensus algorithm, but many decentralized applications (dapps) still prefer layer 2 solutions to achieve greater scalability and performance.
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Arbitrum, Optimism, and Polygon are Ethereum’s blockchain’s most popular layer 2 solutions, although Polygon has lost market share due to rise of the likes of Base, Blast, Linea, or zkSync Era. However, in terms of market cap, their native cryptocurrencis still account for almost 60% of the layer 2 sector, as tracked by Coinmarketcap
The three networks significantly impact decentralized finance (DeFi) by collectively holding approximately 4% of the total value locked (TVL) in the sector.
Source: DeFiLlama
Arbitrum and Polygon host over 500 DeFi protocols each, while Optimism is used by over 200 dapps.
All three layer 2s settle Ethereum transactions off-chain, but their methods differ. Here’s how 👇.
Arbitrum (ARB)
- Name: Arbitrum
- Token: ARB
- Mainnet: Ethereum
- L2 Type: Optimstic Rollup
How Does Arbitrum Work?
Arbitrum uses so-called optimistic rollups to merge transactions into batches and verify them outside of the Ethereum network.
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They’re called optimistic because all transactions carried out on Arbitrum are treated as valid immediately. However, there is a challenge period to filter out bad transactions. Users are able to dispute any transaction by posting fraud proof up to seven days after execution.
This approach enables Arbitrum to achieve greater efficiency.
Arbitrum Ecosystem
Arbitrum offers two L2 chains:
- Arbitrum One is the Optimistic Rollup mainnet. It runs transactions on the Arbitrum Virtual Machine (AVM) extension, which is compatible with the Ethereum Virtual Machine (EVM).With the Nitro upgrade, this Optimistic Rollup chain improved its speed and reduced gas fees.
- Arbitrum Nova is also built with Nitro and is specially developed for dapps like gaming, social, and non-fungible token (NFT) projects which come with high transaction volumes and demand very low transaction fees. This is achieved using the AnyTrust model, which is not an Optimistic Rollup protocol. In exchange for lower fees, its data availability is managed by a fixed permissioned set of entities called “Data Availability Committee (DAC).”
Developers can use Arbitrum Orbit to create customized Rollup or AnyTrust chains, being able to configure parameters like throughput, gas token, challenge period, and more.
Source: Arbitrum