Arbitrum One is a layer 2 network that runs on top of Ethereum to make transactions faster and cheaper. This article explains who built it, how its sequencer and rollup design work, what you pay in fees, and why withdrawing to Ethereum can take about a week.
Not sure what a layer 2 is? Read layer 1, layer 2 and layer 3.
What Arbitrum is and who built it
Arbitrum was created by Offchain Labs, a company that grew out of research at Princeton University. The main network, Arbitrum One, launched in 2021. Its software stack is called Nitro. A separate organization, the Arbitrum DAO, governs parts of the ecosystem through the ARB token.
It was built to solve Ethereum's cost problem without leaving Ethereum. Arbitrum runs the same kind of smart contracts (it is EVM compatible) so apps and wallets work with few changes, while the cost of each transaction is shared across many users. Typical uses are trading and lending in decentralized finance, stablecoin transfers, games and apps.
How it works: an optimistic rollup
Arbitrum One is an optimistic rollup. "Rollup" means it executes transactions on its own chain, then posts the transaction data back to Ethereum, so anyone can rebuild the state from Ethereum alone. "Optimistic" means the results are assumed to be correct unless someone proves otherwise.
The flow:
- You send a transaction. A sequencer, a server that orders transactions, receives it and gives you an almost instant confirmation. Arbitrum blocks come in a fraction of a second, about four per second.
- The sequencer compresses many transactions into batches and posts them to Ethereum. Newer Ethereum blobs make this cheaper.
- A validator posts the resulting state to Ethereum. During a challenge period of about seven days, anyone can submit a fraud proof if the state is wrong.
Today the sequencer is operated by Offchain Labs, so ordering is centralized in practice. If the sequencer goes down, the design allows users to send transactions directly through Ethereum, though this is slower. See rollups: optimistic vs zk.
Finality
You get a fast soft confirmation from the sequencer. The transaction is as final as Ethereum once its batch is posted and Ethereum finalizes it, around 13 minutes later. See finality and confirmations.
Withdrawing to Ethereum
Moving funds from Arbitrum back to Ethereum through the canonical bridge, the official one, takes about seven days because of the challenge period. Moving from Ethereum to Arbitrum is much faster, usually minutes. Many third-party bridges give faster exits for a fee by fronting you the funds, but they add their own trust and risk. Read bridges and their risks.
Fees
The gas token on Arbitrum One is ETH. The ARB token is a governance token, not the one used for gas.
A fee has two parts:
- L2 execution fee: gas used times the Arbitrum gas price, which is low and adjusts when the chain is busy.
- L1 data fee: a share of the cost of posting your transaction data to Ethereum. When Ethereum is busy, this part grows even though Arbitrum itself is quiet.
Both are paid together in ETH and shown as one number in your wallet. Fees rise when Arbitrum is crowded, and when Ethereum data costs go up. Check live fees on the gas page, which includes the L1 data component. Read also gas and fees.
Addresses and tokens
Arbitrum uses the same 0x addresses as Ethereum, so your Ethereum address works on Arbitrum with a separate balance. Tokens follow ERC-20. Many tokens exist in more than one version on Arbitrum, for example native USDC and an older bridged version. Always check which one an app expects. See stablecoins.
Arbitrum also operates Arbitrum Nova, a separate chain aimed at low-cost gaming and social uses. This article covers Arbitrum One only.
How Arbitrum compares
| Arbitrum One | Optimism | Base | Ethereum | |
|---|---|---|---|---|
| Builder | Offchain Labs | OP Labs / Collective | Coinbase | Community |
| Stack | Nitro | OP Stack | OP Stack | Not applicable |
| Gas token | ETH | ETH | ETH | ETH |
| Governance token | ARB | OP | None | None |
Arbitrum and Optimism are both optimistic rollups with different software. Arbitrum is not built on the OP Stack. See Optimism and Base.
What to watch out for
- Wrong network. A 0x address looks the same on every EVM chain. If an exchange expects "Arbitrum One" and you send on Ethereum, the deposit may not be credited.
- Seven-day exit. Plan for the delay if you need funds on Ethereum, or choose a fast bridge knowingly.
- Centralized sequencer. One operator orders transactions. It can censor or go down temporarily.
- Smart contract risk. Upgrades and bridge contracts have admin controls in many rollups. Read the project's documentation for the current decentralization status.
- Fake ARB tokens and airdrops. Never sign a transaction from an unexpected message.
Follow Arbitrum live on ChainMonitor
- Live blocks: blocks are too fast to follow, so one tile is drawn per second, showing transactions and fees.
- Recent blocks list and the header search.
- Gas tracker: the cost of a send, a USDC transfer and a swap on Arbitrum, with the L1 data fee included.
- RPC health for Arbitrum: public endpoints ranked by latency and lag.
Frequently asked questions
What is the difference between Arbitrum and Optimism?
Both are optimistic rollups on Ethereum with ETH as gas. Arbitrum uses Offchain Labs' Nitro software, while Optimism created the OP Stack, which Base and others also use. Both are EVM compatible and feel similar to users.
Is Arbitrum a layer 2?
Yes. It runs transactions off Ethereum and posts data to it, which is the definition of a rollup, a kind of layer 2.
Why does Arbitrum take 7 days to withdraw?
The official bridge waits for the challenge period so that anyone can dispute an invalid state. Fast bridges avoid the wait by paying you early for a fee.
Do I pay fees on Arbitrum in ARB?
No. Fees are paid in ETH. ARB is used for governance.
Why are Arbitrum fees low but not zero?
You still pay for execution and for your share of posting data to Ethereum. Both are far smaller than on mainnet.
Can I use the same wallet on Arbitrum and Ethereum?
Yes. Add the Arbitrum network or use the one-click add on the RPC page.