Arbitrum is a layer-2 scaling solution for Ethereum, designed to enable faster and cheaper transactions while still preserving the security guarantees of Ethereum. It uses an off-chain protocol with on-chain enforcement: users can move their funds off chain in order to execute smart contracts more quickly than would be possible on the main chain, but if there is any dispute about how those smart contracts were executed then it will be resolved using the main chain as a source of truth.
The Arbitrum system consists of two components: Regulator Contracts and User Contracts. The Regulator Contract acts as an oracle that keeps track of who owns what assets on the network at any given time; it also enforces compliance with rules set by validators (such as transaction fees). The User Contract allows users to interact directly with each other without needing permission from regulators or validators – they are free to create their own custom agreements and trustlessly interact within this framework.
In addition, Arbitrum has built-in privacy features which allow users to keep certain information hidden from public view while still allowing them access their funds securely. This feature makes it attractive for applications such as decentralized finance (DeFi) where data integrity is paramount due to its censorship resistance capabilities. Furthermore, since all user interactions happen outside of Ethereum’s blockchain, gas costs are significantly reduced compared to executing similar operations directly through EVM code execution inside ETH blocks – making Arbitrum suitable for high frequency trading scenarios too!
Finally, one major advantage over traditional Layer 2 solutions like Plasma or Optimism is that developers do not need special software development skills in order write complex business logic into smart contracts because Arbitrums’ virtual machine supports many popular programming languages such JavaScript & Python out of the box – meaning anyone familiar enough these language should have no problem getting up and running quickly!
