What is Arbitrum?

By Kromatika | Kromatika Education | 4 Apr 2022

Arbitrum is one of the potential remedies to Ethereum's recent transaction cost issue. Ethereum is the second-largest cryptocurrency by market value, but its exponential growth has been limited by network congestion and exorbitant fees. Arbitrum attempts to lower transaction costs and congestion by transferring as much computing and data storage as possible away from Ethereum's primary network. Layer 2 scaling solutions are used to store data outside of Ethereum's blockchain.
This is because it is built on top of Layer 1 and retains the security of Ethereum. Layer 2 initiatives such as Arbitrum are believed to be significant solutions for Ethereum's scaling problem at the moment.
Ethereum network updates are planned for the coming year and beyond, to lower costs and congestion. These improvements, particularly Eth 2.0, will aid Ethereum's scaling and cost reduction. Because the ETH 2.0 update is unlikely to solve scalability issues, layer 2 initiatives may continue to be beneficial in the medium and long run.

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