Arbitrum – An Ethereum Layer 2 Scaling Solution

Arbitrum - an Ethereum Layer 2 Scaling Solution

Arbitrum is yet another major player amongst Ethereum’s ever-expanding war chest of Layer 2 scaling solutions that are working to make unaffordable high transaction fees a thing of the past. It falls under the category of Optimistic rollups, similarly to Optimism, which we discussed here last week. Arbitrum is one of the few Ethereum Layer 2 scaling solutions that is available to use on mainnet today and it also offers the broadest range of DeFi apps currently available amongst all Layer 2’s.

Making Ethereum Affordable

Arbitrum aims to offer its users access to a suite of DeFi applications, all while harnessing the security of the world’s most secure and decentralised blockchain. At the time of writing, token swaps on the Arbitrum network are sitting at approximately 0.60 cents, while still remaining a lot higher at $15.00 on Layer 1. You can use CryptoFees to track the current transaction costs for all Layer 2’s here.

Your Portal to DeFi

Arbitrum currently has over 200 DeFi apps readily available to use today, with many more expected to deploy as we progress further into 2022. Blue chips such as Aave, Uniswap, and Curve finance are just some of the amazing protocols that are currently available on the Arbitrum network. Going forward, as the Ethereum ecosystem expands and Layer 1 fees get higher and higher, we expect most end users to migrate to Layer 2 and use these scaling solutions to conduct their usual DeFi activities. Be sure to check out the Arbitrum portal here to check out the full list of readily available dapps. 

Arbitrum Nitro – Turbocharging Ethereum

Arbitrum Nitro is the next update that Ethereum users are eagerly awaiting to hit mainnet. Nitro is easily the biggest and most anticipated upgrade to hit the network yet, and it aims to drive fees even lower than what is currently being experienced on Layer 2. Once the upgrade is implemented, users can expect fee reductions anywhere between 50-100x. The hope with this major upgrade is that once the market heats back up, Arbitrum is able to keep fees below $1.00 going forward, therefore giving users the Ethereum level experience for a fraction of the cost at all times. Click here to check out the latest thread outlining how Arbitrum plans to scale Ethereum with Nitro. 

Lending and Borrowing 

Thanks to the recent deployment of Aave v3 to the Arbitrum network, users are now able to interact with a major money market on Layer 2. Using Aave v3, users can partake in lending or borrowing with various digital assets such as ETH, DAI, USDC, USDT and LINK. These features are some of the most important components currently being offered at Layer 2, as they provide Ethereum users with even further reason to migrate from Layer 1. Click here to see the full list of features currently being offered by Aave v3.


As more of these major DeFi applications are made available on scaling solutions such as Arbitrum, the adoption rate of Layer 2 protocols in general is expected to increase significantly, and well into the future. Once the market eventually heats up again, Layer 1 fees will rise to the unaffordable prices that we were experiencing throughout 2021, and scaling solutions like Arbitrum are working to make sure that we have a bustling Layer 2 ecosystem ready and waiting for when this day eventually comes.

Thanks for reading everyone!