Arbitrum

What is Arbitrum?

Arbitrum One is a layer 2 network that processes transactions off Ethereum's main chain and posts the data back to Ethereum, making transactions cheaper while inheriting much of Ethereum's security. ARB is the governance token of the Arbitrum DAO; fees on the network are paid in ETH, not ARB.

What it’s used for

People bridge ETH and stablecoins to Arbitrum One to trade, lend and use other DeFi apps at lower cost than on Ethereum itself. Developers deploy the same smart contracts they would on Ethereum. ARB holders and delegates vote on upgrades, treasury grants and DAO programs.

Role of the ARB token:

Evidence of real use

• L2BEAT rates Arbitrum One Stage 1, noting that users can exit even if the Security Council disappears, while the Security Council's powers are not limited to provable bugs. Source
• ARB launched with an initial supply of 10 billion and a maximum inflation of 2% per year set by the DAO; claiming began March 23, 2023. Source
• Timeboost, an auction for faster transaction ordering whose proceeds go to the DAO, went live on Arbitrum One on April 17, 2025. Source

How Arbitrum works

Arbitrum is an optimistic rollup. A component called the sequencer collects user transactions, orders them and quickly confirms them, then posts the transaction data to Ethereum in compressed batches. Results are assumed correct unless someone challenges them. With the BoLD system, anyone with enough funds can post or dispute a claim about the chain's state, and a dispute is settled on Ethereum. Withdrawals back to Ethereum through the official bridge take about a week to allow time for challenges.

The sequencer is run by a single operator, Offchain Labs. That makes the chain fast but means one party decides transaction ordering and can delay transactions. If the sequencer goes down or ignores you, you can submit your transaction directly to Ethereum and force its inclusion after a delay. L2BEAT rates Arbitrum One at Stage 1, meaning users can exit even if operators misbehave, but a Security Council can still make emergency upgrades.

ARB is the token of the Arbitrum DAO. Holders and delegates vote on protocol upgrades, how the DAO's treasury is spent and settings for the chain, including programs like Timeboost, an auction for fast transaction ordering whose revenue flows to the DAO. ARB does not pay for gas and holders do not receive network fees directly. A 12-member Security Council can act quickly in emergencies.

Key moments

1. 2021Arbitrum One mainnet launches in beta in August, built by Offchain Labs.
2. 2022The Nitro upgrade lowers fees and improves Ethereum compatibility.
3. 2023ARB launches with an airdrop in March and the Arbitrum DAO takes over governance.
4. 2025BoLD permissionless validation and Timeboost go live on Arbitrum One.

Supply

ARB started with 10 billion tokens, with large shares going to the DAO treasury, Offchain Labs team and investors, and an airdrop to users. The DAO can vote to mint up to 2% more per year. Network fees are paid in ETH, and there is no ARB burn tied to usage.

Risks to understand

• Sequencer centralization: one operator orders transactions and could censor or delay them, although forced inclusion through Ethereum exists.
• Upgrade risk: the Security Council can make emergency upgrades without giving users time to exit.
• Bridge risk: assets bridged through third-party bridges carry extra risk beyond Arbitrum's own design.
• Token value is not directly linked to network fees, and insider unlocks and possible DAO inflation add supply.
• Competition from other layer 2 networks and from Ethereum mainnet improvements.

Last reviewed October 4, 2026 by The Crypto Guide editorial team. Utility Lens ratings are editorial judgments, not investment advice. Market data from CoinGecko. Spot an error? Request a correction.