What Is Arbitrum (ARB)?
An Ethereum rollup born in a Princeton research paper and open to everyone since 31 August 2021. Gas on it is paid in ETH, and the ARB token, airdropped in March 2023, is for voting.
TL;DR
- Arbitrum One is an optimistic rollup that posts its transactions to Ethereum in compressed batches and lets anyone challenge a wrong claim about its state.
- Withdrawals to Ethereum through the official bridge take roughly a week because of a 45,818-block challenge window, about 6.4 days, while deposits take 15 to 30 minutes.
- Gas on Arbitrum One is paid in ETH, and the ARB token, claimable from 23 March 2023, is used to vote on Arbitrum DAO proposals.
- The main trade-offs are a single sequencer run by Offchain Labs, which stalled on 15 December 2023, and a 12-member Security Council, nine of whom can make emergency upgrades instantly.
On 2 April 2023, ten days after it had handed out more than a billion tokens, the Arbitrum Foundation backed down in public. Its first proposal to the new Arbitrum DAO, known as AIP-1, had been presented as a "ratification" of decisions already taken, and one of those decisions put 750 million ARB under the Foundation's own control.
Then it emerged that 50 million of them had already moved. The Foundation confirmed it had lent 40 million to the market maker Wintermute and sold another 10 million to cover running costs. The Snapshot poll on AIP-1, open since 27 March, closed on 3 April with 77% of the vote against.
So the proposal was broken up. A community motion to send the remaining 700 million back to the DAO treasury failed on 15 April with 84% voting no. AIP-1.1 instead locked those tokens in a contract that releases them evenly over four years, and after 98% backed it on Snapshot it passed an on-chain vote in June 2023.
The row is a good way into Arbitrum, because it shows what the ARB token is for. It votes. The fees for actually using the network are paid in ETH. This is an educational explainer, and none of it is financial advice.
What Arbitrum One actually is
Arbitrum is the technology, and Arbitrum One is the main public network built with it. Other teams run their own chains on the same software, while the DAO also governs a sister network, Arbitrum Nova, which keeps fees lower by handing transaction data to a committee and posting less of it to Ethereum.
Arbitrum One is an optimistic rollup: transactions go first to the sequencer, which puts them in order, compresses them into batches and posts those to Ethereum, as cheap blob data when that is priced well and as ordinary calldata when it is not. Anyone with that sequence can recompute the chain's state and get exactly the same result.
Validators then post assertions to Ethereum, which are claims about the chain's state after a run of transactions, each backed by a 3,600 ETH bond. An assertion nobody disputes for 45,818 Ethereum blocks, roughly 6.4 days, is confirmed. If somebody does dispute it, the two sides keep halving their disagreement until it comes down to a single instruction, which a contract on Ethereum executes to decide who was right, and the loser forfeits the bond.
The engine doing the work has been built around Geth, the Go implementation of Ethereum, since the Nitro upgrade. The same code is compiled twice: to native code for speed, and to WebAssembly so that one disputed step can be replayed on Ethereum.
It is busy: L2BEAT data shows Arbitrum One averaging about 1.5 million transactions a day in the 30 days to 27 September 2026, with roughly $11.6 billion of value secured on it as of 28 September.
Who built it
Arbitrum began as academic research. Harry Kalodner, Steven Goldfeder and Ed Felten, writing with two Princeton colleagues, presented it at the USENIX Security Symposium in Baltimore in August 2018, the same year the three founded Offchain Labs to build it. Felten, a long-time Princeton professor, had earlier served as deputy US chief technology officer in the Obama White House.
Arbitrum One opened to developers in May 2021 and to everyone on 31 August 2021, the day Offchain Labs announced $120 million in new funding. Exactly a year later the network moved to Nitro, a rebuild the company said lifted throughput seven to ten times. Stylus followed on 3 September 2024, letting developers write contracts in Rust, C or C++ that sit alongside Solidity contracts and can call them directly.
Why getting money back to Ethereum takes a week
Deposits from Ethereum usually land within 15 to 30 minutes, but the return trip is slow on purpose.
A withdrawal through the official bridge has to be batched, folded into an assertion and then left to sit out the whole challenge window, because until those 6.4 days are up nobody can rule out a successful challenge. After that, you send a second transaction on Ethereum to claim the funds. Arbitrum's own documentation calls the whole process roughly a week.
A dispute can stretch it. BoLD, the dispute system switched on for Arbitrum One on 12 February 2025, puts a ceiling on that: every assertion is confirmed within two challenge periods plus a two-day grace period for the Security Council, or about 15 days at worst.
There is a workaround: third-party fast bridges pay you on Ethereum out of their own funds, charge a fee and get repaid later, which swaps the week of waiting for exposure to a second set of smart contracts.
What ARB does, and what it does not
ARB launched with an initial supply of 10 billion, and the DAO can vote to mint up to 2% more a year. The airdrop made 1.162 billion of them, or 11.62%, claimable by earlier Arbitrum users from 23 March 2023, while 35.28% was allocated to the DAO treasury.
Holding ARB lets you vote on Arbitrum Improvement Proposals or delegate your vote to somebody who will use it. Those votes decide how Arbitrum One and Nova are upgraded and how the treasury is spent. An address needs at least 1 million delegated tokens to put a proposal on-chain, and a constitutional change typically takes at least 42 days from the opening temperature check to execution.
Gas is the thing ARB does not cover. Fees on Arbitrum One are paid in ETH, so you need a small ETH balance on Arbitrum even to send ARB to somebody. The part of each fee that repays the cost of posting data to Ethereum goes to the Arbitrum Foundation for the sequencer, and the remainder flows to the DAO treasury, still in ETH.
The trade-offs
Arbitrum One has one sequencer, and Offchain Labs runs it. It chooses the order of transactions but not their outcome, since anyone can recompute every result, yet one operator is still one point of failure.
That weakness showed on 15 December 2023, when a lagging Ethereum node and a flood of inscriptions, tiny transactions being minted in bulk, built a backlog of 34,515 blocks waiting to be posted, and at 15:29 UTC the sequencer and its feed stalled. Transactions failed for more than an hour, and when blocks flowed again the fee mechanism overcorrected, so fees only settled at 21:04 UTC, after the Arbitrum Foundation paid to close the pricing deficit.
Users do have a fallback: a transaction sent through the delayed inbox on Ethereum can be forced into the chain if the sequencer still has not included it after 24 hours.
The heavier trust assumption is the Security Council, 12 members holding a multisig wallet and elected in two cohorts of six. Nine of them can upgrade the system instantly in an emergency. Ordinary upgrades give users about 10 days to leave, according to L2BEAT, which rates Arbitrum One at Stage 1, the middle of its three tiers.
Validation, at least, is open now. Before BoLD, only an allowlist of validators could post or challenge assertions. Since February 2025 anybody can do either, as long as they can fund the bond, which for a new assertion is 3,600 ETH and can be pooled among several parties through a contract.
Frequently Asked Questions
No. Arbitrum One charges gas in ETH, so a wallet needs some ETH on the network even to move ARB tokens around. ARB is a governance token: holders vote, or delegate their votes, on Arbitrum DAO proposals covering chain upgrades and treasury spending. Part of each ETH fee covers Ethereum data costs and the rest goes to the DAO treasury.
About a week through the official bridge. Arbitrum One's challenge window lasts 45,818 Ethereum blocks, roughly 6.4 days, and the funds must then be claimed with a second transaction on Ethereum. A contested assertion can push confirmation to around 15 days. Deposits the other way usually take 15 to 30 minutes, and third-party fast bridges front withdrawals for a fee.
Offchain Labs, founded in 2018 by Ed Felten, Steven Goldfeder and Harry Kalodner. The design came out of their research at Princeton University and was published at the USENIX Security Symposium in August 2018. Offchain Labs opened Arbitrum One to the public on 31 August 2021 and still runs its sequencer, while ARB holders in the Arbitrum DAO have governed the chain since March 2023.
A layer 2. Arbitrum One posts its transaction data to Ethereum, and any wrong claim about its state can be challenged and settled by a contract on Ethereum itself. A sidechain relies on its own validators instead. L2BEAT rates Arbitrum One Stage 1, the middle of its three stages, and notes that the Security Council can still make emergency upgrades with no delay.
AIP-1 was the first proposal put to the Arbitrum DAO, days after the March 2023 airdrop. It asked holders to ratify steps already taken, including 750 million ARB for the Arbitrum Foundation, 50 million of which had already been moved. The Snapshot poll closed with 77% against, the Foundation split the proposal, and 700 million ARB went into a four-year lockup.
About the author — Dan Clarke
Dan Clarke is the author of Bitcoin: The Complete Guide and a former content lead at Binance Academy, where he wrote crypto education for readers arriving with no background in the subject. He has worked in the cryptocurrency industry since 2017. His rule for these guides: plain language first, precision where it matters, no cheerleading.