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Arbitrum (ARB) in the Green as Increased Focused Placed on Scaling Solutions

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With interest in digital assets continuing to spread across the world, the sector has found itself arriving at a critical point where scalability concerns are no longer a future problem, but are actively presenting themselves.  As a result, much attention is now being placed on what are typically viewed as the best path forward – Layer 2 networks.

What is a Layer 2 Network?

With regards to digital assets, a Layer 2 network refers to an off-chain system that functions ‘atop' a base chain or ‘Layer 1 network'.  The purpose of this is to build upon and improve the capabilities of said base layer.  While this sometimes involves introducing new functionalities, it is most often a path taken with the goal of addressing network throughput or ‘scalability' – meaning the underlying network can now serve and handle significantly heavier workloads.

This approach is typically synergistic, as layer 1 and layer 2 pairings allow for each to leverage the strengths of the other.  This means benefiting from the security and decentralization of a base layer, while simultaneously leveraging the throughput of those built atop.

Arbitrum (ARB)

While a relative newcomer, Arbitrum is an example of a promising layer 2 scaling solution for the Ethereum network.  Designed to increase network throughput by offloading transactions from Ethereums main-chain, governance of Arbitrum itself is made possible through use of its own ERC-20 based ‘ARB' tokens.

To learn more about this project, make sure to visit our Investing in Arbitrum guide.

Market Performance

At time of writing, Arbitrum is one of the few tokens to remain ‘green' on the day.  Over this 24hr period, ARB have managed to boast gains nearing 5%, bringing its value from roughly $1.1 to $1.5 with a trading volume of ~$195M.  Of its trading volume, roughly 50% has taken place on Binance, and Gate – both centralized exchanges.

Source: coingecko.com

As a result of this upwards movement, Arbitrum now finds itself ranked as the #37th largest project by marketcap on CoinGecko.  To further climb this list, Arbitrum will need to leap-frog projects like Aptos, Hedera, and Filecoin – each boasting promising potential of their own.

If interested in purchasing Arbitrum tokens, make sure to visit our How to Buy ‘ARB' guide.

Recent News

Beyond prevailing interest in scaling solutions as a whole, Arbitrum (ARB) has also benefitted from positive news surrounding its adoption.

Source: Twitter @arbitrum

This was most recently highlighted when popular hardware wallet manufacturer, Ledger, announced that the project is now fully supported across its platform.  With millions of digital asset enthusiasts turning to Ledger for their storage needs, Arbitrum will now benefit from greatly increased exposure.

Similar Offerings

Although recent performance and developments have impressed, Arbitrum is by no means the only scaling solution for Ethereum that is growing in popularity.  The following are a couple examples of this, each of which have large and growing followings of their own.

Of the various other Ethereum scaling solutions on the market today, Polygon clearly leads the way, residing in the top-10 projects by marketcap.

Final Word

The importance of scaling solutions for top assets like Bitcoin (i.e. Stacks, Liquid, Lightning) and Ethereum (i.e. Arbitrum, Polygon, Loopring)  cannot be overstated.  While such networks have amazing potential and functionality, these are moot points if they are unable to serve a growing user-base efficiently.  With that in mind, savvy investor would be wise to continue tracking the development of projects like Arbitrum, as they attempt to solve this issue through layer 2 implementations.

Daniel is a big proponent of how blockchain will eventually disrupt big finance. He breathes technology and lives to try new gadgets.