Arbitrum

Due to the growing popularity of Ethereum, it suffered from scalability problems. This meant that users had to pay high amounts of ETH in order to complete a transaction. These transaction fees could sometimes amount to several hundred dollars.

Hopefully this problem will be solved when Ethereum 2.0 is up and running, although there are also plenty of parties who don't want to wait for this. For example, the team behind Arbitrum.

In this article, we'll focus on what Arbitrum is and how it should help solve Ethereum's scalability issues.

Ethereum's Scalability Problem

Suppose a given blockchain can process 100 transactions per second. As soon as no more than 6000 transactions per minute are sent, there will be no problems.

But what happens if 12000 transactions are sent in one minute? This is too much, and the network will not be able to process all of these transactions. The first 6000 transactions are processed, while the last 6000 end up in a so-called mem pool, which is a kind of queue.

You can imagine that this is only the beginning of a problem that is getting bigger. Unless, something is done about it. And that is something that Ethereum is working on: A major update, called Ethereum 2.0 or Serenity, which is expected to be carried out in 2022.

However, There are also developers who prefer to take matters into their own hands, such as the group behind Arbitrum, which is a piece of software that should provide a solution to Ethereum's scalability problems. Now that you know exactly how this problem is caused, it will be a lot easier to understand Arbitrum.

Existing solutions for this problem

Arbitrum isn't the only protocol trying to address this issue. There are already several projects that try to put an end to the scalability problem by means of sharding, sidechains, plasma, channels and rollups.