Coinbase, one of the top United States-based crypto exchange platforms, has added trading support for the Ethereum (ETH) layer-2 scaling solution Arbitrum (ARB), which is a chief competitor to Polygon (MATIC).
The leading crypto exchange platform revealed in a new announcement that trading for Arbitrum is now available across both iOS and Android devices. However, it has an experimental label, which means that the digital asset is highly volatile and has a lower trading volume when compared to other cryptocurrencies in the crypto exchange platform’s portfolio.
Although the announcement sent ARB soaring, going from its 24-hour low of $1.26 all the way to a peak of $1.54, a 22.2% increase, the token has since retraced and is trading for $1.37 at the time of writing. However, ARB’s launch saw the asset experience significant losses as it plummeted by over 70% since its debut.
Earlier this month, four prominent crypto exchange platforms were among the first to announce that they would add support for Arbitrum, which occurred right before its first airdrop. According to previous reports, the exchange platforms, including MEXC, Huobi, Bitrue, and Bybit, all stated that they would list ARB by March 23rd.
Yesterday, the Arbitrum foundation proceeded with its scheduled airdrop and distributed 12.5% of its token supply to eligible users. According to blockchain explorer Arbiscan, the airdrop caused the number of daily transactions on Arbitrum to skyrocket from 1,218,525 to 2,733,872.
Understanding Arbitrum and its Features
Arbitrum is an Ethereum Layer 2 scaling solution that leverages a unique approach called Optimistic Rollups. The project operates on Ethereum, allowing for seamless compatibility between Ethereum and Arbitrum, and it seeks to improve protocol scalability and solve the well-known issue of high transaction costs associated with using the Ethereum network.
Optimistic Rollups provide an opportunity to introduce smart contracts on Layer 2 without the associated tradeoffs of security, centralisation, or functionality. This way, smart contracts can be processed off-chain, giving the main Ethereum network the much-needed breathing space to operate more efficiently.
Optimistic Rollups work by enabling smart contracts to process off-chain while still maintaining the security of the main Ethereum blockchain layer. The technology enables Ethereum transactions to be processed more quickly and cheaply, achieving the same results with lower fees.
Arbitrum’s communication channel optimises the distribution of information, allowing for the verification and execution of smart contracts. With the Optimistic Rollups sidechain, it is possible to extend the capabilities of the protocol without increasing the computational load or gas fees.
The Arbitrum Protocol Vastly Improves Ethereum’s Performance
With an increasing number of decentralised finance (DeFi) applications being built on Ethereum, the network has often suffered from congestion and high gas fees. In response, Arbitrum is emerging as an essential tool that can help to improve Ethereum’s scaling capacity and increase its transaction throughput.
With the growing adoption of Ethereum-based DeFi protocols, there has been a surge in demand, leading to congested networks, resulting in high transaction fees. The high fees have led to many users and projects looking for alternative, more scalable solutions. This is where Arbitrum comes in, presenting as a viable solution to help tackle the issue of high transaction fees.
Essentially, the Arbitrum protocol provides a means to interact with smart contracts on Ethereum Layer 2 solution, which is outside the Ethereum mainnet’s congested layer. This solution offers faster transaction processing times and lower gas fees, making it a more efficient solution for applications built on Ethereum.
Arbitrum also offers some advantages in terms of efficiency and usability over other Ethereum Layer 2 protocols such as Polygon, ZK Sync, and Optimism.
Final Thoughts
With trading now live for ARB on Coinbase, the digital currency is expected to experience further price surges as more investors join the network. Coinbase’s support for Arbitrum is significant and adds to its inclusion on other crypto exchanges worldwide.
As Ethereum’s Layer 2 scaling solution, Arbitrum is well-positioned to help resolve the main Ethereum network’s scaling issues. With its Optimistic Rollups feature and efficient communication channels, the protocol offers a viable solution that can scale Ethereum to much higher throughput rates than previously possible.
Overall, Arbitrum is a valuable addition to the expanding DeFi ecosystem, contributing to the acceleration of the adoption of blockchain technology globally.
