Original title: The Year of Arbitrum Orbit
Original author: Francesco
Original compilation: Luccy, BlockBeats
Editors note: As competition for Ethereum Layer 2 solutions becomes increasingly fierce, Arbitrum Orbit is emerging as a driver of ecosystem development. Crypto researcher Francesco dives into Arbitrums technological innovation, developer licensing model, and the uniqueness of the Orbit chain, and lists projects that have been built on Orbit. Francesco pointed out that as more projects choose to build on its stack, the Arbitrum technology stack is expected to show its potential in 2024 and inject new vitality into the ecosystem. BlockBeats compiled the original text as follows:
Layer 2 has solidified their role as the most successfully implemented in Ethereum’s scaling roadmap.
Among them, Arbitrum and optimization have been attracting projects and talents to compete fiercely on the basis of L2 - often referred to as the L2 battle.
Initially, it was a battle to build the critical infrastructure for L2 and gather an initial critical mass of protocols and users.
Now theyre booming, and the next step in the fictional war is who will attract more projects to build on top of their stack.
To do this, they chose different methods.
Arbitrum focuses more time and energy on improving its technology stack and decentralized governance, while Optimism adopts a more streamlined approach that can be summarized as an emphasis on growth - it is all about trade-offs.
Eventually, as more and more protocols adopted the OP Stack, these different trade-offs became apparent, leading many to believe that Arbitrum was losing the race.
However, this is not a race, but a marathon.
Year of the Orbit
If we analyze the data, Arbitrum remains the largest L2 in TVL with over $2.5 billion and one of the most complex and composable DeFi ecosystems with over 500 protocols.
Orbit is part of Arbitrums expansion plans that will see its technology stack leveraged by other projects built on top of it.
As part of these plans, more than 50 Arbitrum Orbit chains are already under development, and one of Arbitrums founders speculates that there will be approximately 150 more Orbit chains by the end of this year.
What is Arbitrum Orbit?
Orbit is the Arbitrum stack that allows anyone to launch their chain on Arbitrum One or Nova without permission. It is equivalent to the OP Bedrock stack, where protocols can build their own chains.
Arbitrum Orbit allows any developer to easily and permissionlessly launch their own L3 ecosystem based on the Arbitrum chain.
What can you build on Orbit?
When building on Orbit, projects can decide whether to build L2 or L3 on Orbit, and whether to choose Arbitrum One or Nova.
Depending on the necessary trade-off between decentralization and performance, on Arbitrum Orbit you can decide whether to build:
Arbitrum Rollup
Arbitrum Arbitrary Trust
L3 for specific use cases
By creating an Orbit chain, projects can customize their throughput, privacy, gas tokens, governance, and more.
Why should projects be built on Orbit?
gas price reliability: dedicated throughput and traffic isolation
Arbitrum Stylus: Benefit from EVM compatibility
Referee Nitro: Use Referee Nitro code upgrade
Arbitrum’s independent roadmap
Customizable permissions: choose who can read and deploy data and smart contracts (no permissions/permissions)
Choose gas token: whether its ETH, ARB or your token.
Account Withdrawal/Transaction Fee Subsidy
Customizable protocol settlement/execution/governance
Low cost of launching prototypes
Differences from the optimization model
In contrast to the OP model, Arbitrum chose to develop a licensing model.
When building a new Orbit chain, projects will be given full permission to adapt the Arbitrum codebase to their needs. These licenses are:
Perpetual—no one can take your software license away from you
Recursive – the Orbit chain itself can host other chains governed by the same license
While developers can always deploy any L3 without a license, launching a new L2 chain using the Orbit stack directly on Ethereum requires a custom license from Offchain Labs or approval from the Arbitrum DAO, which may be done at the discretion of the Arbitrum DAO grant these licenses.
Almost like its trademark, Arbitrum prioritizes slower processes, ensuring that checks and balances are in place to ensure consistency between Arbitrum and the Orbit-hosted L2 on top of it, while Optimism has always favored a faster approach to marketing its technology stack.
What’s so special about Orbit?
One of the differences between Arbitrum Orbit and other L2 competitors is flexible block time, that is, Orbit flexibly produces blocks according to demand.
The Orbit chain can produce up to 4 blocks per second if a large number of transactions come in, but if the chain continues without transactions, there will be no blocks.
Why is this important?
The cost of producing empty blocks is high, especially if they choose Ethereum.
A new chain that has just launched may encounter serious problems with transactions, especially initially.
Orbit’s flexible block time allows them to save money on L1 block settlement because no empty blocks are generated and no money is wasted.
Cumulatively, elastic block times will improve the capital efficiency of the Arbitrum Orbit network, here is an example comparing to the OP stack chain which produced 7.8 million blocks even though it only had 577,000 transactions.
In addition, Orbit allows projects to build “Anytrust” chains that can leverage the Commission’s (DAC) customized data availability solutions. This, in turn, enables “ultra-low transactions of less than a penny without compromising security and minimizing trust.”
Orbit chains also benefit from Arbitrum Stylus, which allows them to write smart contracts in the most popular languages such as Rust, C and C++ while maintaining full EVM compatibility.
Is anyone already developing on Orbit?
There are already several projects using Orbit to build L3:
Most of these projects revolve around games, while other projects revolve around DeFi, music, new ways of streaming incentives, etc.
With more Orbit chains coming soon, the Arbitrum technology stack will finally show its potential at the infrastructure layer by 2024.
Its worth remembering that Arbitrum is a Phase 1 rollup, while Optimism is still Phase 0 due to their lack of field failure proof.
The benefits of the thriving Orbit Chain network will also extend to ARB.
While most L3s will likely use their own native tokens for gas, the ARB token can also benefit from the Orbit chain using it as a supply pool for gas tokens.
Orbit has all the ingredients for success:
Flexible technology stack: all development comes from the Nitro code base while maintaining complete independence
Arbitrum’s Network Effects
A powerful treasury to stimulate growth
The Arbitrum DAO runs several funding programs for the ecosystem, so it’s not far-fetched to envision them using some of the funds to incentivize Orbit’s builders, such as gas fee subsidies, etc.
At the same time, the Orbit chain will raise new questions about governance, one of Arbitrums co-founders said in his new researcharticlesolved this problem.
Are you ready to launch a series of new chains on Orbit?
There is no denying that Arbitrum has lagged behind in technology stack adoption compared to Optimism, will we see changes in 2024 with the launch of the new Orbit chain?
