Offchain Labs, the company behind Ethereum's scalability solution Arbitrum, has announced its major update, Nitro. According to Offchain, the Arbitrum update will reduce fees, speed up transactions, and make it easier for native Ethereum applications to interface with the layer 2 chain.
"Nitro will massively increase network capacity and reduce transaction costs. Today, we throttle Arbitrum’s capacity, but with Nitro we’ll be able to release those controls and significantly up our throughput. And while Arbitrum today is already 90–95% cheaper than Ethereum on average, Nitro cuts our costs even further."
Offchain founder Steven Goldfeder emphasized that Arbitrum fees, which were usually between 50 cents and $1 before the update, will be reduced by at least 50 percent.
Aggregations like Arbitrum scale the Ethereum network by processing transactions on separate aggregation-specific chains and executing smart contracts, which are mini-computer programs that run on blockchains. Finally, a $625 million hack from Ethereum's Ronin sidechain last week demonstrated the potential vulnerability of sidechains that, unlike aggregates, do not inherit their security from the layer 1 blockchain.
Recently, Offchain company also introduced Arbitrum AnyTrust chains. These chains will be a cheaper, faster and more centralized alternative to the existing Arbitrum chain.
What is Arbitrum?
Arbitrum is a second layer solution designed to augment the capabilities of Ethereum smart contracts. It adds additional layers of privacy while pushing forward speed and scalability.
The platform takes advantage of the fully functioning layer one security of the Ethereum network, as it is designed to allow developers to easily run unmodified Ethereum Virtual Machine (EVM) contracts and Ethereum transactions on a second layer.
Built to address some shortcomings, such as low efficiency and high implementation costs, the protocol solves the existing problems of Ethereum-based smart contracts that harm the Ethereum user experience and drive up the cost of transacting.