Arbitrum One
Description
Arbitrum is an Optimistic Rollup that aims to feel exactly like interacting with Ethereum, but with transactions costing a fraction of what they do on L1. Centralized Sequencer receives users' transactions and regularly sends the transaction batch to mainnet Ethereum. Independent Validators (currently whitelisted) read transaction batches from L1, execute them and submit a resulting L2 state root to L1. Any other Validator can challenge the state root within the challenge window (7-days). The challenge will result in an interactive fraud proof game that will be eventually settled by L1. As long as there is at least one honest Validator, users are guaranteed that eventually correct L2 state root will be published to L1. If Sequencer is censoring users transactions, it is possible to force the transaction via L1 queue. If no Validator publishes L2 state root within 7 days, the Validator whitelist is dropped and anyone can take over as a new Validator.
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Risk summary
Funds can be stolen if
Funds can be lost if
MEV can be extracted if
Technology
Fraud proofs ensure state correctness
After some period of time, the published state root is assumed to be correct. For a certain time period, usually one week, one of the whitelisted actors can submit a fraud proof that shows that the state was incorrect.
Funds can be stolen if none of the whitelisted verifiers checks the published state. Fraud proofs assume at least one honest and able validator (CRITICAL).
All transaction data is recorded on chain
All executed transactions are submitted to an on chain smart contract. The execution of the rollup is based entirely on the submitted transactions, so anyone monitoring the contract can know the correct state of the rollup chain.
Operator
The system has a centralized sequencer
While proposing blocks is open to anyone the system employs a privileged sequencer that has priority for submitting transaction batches and ordering transactions.
MEV can be extracted if the operator exploits their centralized position and frontruns user transactions.
Users can force any transaction
Because the state of the system is based on transactions submitted on-chain and anyone can submit their transactions there it allows the users to circumvent censorship by interacting with the smart contract directly.
Withdrawals
Regular exit
The user initiates the withdrawal by submitting a transaction on L2. When the block containing that transaction is finalized the funds become available for withdrawal on L1. The process of block finalization usually takes several days to complete. Finally the user submits an L1 transaction to claim the funds. This transaction requires a merkle proof.
Tradeable Bridge Exit
When a user initiates a regular withdrawal a third party verifying the chain can offer to buy this withdrawal by paying the user on L1. The user will get the funds immediately, however the third party has to wait for the block to be finalized. This is implemented as a first party functionality inside Arbitrum's token bridge.
Other considerations
EVM compatible smart contracts are supported
Arbitrum One uses Nitro technology that allows running fraud proofs by executing EVM code on top of WASM.
Funds can be lost if there are mistakes in the highly complex Nitro and WASM one-step prover implementation.
Permissioned Addresses
The system uses the following set of permissioned addresses:
The admin of all contracts in the system, capable of issuing upgrades without notice and delay. This allows it to censor transactions, upgrade bridge implementation potentially gaining access to all funds stored in a bridge and change the sequencer or any other system component (unlimited upgrade power). It is also the admin of the special purpose smart contracts used by validators.
These addresses are the participants of the 4/6 Arbitrum MultiSig.
Central actor allowed to set the order in which L2 transactions are executed.
They can submit new state roots and challenge state roots. Some of the validators perform their duties through special purpose smart contracts.
Smart Contracts
The system consists of the following smart contracts:
This contract is an admin of SequencerInbox, Bridge, Outbox and ChallengeManager contracts. It is owned by a 4-of-6 multisig.
Main contract implementing Arbitrum One Rollup. Manages other Rollup components, list of Stakers and Validators. Entry point for Validators creating new Rollup Nodes (state commits) and Challengers submitting fraud proofs.
Main entry point for the Sequencer submitting transaction batches to a Rollup.
Entry point for users depositing ETH and sending L1 --> L2 messages. Deposited ETH is escowed in a Bridge contract.
Contract managing Inboxes and Outboxes. It escrows ETH sent to L2. This contract stores the following tokens: ETH.
This is a different proxy admin for the three gateway contracts below. It is also owned by a 4-of-6 multisig..
Router managing token <--> gateway mapping.
Main entry point for users depositing ERC20 tokens. Upon depositing, on L2 a generic, "wrapped" token will be minted. This contract can store any token
Main entry point for users depositing ERC20 tokens that require minting custom token on L2. This contract can store any token
Custom DAI Gateway, main entry point for users depositing DAI to L2 where "canonical" L2 DAI token managed by MakerDAO will be minted. Managed by MakerDAO.
DAI Vault for custom DAI Gateway managed by MakerDAO. This contract stores the following tokens: DAI.
The current deployment carries some associated risks:
Funds can be stolen if a contract receives a malicious code upgrade. There is no delay on code upgrades (CRITICAL).