Arbitrum One logoArbitrum One

TVL: $2.52 B

-2.73% / 7 days

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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.

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Risk summary

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).
  1. Executing and Securing the Chain - Arbitrum documentation
  2. RollupUserFacet.sol#L281 - Etherscan source code, onlyValidator modifier

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.

    1. Submitting Transactions - Arbitrum documentation

    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.
    1. Validators - Arbitrum documentation
    2. If the sequencer is malicious - Arbitrum documentation

    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.

      1. Submitting Transactions - Arbitrum documentation

      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.

      • Funds can be frozen if the centralized validator goes down. Users cannot produce blocks themselves and exiting the system requires new block production (CRITICAL).
      1. L2 to L1 Messages Lifecycle - Arbitrum documentation
      2. Rules for Confirming or Rejecting Rollup Blocks - Arbitrum documentation
      3. Mainnet for everyone - Arbitrum Blog

      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.

        1. Tradeable Bridge Exits - Arbitrum documentation

        Other considerations

        EVM compatible smart contracts are supported

        Arbitrum 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 AVM implementation.
        1. AVM - Arbitrum documentation

        Permissioned Addresses

        The system uses the following set of permissioned addresses:

        Smart Contracts

        A diagram of the smart contract architecture
        A diagram of the smart contract architecture

        The system consists of the following smart contracts:

        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).