Arbitrum (ARB)

Arbitrum (ARB) is the governance token of Arbitrum, a family of networks that process transactions away from Ethereum's main chain and then post the results back to it. Holders of ARB vote on how the Arbitrum networks are upgraded and how a large shared treasury is spent, through the Arbitrum decentralized autonomous organization (DAO). The token was launched by airdrop in March 2023.

ARB is not the fee token: transactions on Arbitrum are paid for in ether (ETH). Arbitrum One, the main network, is an optimistic rollup and one of the largest layer 2 networks built on the Ethereum blockchain. Its software is developed mainly by Offchain Labs, a company founded by Ed Felten, Steven Goldfeder and Harry Kalodner, while the Arbitrum Foundation supports the DAO.

Imagine a busy court that can only hear a few cases a day. Arbitrum acts like a trusted clerk's office next door. It handles thousands of routine matters quickly and cheaply, then files a summary with the court. The court accepts the summary unless someone formally objects within a set period, and if they do, the court looks only at the single disputed point and decides it.

That arrangement lets people use Ethereum's applications for a fraction of the cost while still relying on Ethereum as the final judge. The ARB token is not the fee people pay at the clerk's office; that is paid in ether. ARB is more like a voting share in the body that runs the office, deciding its rules and how its savings are spent.

Arbitrum grew out of research at Princeton University and was developed by Offchain Labs from 2018. Arbitrum One opened to the public in August 2021, and the Nitro upgrade of August 2022 rebuilt the system around Ethereum's own software, lowering costs. A second network, Arbitrum Nova, launched the same month for games and social applications that need very low fees.

ARB was airdropped on 23 March 2023 to early users of the networks and to DAOs building on them. Days later the DAO's first proposal, AIP-1, caused an uproar because it sought to approve the transfer of 750 million ARB to the Arbitrum Foundation, some of which had already been moved; most voters opposed it and the Foundation split it into smaller proposals. Later upgrades included Stylus in September 2024, which lets developers write smart contracts in languages such as Rust as well as Solidity, and BoLD in February 2025, which allows anyone, not just an approved list, to challenge an incorrect result.

A user's fee on Arbitrum covers two costs: the work done on Arbitrum itself and the cost of publishing the transaction data on Ethereum, which is usually the larger part. In simplified form:

• $G_{\text{L2}}$ is the gas the transaction uses on Arbitrum.
• $P_{\text{L2}}$ is Arbitrum's gas price, which rises when the network is busy.
• $C_{\text{L1}}$ is the transaction's share of the cost of posting data to Ethereum.

For example, a swap using 200,000 gas at 0.01 gwei costs $200{,}000 \times 0.01 = 2{,}000$ gwei on Arbitrum. If its share of Ethereum data costs is 3,000 gwei, the total is 5,000 gwei, or 0.000005 ETH. See gas fee for how gas prices are set.

Security rests on fraud proofs. Results posted to Ethereum are assumed correct unless challenged within a window of about a week, which is why withdrawals to Ethereum through the official bridge take that long; third-party crypto bridges offer faster exits for a fee.

ARB has a fixed total supply of 10 billion tokens. At launch about 42.8 percent went to the DAO treasury, 26.9 percent to Offchain Labs staff and advisers, 17.5 percent to investors, 11.6 percent to users and 1.1 percent to DAOs in the ecosystem. Team and investor tokens were locked for a year and then released monthly, in line with a cliff vesting schedule, so each token unlock has added supply to the market.

Holders can vote directly or delegate their votes. The DAO decides on protocol upgrades through a "constitutional" track with higher thresholds, controls the treasury, and funds grant and incentive programmes. A Security Council of elected members can act quickly in an emergency. Businesses can also build their own chains with Arbitrum's software, called Arbitrum Orbit chains; Robinhood announced in 2025 that it would build a chain on this technology.

The AIP-1 dispute left lasting questions about how much power the Foundation and Offchain Labs hold over a nominally decentralized DAO. Like most rollups, Arbitrum relies on a single sequencer, run by Offchain Labs, to order transactions, which can censor or delay them for a time even though users can force transactions through Ethereum. Because ARB is a governance token with no claim on fees, critics argue its value depends on governance rights and treasury spending rather than cash flow, and regular unlocks have weighed on its price. It competes directly with Optimism (OP), Polygon (POL) and other scaling networks.

• Arbitrum
• Arbitrum documentation
• Arbitrum Foundation
• Faisal Khan: What is Arbitrum (ARB)?