Arbitrum: Scalable, private smart contracts | USENIX

Paper authors are a group of people from Princeton University.

Problem

Ethereum smart contract’s total throughput is limited to number of steps a single miner can emulate in one block. So how to scale the smart contract? A few existing options:

  1. SNARK stands for "Succinct Non-Interactive Argument of Knowledge". It is a type of proof system that allows one party to prove to another that a statement is true, without revealing any information beyond the validity of the statement itself. In the context of blockchain and smart contracts, SNARKs can be used to prove that a computation has been correctly performed without actually having to execute the computation on-chain, thereby increasing scalability and privacy.
    1. requires trusted setup for every contract
    2. off-chain proving very expensive
  2. TrueBit is an incentivized verification system for smart contract computations. It allows for off-chain computations to be verified by a network of nodes who are incentivized to correctly validate the computation. This system increases scalability by allowing for complex computations to be executed off-chain, while still ensuring the correctness of the computation through the incentivized verification process.
    1. no privacy
    2. serious incentive compatibility problems
  3. State channels are a type of off-chain scaling solution for blockchain networks. They allow for two parties to perform a series of blockchain transactions without having to execute each transaction on-chain. Instead, the state of the transactions is stored off-chain, and only the final state is recorded on-chain. This greatly increases scalability by reducing the amount of on-chain transactions required, while still ensuring that the transactions are secure and valid.
    1. assume unanimous off-chain agreement
    2. dispute resolution is expensive

Solution

Arbitrum One, Offchain Labs' Layer 2 scaling solution for Ethereum, was launched in 2021. Arbitrum aims to increase its ability to process thousands of transactions per second and lower transaction fees, like any other scaling solution. It moves contract computation and storage from Ethereum's primary chain, enabling significantly better throughput. Transactions on Arbitrum only cost a few cents to complete.