Arbitrum scales Ethereum via Optimistic Rollups, executing transactions off-chain while leveraging Ethereum's security. Its Nitro upgrade introduced WASM-based fraud proofs and EVM+ compatibility, enabling near-instant finality. ARB tokens govern the network (decentralized DAO), and Stylus SDK supports Rust/C++ for dApp flexibility. Multi-round fraud proofs secure $18B+ TVL, the highest among Layer2s.

Arbitrum processes 40,000+ TPS (theoretical max), reducing Ethereum gas costs by 95% (avg. fee: $0.05). Nitro's adaptive compression cuts data costs by 50%, while AnyTrust chains (e.g., Nova) optimize for gaming with near-zero fees. Transactions finalize in 1-2 minutes, balancing speed and trustlessness.

Arbitrum dominates Layer2 with $10B+ TVL, hosting Uniswap V3, GMX, and Radiant. Over 60% of Ethereum's Layer3 projects (e.g., XAI Games) run on Arbitrum Orbit. ARB airdrops incentivize 1M+ users, and partnerships with Chainlink, Lido, and TreasureDAO (gaming hub) drive adoption. Its BOLD testnet pioneers permissionless validation, enhancing decentralization.