Ethereum’s path to scalability is currently centered around rollups. Rollups reduce gas fees and improve throughput by executing transactions outside Ethereum while inheriting its security. This design space allows developers to create scalable applications with low-entry barriers.
While rollups handle scaling, there is also the need to customize. General-purpose rollups may not work long-term for use cases demanding greater control over the underlying blockchain. This is where a layer-3 solution like Arbitrum Orbit comes into play.
With Orbit, teams can launch a custom blockchain on top of Arbitrum rollups like Arbitrum Nova and Arbitrum One in a permissionless manner. While each chain is unique, all Orbit chains are connected to the Arbitrum ecosystem, ensuring interoperability.
But first, what are Arbitrum Orbit chains?
In this blog, we’ll deep-dive into Arbitrum Orbit chains, exploring its inner workings, current ecosystem, and how to build your Orbit chain.
What is Arbitrum Orbit?
Arbitrum Orbit enabled developers to launch dedicated blockchains with highly customizable throughput, privacy, and governance. These Orbit chains are capable of settling to Ethereum itself or to any layer-2 solution like Arbitrum One or Arbitrum Nova, which are based on rollup and AnyTrust technology.
The difference between an Orbit chain and other Arbitrum rollups is the Ethereum alignment degree.
With Orbit chains, developers don't have to optimize for Ethereum compatibility to benefit from its security standards. Instead, they can optimize for performance and user experience by arbitrarily modifying the software to meet their dApp needs.
Orbit chains are an expansion to the larger app chain thesis, offering developers an environment to build custom blockchains in a streamlined way.
How does Arbitrum Orbit work?
The new Orbit chains have the same inner workings as other rollups on Arbitrum. The only difference is that instead of settling on Ethereum L1, these L3s settle on L2s like Arbitrum One or Arbitrum Nova. Let's dive into the core components forming Orbit chain architecture to understand how this works.
Nitro is a major technical upgrade that made Arbitrum more cost-effective, interoperable, and EVM-compatible than the previous Arbitrum Classic. These improvements are a result of four main design ideas, which are:
- Sequencing transactions: Nitro processes transactions in two phases. First, the transactions are organized in a sequence. These can be batched and compressed in real-time to L1 for soft finality. For the second phase, they run through a deterministic state transition function, and then L2 blocks are published on Ethereum for hard finality.
- Geth integration: Arbitrum Nitro integrates go-ethereum's core code, forming the base layer of its design. By treating go-ethereum as a library, Nitro maintains a high level of compatibility, facilitating efficient interaction with the broader Ethereum ecosystem.
- Separating execution and proving: Nitro compiles the same source code twice. For execution, it complies with WebAssemble (WASM) for speed optimization, whereas proving is on the native code for better portability.
- Rollup-based interactive proving: Arbitrum Nitro offers effective dispute resolution with interactive fraud proofs. The two nodes involved in the dispute engage off-chain to narrow down to a single instance during execution that they disagree on. In this way, the L1 only has to look at that one step and check for the legitimacy of proofs.
Source: Arbitrum Keynote
Data Availability Mechanisms
One of the biggest cost factors of rollup gas fees is posting call data on Ethereum. To lower this cost, Arbitrum provides AnyTrust technology to build an Orbit chain with an external DA solution.
While AnyTrust chains are cost-effective, they come with a trust assumption. This assumption is that at least 2 members of the DA committee are honest and provide access to the data. This method posts data on L1 through a data availability certificate (DACert). If the DACert gets rejected, the chain will fall back to the rollup way of posting data to Ethereum.
Elastic Block Times
Posting data blocks on Ethereum for verification is the biggest cost for rollups, irrespective of whether a block is empty or not. Arbitrum Orbit introduces a killer feature with elastic block times to avoid rollup costs when blocks are empty.
When the chain goes without any transactions, no block will be produced. This saves L1 costs significantly. In contrast, when activity spikes, as many as 4 blocks are produced per second, providing a super-fast user experience.
Why build on Arbitrum Orbit?
Gas price reliability
In a general-purpose rollup, computational resources are shared between applications. This creates uncertainty around throughput and gas prices.
For example, when an NFT mint is underway and draws significant on-chain activity, it can cause a fee spike for other apps due to congestion.
With custom chains, projects don't have to compete for blockspace. This isolation supports use cases that need predictable gas pricing and dedicated throughput. Further, it makes it possible to abstract gas fees for users because the costs will be so low.
Custom protocol logic
Extensive customization can be done to core protocol logic on Orbit chains. This involves changing the chain's settlement, execution, and governance protocols.
For example, a protocol can use an alternate data availability layer like Celestia instead of the AnyTrust model Arbitrum offers.
Projects can also go beyond Arbitrum rollups for settlement. With the Arbitrum expansion program, an Orbit chain can settle on Ethereum L2s like Optimism and Base. Similarly, developers can add new sequencing models, new forms of cross-chain communication, and custom gas tokens for Orbit.
Multiple decentralization options
Arbitrum provides two options for launching an Orbit chain based on the technology stack. First, Arbitrum One, the flagship optimistic roll-up, directly batches transactions to Ethereum, ensuring top-tier security. It is ideal for apps with high decentralization and security needs.
Alternatively, there's Arbitrum Nova, utilizing AnyTrust technology. This roll-up introduces a mild trust assumption through an external Data Availability Committee (DCA), significantly reducing the cost of posting data to Ethereum. For large-scale apps prioritizing low gas fees, AnyTrust is suitable for launching their Orbit chain.
Predictable gas pricing, irrespective of scale, allows developers to cover costs for users. As a result, overall user experience is enhanced, leading to better long-term retention.
In addition, teams can improve user experience with account abstraction that unlocks simpler social logins and users can pay gas fees via different ERC-20 tokens. There can be many more features that aren't supported on Ethereum or Arbitrum added on the UX front, as you can have an independent product roadmap. For example, you can have Face ID as your private key to verify transactions.
Projects building app chains using Orbit can access Arbitrum Stylus and achieve EVM+ compatibility. Stylus upgrade will allow developers to write smart contracts in popular programming languages like Rust. This will improve computation by 10x and memory by 100x.
Besides performance, Stylus also makes smart contracts safer by providing cheap reentrancy ( a common vulnerability) detection. These innovations will help developers code in their preferred language and unlock use cases not possible on native EVM.
Projects built on Arbitrum Orbit
Here are different types of applications leveraging the Orbit tech stack:
Xai is a gaming-specific L3 built using Arbitrum’s AnyTrust technology. Xai will be the execution layer for all games published within the ecosystem and support them with account abstraction and low gas fees. The game studio behind Xai, Ex Populus, is developing the first two games on Xai, Final Form and LAMOverse. Games are also migrating to the Xai chain, with Crypto Unicorns being the first.
Formerly known as NFT Worlds, HYTOPIA is a modern metaverse platform where players go on adventures, build new items, and monetize in the open markets. HYTOPIA is launching an Orbit L2 chain using AnyTrust technology to make it as simple as possible for developers to launch games and players to transition from web2 to web3. This includes seamless social logins, developer-friendly APIs, and gas fee subsidization.
Deri is a futures and options trading derivatives platform. The unique feature about Deri is that trades are tokenized as NFTs, making them composable with other DeFi projects. Deri leveraged Arbitrum’s Nitro stack to launch an L3 chain to improve transaction processing times and lower gas fees for traders.
Syndr is a DeFi derivatives exchange with 100+ markets for options, futures, and perps trading. Syndr launched an Orbit L3 chain to improve latency and abstract gas fees for traders. It also allowed Syndr to enable 1-click deposits and withdrawals because of the EVM compatibility and interoperability offered by Orbit chains.
Non-fungible tokens (NFTs)
Frame is a layer-2 solution built using the Arbitrum stack tailored to meet the needs of NFT creators and collectors. Using Arbitrum Orbit, Frame wants to make the NFT experience cheaper and more straightforward for users while still being closely associated with the EVM ecosystem. This involves enshrining NFT-friendly features like enforced royalties into the base rollup.
Built by the Rari Foundation, Rari Chainthe is a creator-centric Orbit L3 chain supporting the next-generation NFT use cases. Arbitrum Orbit’s custom protocol logic features enabled enforced royalties and near-zero gas fees. Rari also used thirdweb’s infrastructure in partnership with Caldera for smart contract implementation and wallet integrations.
The Orbit ecosystem is just getting off the ground. According to Arbitrum’s co-founder Steven Goldfeder, there can be as many as 150 Orbit chains on mainnet by the end of 2024.
How to build on Arbitrum Orbit?
Here is a breakdown of how you can start building apps or even a new orbit chain:
Building dApps on Orbit chains
To deploy dApps on Orbit chains, developers can use the development stack from thirdweb. From smart contract creation to adding user-friendly wallet UI, developers can leverage thirdweb to develop dApps on any of the Orbit chains, like:
Building a new Orbit chain
Here’s a step-by-step process of building your own Orbit chain:
Step 1: Acquire Arbitrum testnet ETH for base contract deployment. You can get this through thirdweb’s faucets.
Step 2: Choose which Arbitrum stack you want to use: AnyTrust or Rollup.
Step 3: Configure parameters for deployment.
Step 4: Configure node validators and chain’s batch poster.
Step 5: Review and deploy the Orbit chain to Arbitrum’s testnets.
Many aspects of the chain need to be customized before it goes live. It can be even more extensive based on the complexity of the app being built.
Rollup-as-a-service platforms like Caldera ease this process, from deploying to scaling a rollup. With Caldera, developers also access thirdweb’s development kit for wallets, contracts, payments, and more.
Final thoughts: What’s next for Arbitrum Orbit?
Arbitrum Orbit is a catalyst for the expansion of the multi-chain world. With a wide range of customizations, Orbit allows developers to create an isolated yet connected-to-the-EVM environment to launch large-scale applications.
Besides scalability, the protocol logic can be changed permissionlessly to add necessary UX upgrades. The Orbit chains also benefit from the existing community, liquidity, and overall network effects of the underlying Arbitrum blockchain.
Ultimately, the Orbit chain can be a key driver to attract more users as every dApp built becomes accessible and easy to use.