At first glance, 2022 in crypto looks like nothing other than an outright catastrophe. We had the expected bear market grind, as predicted by Bitcoin’s four-year halving cycles, coupled with the domino-rally collapse of ecosystems and entities, from Terra/Luna to, most damagingly of all, FTX.
With that in mind, anything that was able to demonstrate ongoing growth within this crumbling landscape should register as worthy of attention, and if we look closely, we can find just such a candidate for closer inspection.
Throughout 2022, and continuing now into the new year, the Arbitrum Layer 2 network has become increasingly active and shown consistent expansion, setting it apart from the rest of crypto, and indicating significant future potential as wider crypto sentiment begins (for now, at least) to improve.
What Are Layer 2s and Why Are They Important?
A Layer 1 blockchain is an independent blockchain at the base of an ecosystem. This means the likes of Bitcoin, Ethereum, Solana, Cardano, Avalanche, and more. From this foundation, a Layer 2 refers to an additional chain that operates on top of or alongside, and in communication with, a Layer 1.
The purpose of Layer 2, in general, is to take user activity off Layer 1, easing the network and allowing for faster transactions and lower costs. Ultimately, activity on Layer 2 will be regularly settled back on Layer 1, meaning Layer 1 remains foundational and provides security.
Very often, when people talk about Layer 2s, it’s with reference to Ethereum and its growth. Layer 2s are critical to Ethereum’s future since Ethereum has well-documented problems when it comes to scaling. Basically, the network can become congested, and transaction costs sometimes soar to levels incompatible with mass adoption.
It is proposed that Layer 2s offer the solution (or part of the solution) by which Ethereum can scale and achieve mainstream integration, and chief among these complementary chains is Arbitrum.
What Is Happening on Arbitrum?
Arbitrum was developed by a group called Offchain Labs, and launched to developers as Arbitrum One back in May 2021. There was a subsequent upgrade, called Arbitrum Nitro, last August, which was lauded for reducing fees and increasing network throughput.
Also, in August last year (following a limited July launch for developers), Arbitrum launched a second Layer 2 chain, called Arbitrum Nova. This alternative chain is optimized for web3 gaming and social applications, while…
