How Arbitrum Works
The technology behind Arbitrum is optimistic rollups. Rollup is a type of data compression technique in blockchain transactions. This technique involves ‘rolling up’ a collection of transactions into a single transaction. The benefit is that the blockchain only needs to process one transaction i.e. the ‘rolled up’ transaction and does not need to confirm each individual transaction within the rollup. This can save time because the blockchain only needs to confirm one transaction.
Optimistic rollup is a special technique for rolling transactions off-chain. To speed up the process, optimistic rollup assumes that the transactions contained in the rollup are valid.
Arbitrum's optimistic rollup is completed on top of Arbitrum's rollup chain. Arbitrum collects a collection of transactions, settles them on the Arbitrum rollup chain, and then feeds the transaction data back into the Ethereum blockchain.
Arbitrum says that every transaction confirmed through this process is stamped with an “AnyTrust Guarantee“, which is when all validators agree on the validity of the transactions contained in a block. Validators stake ETH before they can confirm transactions; by staking ETH, they are incentivized to act honestly.
