The Arbitrum network is set to undergo a major upgrade soon. The transition to Nitro will resolve some key issues and introduce more innovative features. It’s a standout development for the popular network, although it doesn’t necessarily mean a price increase.
Nitro’s decision is on the horizon
Innovation happens 24/7 in the blockchain world. New developments can help to improve existing networks and increase their attractiveness. While most people focus on Ethereum and The Merge, networks like Arbitrum will also try to improve their market position. The Nitro version for this network will not only improve network capacity and transaction costs without interrupting the user experience.
Contrary to what some people might expect, the “migration” to Arbitrum Nitro shouldn’t result in downtime or a chain split. Instead, everything should run organically, although network participants immediately benefit from reduced fees and higher transaction throughput after the switch. It also means that the network will be much faster, which is excellent news for dapps based on this blockchain.
One of the main benefits of Nitro is how developers can write and compile the L2 Arbitrum engine using standard languages and tools. There is no longer a need to rely on custom coding and the associated compiler. In addition, the core of geth is being compiled into Arbitrum, which is a crucial milestone for the network.
Also, the ArbOS component is stripped down and rewritten in Go. This enables cross-chain communication and better batch processing and compression to minimize the cost of L1 transactions. While Arbitrum is a fair bit cheaper to use than Ethereum, it never hurts to introduce even cheaper options wherever possible.
A potential boost for DeFi
One of the main reasons people are flocking to Arbitrum is to reduce the cost of DeFi activity. Despite the bearish market conditions, the L2 network is one of the few solutions to see DeFi TVL growth this month. A significant gain of over 18% in 30 days brings Arbitrum’s total value to over $919 million. The next target is to surpass $1 billion again, although the bearish pressure will make that quite difficult.
What is interesting is how the L2 solution is housed over 100 DeFi Protocols. This includes popular Ethereum-based projects like Curve, Uniwap and Aave V3, but also solutions like GMX, Stargate, Radiant and Synapse. It’s a good collection of protocols covering derivatives, lending, DEXes, yield farming, options trading and CDPs.
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