Arbitrum is a Layer 2 scaling solution for the Ethereum blockchain that powers fast smart contract transactions while reducing transaction costs.

Layer 2 solutions can scale the base Layer 1 blockchain by delegating complex computational tasks, such as transaction processing and data storage to the second chain. In short, the Layer 2 blockchain executes the smart contract, and the Layer 1 blockchain stores the data. If you want to know more about how the mainnet works, check out our article on what is Ethereum.

In the context of Ethereum, Arbitrum handles blockchain transaction processing and batching, reducing congestion and cost from the main network.

For instance, DeFi projects like Sushiswap and Aave use Arbitrum in the hood to offer efficient swaps with lower gas fees.