You've Probably Used Arbitrum But What Do You Know About Arbitrum Nitro?

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20 Feb 2024

Arbitrum Nitro

Arbitrum Nitro represents a significant upgrade from the original Arbitrum Classic, the inaugural tech stack on Arbitrum One. This upgrade has notably boosted network capacity and slashed transaction costs, achieving a remarkable 7-10x increase in network throughput.

Key Features of Nitro Upgrade

Geth Integration: Nitro departs from Arbitrum Classic's custom EVM emulator, embracing the widely-used and supported go-ethereum (Geth) software. This integration places Geth at Nitro's core, handling the execution and state maintenance. The result? Enhanced Ethereum compatibility, with most of Nitro's benefits stemming from this pivotal design decision.
Execution-Proving Separation: In Nitro, the state transition function code is dual-purposed. Primarily, it's compiled for native execution during regular operations. Secondly, it's transformed into portable WebAssembly (Wasm) code, ready for use in interactive fraud proofs should disputes arise. This setup ensures transaction processing is swift and efficient.
Optimized Fraud Proofs: The platform utilizes optimized, dissection-based, interactive fraud proofs, enhancing security and reliability.
Sequencing and Execution: Transaction handling in Nitro occurs in two phases. Initially, transactions are sequenced, with the sequencer committing to this order. Following this, a deterministic state transition function processes each transaction in sequence, only acknowledging valid transactions.

Advantages of Nitro Upgrade

Reduced User Fees: This is achieved through two main innovations. Firstly, the separation of execution from proving accelerates operations and enhances node performance. Secondly, Nitro employs advanced calldata compression using Brotli, a renowned compression technique. This compression reduces the amount of data needing to be posted to Layer 1, further cutting transaction fees on Arbitrum.
Increased EVM Compatibility: By incorporating Geth and aligning with Ethereum Layer 1 gas protocols, Nitro ensures improved pricing and precise accounting for EVM operations, closely mirroring Ethereum's standards.

AnyTrust (A variant of Arbitrum Nitro technology)

AnyTrust is a type of “honest minority” sidechain with rollup fallback and functions as a mode of Arbitrum that allows for ultra-low-cost transactions with strong security guarantees. These types of chains operate similarly to any alternative layer-1 or sidechain, but with significantly higher security due to a different consensus model, using a “1-of-N” consensus rather than “%-of-N” consensus. They also feature a “fallback” mode in the case of one or two validators' dissent, which makes the chain fall back into a rollup.
AnyTrust chains are superior to alternative L1s and also to sovereign rollups since they can allow for much lower cost and faster withdrawals in exchange for a minimal extra trust assumption. Compared to sidechains, AnyTrust’s key advantage is it’s built on top of Ethereum, so it doesn’t require a separate set of validators and, therefore, less trust. However, the “gold standard” of rollups would be a secured Ethereum rollup, which will also be negligibly cheap post-EIP-4844 and danksharding.
AnyTrust works by using a chain that's operated by a committee of nodes with a minimal assumption about how many committee members are honest. For example, there might be 20 committee members and an assumption that at least two of them are honest. This is a much easier trust assumption compared to conventional BFT sidechains, which require more than two-thirds of the members (14 out of 20) to be honest. The trust requirement can be reduced from 14 to two because of AnyTrust’s unique “fallback to rollup” feature built on top of Ethereum.
Assuming the trust assumption holds and the committee members participate, users get two big advantages when using AnyTrust. First, there’s no need to record L2 transaction data on the L1 chain because nodes can rely on the committee to provide data if needed. Instead, with the committee’s promise to provide data, it’s safe to simply record the hash of a transaction batch on the L1, which saves the largest cost of running a rollup. Secondly, withdrawals to the L1 can be executed immediately as soon as the committee vouches for them.

Safety and Consensus

It’s safe to do either of these two actions described above as soon as 19 of the 20 committee members have promised (by signing) it’s acceptable. The logic is: if there are at least two honest members, and 19 of 20 have signed, then at least one honest member must have signed since the quorum must contain an honest member.
If a quorum signs a promise to provide the data backing a batch of transactions, we know data will be available to anyone who wants it. Therefore, we know it’s safe to post the hash of the data, rather than the full data, on the L1 chain. Similarly, if a quorum signs a statement saying a particular state transition is correct, the state transition can be accepted without waiting for a challenge period. This relationship allows withdrawals to L1 to be processed immediately with AnyTrust.
In the case of lacking an active quorum willing to sign statements, neither of those things can happen. However, the chain can still operate and make progress by using the original Arbitrum rollup protocol as described below.

Fallback to Rollup Mode

If the committee doesn’t sign anything or several committee members crash or refuse to cooperate, the chain can still operate, but by falling back to a standard rollup protocol.
In this mode, transaction data will be posted on the L1 Ethereum chain, and withdrawals will have a delay period, just like on a standard rollup, until the committee resumes operation. Then the chain will switch seamlessly back to the cheaper, faster mode of operation.
While Arbitrum is off to a hot start, it’s not without issues. In January 2022, the Arbitrum rollup network came to a halt. Offchain Labs soon after released a post-mortem explaining the issue was due to the main sequencer experiencing a hardware failure during a software upgrade. This issue cascaded down the system, preventing even the redundancy measures in place from working. Eventually, the issue was corrected and has since been restored to full functionality. During the downtime, no funds were at risk (thank you, rollup!), but no transactions could be executed, including deposits and withdrawals.
In summary, if at least two members are honest, the chain operates correctly, and it follows that if there are 19 members available and cooperating, it operates at minimal cost. In fallback to rollup mode, the chain will operate at the cost of an Ethereum-based rollup and it will be evident who the non-cooperating or unavailable members are so they can eventually be replaced.
Therefore, AnyTrust can be best thought of not as an L2, but rather as a sidechain with a 19/20 liveliness assumption, a 2/20 safety assumption, and 1/20 DA assumption, which falls back to an ORU during a liveliness failure, which would be a safety failure putting funds at risk. However, this security model is worse than Validium. In Validium, only the DA assumption is needed, whereas in AnyTrust, both the DA and the safety assumptions must hold.
Cryptocurrency Ethereum (ETH) DeFi Optimism (OP) Arbitrum (ARB)

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Michael @ CryptoEQ
I am a Co-Founder and Lead Analyst at CryptoEQ. Gain the market insights you need to grow your cryptocurrency portfolio. Our team's supportive and interactive approach helps you refine your crypto investing and trading strategies.
CryptoEQ
Gain the market insights you need to grow your cryptocurrency portfolio. Our team's supportive and interactive approach helps you refine your crypto investing and trading strategies.