Offchain Labs Receives Coinbase Ventures Investment As They Test Ethereum Scaling Solution; Arbitrum
Offchain Labs has announced the launch of Arbitrum. The startup which is focused on developing business solutions, announced the launch of the Alpha version of the Ethereum extension solution today. They also announced that Coinbase Ventures will be providing funding to encourage more developers to come on board. Coinbase Ventures is the investment of the popular crypto exchange firm, Coinbase.
The announcement did not specify how much investment was made, but it is significant enough to foster the development of the platform. The New Jersey based startup is led by Ed Felten, the former Vice President of technology in the White House. In an investment round in April, the firm raised $3.7 million.
Solutions for Ethereum
Ethereum is the most popular public blockchain network, and it is used to build smart contracts and decentralized applications (dApps). Felten said that Arbitrum makes the development of Ethereum contracts faster, more private, and more scalable. It is compatible with Ethereum and it is easy for developers to adopt. He added that the main challenges they face has to do with the design of a secure, reliable, and easy to use a system which does not have any performance bottlenecks.
Developers in the crypto industry are scrambling to develop all kinds of solutions for Ethereum. There is a need to increase the speed of the network and privacy that is afforded to transactions. Many startups have taken it upon themselves to develop the required solutions and provide Ethereum based businesses with scalable security and reliability that is needed to boost Ethereum trading.
Arbitrum as a Solution for Ethereum
According to research done by Princeton University, Arbitrum is compatible with any Ethereum application, can process up to 500 times/second, and can execute code and transactions offline. Even when the code or transaction is being executed on a side chain, Arbitrum is still able to provide the same functions. Smart contracts on Arbitrum are developed using Solidity code, which is the same code to develop dApps on Ethereum. The only difference is that Arbitrum will use a separate compiler.
The system comes with a feature that may cause controversy in the blockchain community. Offchain Labs has equipped Arbitrum with a ‘Anytrust Guarantee’ feature, which allows one authenticator to perform functions even if all other authenticators are offline or if there is belief that the others are trying to trick the system. For example, only one authenticator will be needed to confirm that a trader has completed a transaction when they buy Ethereum.
Most networks and solutions employ a voting system among authenticators for the execution of code and to gain scalability. This is because it is not easy to determine who to trust but when a consensus is reached, it becomes easier to trust the decision of the authenticators involved. For businesses that require privacy and confidentiality, the ‘Anytrust Guarantee’ feature secures this privacy.