Arbitrum Nitro: A Customizable Rollup Stack

Arbitrum Nitro is an advanced rollup stack that allows developers to create their own customized Layer 2 or layer 3 rollup chains. Rather than being a rollup chain end to end, Nitro provides the infrastructure and tools to easily deploy a new optimistic rollup tailored to the specific needs of the developer.

Arbitrum Nitro offers several key features and improvements over previous roll-up designs:

• Higher throughput and faster transaction finality

• More efficient dispute resolution through interactive fraud proofs

• Ability to customize the execution environment while maintaining Ethereum compatibility

• Options to reduce costs by relying on a Data Availability Committee instead of posting all data on Ethereum

With Nitro, developers can create application-specific rollup chains optimized for their use case. Chains can choose their own tradeoffs in areas like transaction cost, speed, security assumptions, and virtual machines.

Configuring an Arbitrum Nitro Node

To launch a node for your custom Arbitrum Nitro chain, you’ll need to set up and configure the Nitro software stack. Key components include:

1. Sequencer: Orders transactions and posts transaction data

2. Inbox: Sequences incoming transactions and tracks posted batches

3. ArbOS: Handles L2-specific functions and maintains L2 state

4. Execution environment: Compiles custom execution logic to WASM for fast execution and fraud proofs

5. Data availability: Choose between storing transaction data on Ethereum directly or through a Data Availability Committee (for lower cost)

The basic setup involves compiling the Nitro codebase with your custom configuration, deploying contracts to Ethereum to serve as the bridge between layers, and running your sequencer, inbox, and node software. Further customization is possible at the execution layer

Costs of running a Nitro chain

Nitro chains have two components in terms of running cost - 

1. Cost of infrastructure - The cost of running the infrastructure on the chain including Sequencer, Compiler, ArbOS, etc

2. Cost of posting data - Data posting costs can be divided into two components - 

   1. Cost of posting headers for execution - Block headers are posted for inclusion in Ethereum blocks for execution 

   2. Cost of posting calldata for data availability - Calldata is posted to the selected data availability layer. It can be Ethereum (like the Arbitrum One chain), Arbitrum Anytrust (like the Arbitrum Nova chain), or any of the available data availability layers like Celestia, EigenDA, or Avail

The primary source of revenue for the chain includes earnings from gas fees paid by users on the chain. The operating profit for the chain is determined by - 

Operating profit = Revenue from gas fees - Cost of posting data

Arbitrum Foundation charges 15% of operating profit as fees for allowing rollups to build using the Arbitrum Nitro stack

Current Web3 Chains Using Arbitrum Nitro

Several prominent Layer 2 projects have chosen to build on Arbitrum Nitro to create bespoke rollups for their needs. Some notable examples:

1. Sanko: Sanko Gaming L3 built on Arbitrum.

2. Rari Chain: The first creator-centric L3 chain for the next generation of NFT

3. Xchain: A gas-free blockchain product that boasts gas-free transactions

These chains leverage the customizability of Nitro to optimize the execution environment for their specific requirements and architectural designs. By building on top of Nitro, they inherit the security and Ethereum-compatibility benefits while tailoring the rollup to their needs.

With Arbitrum Nitro, creating a layer 2 or layer 3 rollup has never been easier or more flexible. As more projects adopt this infrastructure to easily spin up fit-for-purpose chains, we can expect to see increasing specialization and diversity in layer 2 designs. Arbitrum Nitro is poised to help power the next generation of Ethereum scaling solutions.

Learn more: Nitro-whitepaper