Arbitrum is a Layer 2 scaling protocol built on Ethereum, developed by Offchain Labs – a blockchain technology R&D company. For this reason, Arbitrum has been chosen by many ecosystems for integration, including Vesta Finance (VSTA). To gain a clearer understanding of what is Arbitrum and how it supports users within VSTA, let’s explore the article below.
General Information about Arbitrum
What is Arbitrum?
Arbitrum is a Layer 2 scaling protocol built on Ethereum, developed by Offchain Labs – a blockchain R&D company. Offchain Labs was founded in 2018 by Ed Felten, Steven Goldfeder, and Harry Kalodner. The team first introduced the concept of Arbitrum during a lecture at Princeton University in 2018.
Layer 2 technology is designed using Optimistic Rollups, which inherit the robust security model of Layer 1 while adding scalability for transaction processing, reducing costs, and increasing transaction confirmation speed.
What is Arbitrum in Vesta Finance?
In Vesta Finance (VSTA), Arbitrum serves as the core Layer 2 infrastructure on which the protocol operates. Thanks to this foundation, VSTA can offer users a borrowing, collateral, and liquidity experience that is fast, low-cost, yet still secure on Ethereum.
Key Features of the Arbitrum Ecosystem
Beyond understanding what is Arbitrum, investors should also be aware of its standout features:
- State Channels: Users send an Ethereum account state snapshot into a multi-signature contract. The snapshot records the address balance. This allows users to perform off-chain transactions with instant finality, zero gas fees, and enhanced privacy protection.
- Sidechains: Independent blockchains with their own consensus rules. Ethereum transactions are closely monitored when transferred here, helping to reduce the load on the Ethereum mainnet.
- Rollups: Similar to advanced sidechains, but non-custodial, designed to increase scalability and throughput for the Ethereum mainnet. Currently, there are four main types of rollups: Optimistic Rollups, zkRollups, Plasma, and Validium.
Why Did Vesta Finance (VSTA) Choose Arbitrum?
After understanding what is Arbitrum, it becomes clear why Vesta Finance chose it instead of running directly on the Ethereum mainnet. Arbitrum stands out with several key advantages:
- Lower Mint/Burn Costs for VST: Instead of paying the high gas fees on Ethereum, users can mint or burn the VST stablecoin at a fraction of the cost with Arbitrum gas fees.
- Faster Transactions: With Layer 2 technology, borrowing, repayment, or pool participation can be executed almost instantly, ensuring a smoother VSTA user experience.
- Access to a Strong DeFi Ecosystem: Arbitrum is currently one of the most vibrant Layer 2 networks, hosting major projects such as Uniswap, GMX, Balancer, and Curve. This allows Vesta Finance to expand liquidity more easily and connect with a broader DeFi community.
Exploring 3 Ways Arbitrum Supports Users in VSTA
When learning what is Arbitrum, many people recognize it as an Ethereum Layer 2 solution that reduces gas fees and accelerates transactions. However, within Vesta Finance (VSTA), Arbitrum is not only an infrastructure platform but also a powerful enabler that enhances the user experience. Specifically:
- Borrowing with Collateral: Users can collateralize ETH, gOHM, GMX, or GLP to borrow the VST stablecoin. Thanks to low gas fees and fast processing speed, borrowing and repayment become far more convenient compared to the Ethereum mainnet.
- Liquidity Participation: Pools such as VST/ETH or VST/USDC on Arbitrum make it easy for users to provide VSTA liquidity. Low costs encourage more investors to participate, thereby reinforcing the stability of the VST ecosystem.
- Staking VSTA for Rewards: Users can stake VSTA to earn attractive rewards. The entire process — from staking to receiving yields and claiming rewards — runs smoothly on Arbitrum’s high-speed Layer 2 infrastructure.
Compare VSTA on Arbitrum and other platforms
Criteria | VSTA on Arbitrum | VSTA on Ethereum mainnet | VSTA on Optimism | VSTA on zkSync |
Transaction Fees | Very low (a few cents) – gas optimized | Very high (up to tens of USD/transaction) | Low, similar to Arbitrum | Low, but still fluctuating |
Transaction Speed | Fast, almost instan | Slower, often pending during congestion | Fast, but less stable than Arbitrum | Fast, thanks to zk-Rollup |
Security | Inherited from Ethereum | Inherited from Ethereum | Inherited from Ethereum | Inherited from Ethereum, secured by zk-proof |
DeFi Ecosystem | Rich (GMX, Uniswap, Balancer, Curve…) | Core ecosystem, but high fees discourage small users | Growing, with many native projects | Still new, fewer major projects |
Liquidity | High, largest TVL among Layer 2s | Very high, but limited by high fees | Decent, but lower than Arbitrum | Low, in early expansion |
Scalability | Excellent, suitable for mass adoption | Limited (Layer 1) | Good, but not as strong as Arbitrum | High potential in the future |
User Experience | Friendly, cheap, smooth | Expensive, inconvenient | Good, low fees | Good, but not yet mainstream |
The Future of Arbitrum and Vesta Finance (VSTA) in 2025, 2026
The above content has already explained what is Arbitrum. Now, let’s explore the projected future of Arbitrum and Vesta Finance (VSTA) in 2025 and 2026.
During the 2025–2026 period, the Layer 2 trend is expected to grow explosively. For Vesta Finance (VSTA), this presents a strategic opportunity to expand its ecosystem:
- Expanding Liquidity: With the rising user base on Arbitrum, VSTA in 2025 has the potential to attract larger capital inflows into VST/ETH and VST/USDC pools, strengthening the stability and reliability of the VST stablecoin.
- Listings on Major DEXs: Arbitrum is currently a DeFi liquidity hub featuring Uniswap, Curve, Balancer, GMX, and more. This opens the door for VSTA to be listed more broadly, boosting liquidity and enhancing access to global markets.
- Long-Term Strategy: The future of Arbitrum is tied to the development of new DeFi products. Vesta Finance can fully leverage this Layer 2 advantage to scale its operations, improve user experience, and increase competitiveness.
Conclusion
Through this article, we hope users now have a clearer understanding of what is Arbitrum and why Vesta Finance chose it. In particular, VSTA on Arbitrum offers users many advantages such as low transaction fees, high speed, a rich DeFi ecosystem, and opportunities to expand liquidity. If you have any questions after reading, feel free to contact us – VSTA is always ready to provide guidance and support for smarter investment decisions.