Arbitrum (ARB)

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Field

Content

General information

S.1

CASP Name

BB TRADE ESTONIA OÜ

S.2

Relevant legal entity identifier

984500L05A5D0E66Q610

S.3

Blockchain network name

Arbitrum

S.4

Name of the crypto-asset

ARB
ETH

S.5

Consensus Mechanism

Optimistic Rollup (reliant on Ethereum's Proof of Stake for finality)

S.6

Incentive Mechanisms and Applicable Fees

Arbitrum aims to provide a high-throughput, low-cost transaction environment built on Ethereum.

Incentives:

Sequencer: The centralized (currently controlled by Offchain Labs/Arbitrum DAO) sequencer processes transactions and collects transaction fees (gas fees) from users. It submits batched transaction data to Ethereum L1. 

Validators: Independent full nodes that monitor the L2 chain, verify the state transitions posted by the sequencer, and can challenge incorrect state roots during a "challenge period." Validators are incentivized to challenge fraud by potentially earning a bounty and by maintaining the integrity of the chain they rely on.

Token Holders: ARB token holders participate in decentralized governance (Arbitrum DAO) to propose and vote on protocol upgrades, funding, and other decisions, indirectly incentivizing network health. 

Fees: Transactions on Arbitrum are paid in ETH (gas fees). These fees are significantly lower than on Ethereum mainnet due to the batching of transactions and optimized execution. A portion of these fees covers the cost of submitting data to Ethereum L1, and the remainder is collected by the sequencer/protocol.

S.7

Beginning of the period to which the disclosure relates

2024-01-01

S.8

End of the period to which the disclosure relates

2024-12-31

Mandatory key indicator on energy consumption

S.9

Energy consumption

~131,400 kWh per calendar year

S.10

Energy consumption sources and methodologies

The energy consumption of the Arbitrum network primarily stems from the electricity used by the computational infrastructure (servers, networking equipment) that runs its sequencer and validator nodes. As an optimistic rollup, it does not involve energy-intensive mining or staking directly akin to PoW or PoS on Layer 1. Methodologies for estimating this involve:

Hardware estimation: Assessing the typical power draw of server-grade hardware used for running sequencers and validator nodes.

Node count scaling: Multiplying the estimated hardware consumption by the number of critical operational nodes (sequencers and a representative sample of active validators/full nodes). 

The majority of the security and finality energy consumption is attributed to the underlying Ethereum (PoS) Layer 1.

Supplementary key indicators on energy and GHG emissions

S.11

Renewable energy consumption

This data is not available as of now.

S.12

Energy intensity 

~0.00024 kWh per transaction

S.13

Scope 1 DLT GHG emissions – Controlled

0 t CO2eq per calendar year

S.14

Scope 2 DLT GHG emissions – Purchased

~62.42 t CO2eq per calendar year

S.15

GHG intensity 

~0.00011 kg CO2eq per transaction

S.16

Key energy sources and methodologies

The energy sources for Arbitrum's operational infrastructure (sequencers, validators) are those of the data centers and cloud providers hosting these nodes. These sources include a mix of conventional electricity generation (e.g., natural gas, coal) and sustainable/renewable sources (e.g., hydro, solar, wind, nuclear), depending on the geographic location of the servers. Methodologies for assessing this would involve:

Geographic location of nodes: Identifying where sequencers and a significant portion of validators are hosted.

Energy grid mix data: Utilizing publicly available data on the electricity generation mix and carbon intensity for those regions (e.g., from IEA, EIA, regional energy authorities).

S.17

Key GHG sources and methodologies

The predominant source of Greenhouse Gas (GHG) emissions for Arbitrum's direct operations is Scope 2 (indirect emissions from purchased electricity). Methodologies for estimating these emissions involve:

Energy consumption multiplied by emission factors: Taking the estimated total electricity consumption (S.8) and multiplying it by the carbon intensity (grams of CO2 equivalent per kWh) of the electricity grid mix powering the L2's operational infrastructure.

Focus on L2 overhead: These calculations focus specifically on the energy consumption added by the L2's distinct processing, separate from the underlying Layer 1, but acknowledging that the L1's energy provides the ultimate security layer.