Coinbase Invests In Offchain Labs' Blockchain Scaling Solution

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Offchain Labs, a New Jersey-based project developing a scaling solution for permissionless blockchains, has announced the successful Alpha release of its Arbitrum code. The company claims that the new system is capable of supporting more than 500 transactions per second, making it many times faster than Ethereum.

Arbitrum has several innovative features that differentiate it from other sidechain scaling solutions. Its key value proposition is the AnyTrust Guarantee, which ensures the resilience of the network even if almost all validators are malicious. As long as just one node is online and acting honestly, dApps on the platform will execute correctly.

A smart contract on Ethereum named EthBridge allows Arbitrum to communicate with the main chain. Its smart contracts are based on Ethereum’s Solidity language, though they are compiled through a proprietary compiler. This solution reduces throughput on the main chain, without much additional development. It is designed to be blockchain-agnostic, though the current implementation relies on Ethereum.

The new scaling solution has elicited interest from Coinbase Ventures, which has invested an undisclosed sum into the company. The new investment follows a previous ‘seed’ investment of $3.7M from well-known funds such as Pantera Capital, Compound VC and Blocknation. 

Interest in effective scaling solutions is high in the industry, with the Co-Founder of Offchain Labs Ed Felten weighing in on the matter. “We believe that blockchains have a distance to go in terms of being enterprise-ready, with the primary issue being scalability,” he noted, before pointing out Arbitrum’s benefits. “We’ve built a solution that enables dApp developers to improve the performance of their applications without any significant cost or development time.”

Even though Ethereum 2.0 is close to release, investors are seeking to hedge their bets. “Coinbase Ventures has invested in some of the most well-known and innovative companies in the space and we’re thrilled to see that they share in our vision to make blockchains ready for prime time,” Felten added.

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