Arbitrum Orbit has enabled developers to build Layer-3 blockchain networks on top of Ethereum‘s Layer-2, Arbitrum, with the addition of custom token support for transaction fees. This new feature allows the use of specific ERC-20 tokens that meet technical criteria to process transaction fees on Orbit networks, as announced by Arbitrum on January 4th.
Previously, only Ethereum could be used to pay transaction fees on Orbit networks. The option to use ERC-20 tokens for fees will allow Orbit ecosystems to create utility for their own tokens and expand their ecosystems. David Dennis, Offchain Labs’ product marketing leader, mentioned the potential for games to have in-game economic models while still being built on Arbitrum and Ethereum.
Xai Gaming, a project developed in collaboration with Arbitrum last June to host Web3 games by Ex Populus, will immediately benefit from this feature. The Ex Populus team has experience from major gaming companies like Pixar, Ubisoft, and Activision Blizzard. The Xai protocol can pay transaction fees on behalf of users through a transaction fee contract, significantly reducing costs for end-users.
Other blockchain projects set to benefit from the custom transaction fee tokens feature include Caldera and Celestia. According to DeFiLlama, Arbitrum One is the largest Ethereum Layer-2 network, with approximately $2.5 billion locked in smart contracts.
Arbitrum’s native ARB token recently hit an all-time high of $2.04 and is currently trading around $1.94. Arbitrum has also recently awarded approximately $40 million worth of ARB tokens to 29 projects to further grow its ecosystem.