Ethereum layer 2 scaling protocol Arbitrum has seen its first setback with an outage caused by a Sequencer bug.

On Sept 14, the Arbitrum One protocol, which was launched at the beginning of this month, suffered its first major issue with a 45-minute outage that prevented transactions from being processed for the period.

Offchain Labs, the firm behind the technology, released a report detailing the outage on Sept 15 confirming that funds were not at risk and that it’s still in a beta phase. The team cautioned that there may be more glitches and outages to come;

“But, as we noted in our launch announcement, we do want to caution users that further outages are possible in these early days.”

Sequencer bug

Offchain Labs stated that there was a bug in the Sequencer that caused transactions to be reassigned a timestamp but retaining their ordering. The Sequencer allows users to post transactions directly on-chain providing an instant response.

It confirmed that Sequencer does not have the ability to steal funds or forge transactions. Every transaction it handles is digitally signed by a user and the signatures are checked by the Arbitrum chain, it added before explaining,

“The root cause of the downtime was a bug causing the Sequencer to get stuck when it received a very large burst of transactions in a short period of time. The issue has been identified and a fix has been deployed.”

The downtime was not a network outage, it confirmed, but a problem with only the Sequencer. Users can opt to bypass the Sequencer when submitting transactions to Arbitrum, but they will experience the same delays as they do with Ethereum layer 1.

Arbitrum TVL surge

Earlier this week, the total value locked on Aribtrum skyrocketed to $1.5 billion following the launch of a yield farm based on the protocol over the weekend. At the time of writing, Arbitrum TVL is at an all-time high of $2.3 billion according to L2beat.

The ArbiNYAN DeFi farm allowed users to send ETH via the Arbitrum Bridge in order to farm NYAN tokens, which subsequently dumped in price on Sept 12.

Because Arbitrum uses optimistic rollups, the transferred funds cannot be withdrawn from the protocol for seven days which explains why all the collateral is still there despite the dump in NYAN token prices.

According to Dune Analytics, the Arbitrum Bridge has processed $2.2 billion and has a market share of 30.9% compared to other Ethereum bridges. Polygon’s ERC-20 bridge is just ahead with $2.4 billion processed and a 32.8% market share.
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