Arbitrum One, an Ethereum Layer-2 (L2) optimistic rollup, experienced an outage on January 9, 2022 for about 10 hours, starting around 5:30 AM Eastern. Arbitrum is Ethereum's largest L2, with over $2.5B in total value locked (TVL) in its ecosystem.
Offchain Labs, makers of Arbitrum, said "the core issue was a hardware failure in our main Sequencer node," and that the issue is now "fully resolved, and the Arbitrum Sequencer as well as all public RPC nodes are fully operational."
This is not the first time the Arbitrum One sequencer has failed, bringing the entire project offline. The project went down for almost an hour in September 2021 following a similar sequencer failure. The Arbitrum One sequencer is centralized, which makes it vulnerable to hackers and large spikes in traffic.
When an L2 blockchain like Arbitrum One has an outage, the consequences are less severe than when an L1, like Ethereum, goes down. This is because Arbitrum One supports "force exiting" assets back the Ethereum's L1 blockchain. Most rollup L2s support this approach, but sidechain L2s like Polygon do not. So, while an L1 outage completely locks up investors’ funds, an L2 outage can be circumvented. Arbitrum One notoriously makes force exits difficult for retail users, but it's still possible.
Ethereum gas fees remain high and applications, such as Arbitrum One, dominate block purchases. Popular crypto investors have declared 2022 to be the "year of the Ethereum L2s," and according to L2 Beat, Arbitrum One enters the year with over 2.5x more TVL than the 2nd richest Ethereum L2: dYdX.