> For the complete documentation index, see [llms.txt](https://arithmic-labs.gitbook.io/arithmic-documentation/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://arithmic-labs.gitbook.io/arithmic-documentation/introduction.md).

# Introduction

The primary objective of any Layer-2 network is to significantly enhance decentralized network activity by enabling scalability for Layer-1 blockchains such as Ethereum and Bitcoin. While current Layer-2 solutions have lowered the economic barriers to transact on these blockchains, they face two major challenges: i) They inherit Ethereum's staking paradigm, resulting in capital centralization and reduced liquidity. This creates a fragmented relationship with network participants, including end-users, infrastructure providers, and DApp developers. ii) the first-generation VMs used in their networks limit their transactional throughput and reduce their scalability. Arithmic addresses these challenges with a two-pronged approach: \
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i) Introducing a novel native restaking paradigm backed by network activity, aligning the participation of end-users, infrastructure providers, and DApp developers. \
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ii) Building a next-generation VM based entirely on lookups, achieving significantly higher throughput compared to existing systems. \
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In summary, Arithmic enhances decentralized economic participation by unlocking liquidity through its Gen 2.0 VM and network-powered restaking.\
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**We've got a surprise!**\
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