Bankless - Massive Arbitrum Acquisition!! with Steven Goldfeder & Preston Van Loon

Episode Date: October 20, 2022

Arbitrum acquires Prysmatic! Hear all about the deal and what it means for both teams, the future of Ethereum, and the space writ large. ------ Push | Try the Communication Protocol of Web3 https://bankless.cc/Push  ------ SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/  ️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/  ------ BANKLESS SPONSOR TOOLS: ️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum  DESO | DECENTRALIZED SOCIAL BLOCKCHAIN https://bankless.cc/Deso   BRAVE | THE BROWSER NATIVE WALLET https://bankless.cc/Brave  TRUEFI | CRYPTO FINANCIAL HUB https://bankless.cc/TrueFi  SEQUENCE | ALL-IN-ONE PLATFORM https://bankless.cc/Sequence  ️FUEL | THE MODULAR EXECUTION LAYER https://bankless.cc/Fuelpod  ------ Timestamps: 0:00 Intro 10:00 How the Acquisition Happened 13:45 Prysmatic Big W's 15:15 Ethereum W's 16:08 Prysmatic Origins 23:20 What Happens Next at Prysmatic 24:50 Arbitrum's Contribution 30:37 Credible Neutrality Concerns 35:25 Open Source Ethos 43:43 Vitalik's Take 49:47 Acquisition Concerns 53:10 Arbitrum Access 56:00 Prysmatic Worth 57:56 Wen Arb Token 58:20 Closing & Disclaimers ------ Resources: Steven Goldfeder https://twitter.com/sgoldfed  Preston Van Loon https://twitter.com/preston_vanloon  ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://www.bankless.com/disclosures 

Hey, Bankless Nation. Welcome to another State of the Nation episode. We've got a really interesting topic for you to cover. This is the first, I think, in crypto history, maybe Ethereum history. The acquisition of Prismatic Labs by Offchain Labs. This is Arbitrum, a layer two acquiring an Ethereum core development team, a core client team. That's what we're here to talk about. David, what are we getting into today? Yeah, I didn't know that this was possible. I don't think anyone would be. realize like, oh, yeah, you can acquire a client. And so this is what we're going to be talking about today. Why exactly? Did Arbitrum acquire a client, a layer one client? What does that do for Arbitrum? What does that do for Prismatic Labs and Prism? What is the future of Prism? Is Prism staying the same? Is it changing? What's the future of Arbitrum? Is that saying the same? Is that changing? And there's also some broader questions as well. I remember Ryan, during the depths of the bear market, at 2018 to 2020, the Ethereum world was plagued by how do we fund our open source software teams,

our open source layer ones. Does Arbitrum with the acquisition of Prismatic Labs bring an answer to that table? Do we like that answer? Are there costs and tradeoffs with that answer of a commercial entity acquiring a layer one client team? So there's a discussion here. There's many, many other things to discuss is like what does this do to the Arbitrum Tech Stack And overall, what is the win-win between prismatic labs and off-chain labs? So these are the things we're all going to explore here on the state of the nation today.

Yeah, I think it's really interesting. I think maybe the answer to the question is layer two will help fund the development of layer one. That seems to be what's going on today. Full disclosure, as we get in, we do these disclosures at the beginning of every episode. I invested in Arbitrum. I don't think David did. So, David, you could play the role of Bad Cop, I guess. Arbitrum is also currently a bankless sponsor.

Preston and David are super good friends and hang out a lot. David, did you write that in the agenda? Yeah, that is my disclaimer. All right, disclaimers. Okay. I guess that's a disclaimer. Maybe we should have a friend's disclosure page, but David would have to basically put everyone in crypto because he loves everyone.

Anyway, you can always find access to our disclosures in the show notes. We'll try to mention them at the top of every episode, but they're always published bankless.com slash disclosures. Also, before we get in, want to tell you about our friends and sponsors at push. I have to know about something cool. So push is an app for Ethereum for Polygon as well. And it answers questions like this. David, have you ever woken up in the middle of the night?

And you've been like, oh, my God. Is my ENS about to expire? Like the five, the 10 I have? Like, hmm, when was the expiration date? Did I set that for a year? Or was that like five years? Or even like questions like, is my collateral okay? Right.

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These are governance updates, but also collateral ranges as well. Is your uniswap pool out of range? If you stopped making money, you can get notified about that. David, what else should we tell them about push? Yeah, overall, it's just something we need to start to mimic the Web2UX. That's what UX is what they've optimized for, and it's actually really hard to get push notifications out of the Ethereum protocol. These things don't really work very well.

So that is why push is here to cover that gap, and especially as we get into the world of the metaverse where there are many, many, many other types of notifications coming down the pipeline to explain to us what's going on in this digital world we're building. We're going to need something like push to actually push notifications to our mobile devices in a Web3 manner. That's right. Take it from a robot like me. You want robots working for you. You don't have to do all the work yourself. Hire them. So click the link to the show notes. You'll find out more about that. Okay. Why are we talking about this today, David? What is the overall significance and what should listeners pay attention to as we talk to Stephen from Arbitrim and Off Chain Labs and Preston from Prismatic?

Yeah, overall, it's kind of what I said in the intro. There is, we perhaps have found an answer to perpetual layer one client development. There are synergies between a layer two who needs tech and needs software that's similar to layer one. And so there's actually some sort of like elegance behind the acquisition of a layer one client team by a layer two. How sustainable is this? Can other people copy this model? Are we actually incentivizing more client teams to be, built if we can like kind of show them that there might be a payday at the end of this and how good

is that all of these things are important questions i actually ryan in my time at devcon asked uh vitalc buterent this question in a little micro interview that is currently in the hands of the bankless editors uh so vitalics take will slowly shortly be up on the bankless youtube oh you know you don't you know i'm not going to tell us uh no no i'm just teasing uh because uh i was so chaotic that week that I can't remember what his answer was. Well, I've been appropriately teased, sir, because I don't recall you mentioning it to me either. Guys, we'll be right back this episode with Stephen and Preston talking about Arbitrum's acquisition of Prismatic.

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A layer two team has bought a layer one client development team on Ethereum. We're here to talk about it. This, of course, is the off-chain labs, aka Arbitrum acquisition of Prism. That is, I think, the main, the top Ethereum 2, used to be called Ethereum 2. Beacon Chain, consensus client, I should say, we have the two folks that know the most about what has just happened. We've had them both on the podcast. The previously, they've been on different teams.

And now they're on the same team, part of the same family. Of course, we're all the Ethereum family, I guess, but it's great to have you back. Stephen Goldfetter. Stephen is, of course, the co-founder of OffChane Labs, the team that's building Arbitrum and Preston Van Loon, is the co-founder of Prysmatic Labs, a leading Ethereum L1 client, one of the first organizations to start actually writing code for ETH2.O. And boy, I remember it well when you guys stepped up to the plate and volunteered for that. That was awesome.

First of all, I just want to say congratulations on this arrangement, on this acquisition. It seems like a pretty good match. Thank you. Thank you so much. Yes, I definitely agree. It seems like a great match and we're super excited about it. Well, we're going to get into it. And also, I want to ask, too, because I know you're both at DevCon.

And that was just, was that just last week, David? That was just last week. And actually, I was talking to Stephen before you came on. Stephen was actually not at DevCon. So actually it was just me. Oh, you weren't. Okay. You were impressed at DevCon.

So the guy who wasn't at DevCon is saying you were both at DevCon. He doesn't know anything about it. David, why don't you ask the DevCon question? Yeah, President, how is your DefCon? Oh, it was amazing. You guys should have been there. Well played. Well, why don't we start talking about Arbitrumb and Prismatic then?

So, Stephen, like, how did this come about, first of all? And what do you see as the big win for both the organizations here? Yeah, so the way it came about as we got to know. know the Prismatic team pretty well over the course of the past several months or many months at this point. And the more time we spent together starting virtually than we actually had in-person sessions, the more it just made sense, then we realized that we thought about a lot of things in the same way. In terms of our vision, our vision is to scale Ethereum and its roll-up-centric roadmap. And that requires obviously layer one components and layer two components, and we had a lot of

the same shared goals and even personal interest, the things that got us excited. the conversations, the whiteboarding sessions, the, you might say the nerd out sessions, you know, we did a lot of those. And it was super, super exciting. And, you know, we really just meshed together and it felt right. And as those conversations, as those conversations moved forward, we basically, you know, said, hey, we could accomplish a lot by joining forces and by working on solving this problem together. And, you know, the thing that we, in a very broad way, the thing that we accomplish is we're really very much, you know, working towards the same goal. From different angles, of course, working on different parts of this puzzle and different parts

of this problem, we have lots of shared experiences and lots of different experiences that we can apply and, you know, to one another's domain. And it just felt right and felt like we really were values-wise aligned and everything else just sort of fell into place. I'm sure there's a great dating metaphor here. So I'll lean into this a little bit more. So now that you guys are together, what was the dating process like from your side of things, Preston. What was it like to begin these conversations and overall? How did these conversations get triggered in the first place? I think everyone, when we heard the announcement, it was like, oh, you can acquire a layer one client team. Who had this idea? And how did these

conversations progress? Why did you just wipe right? You know, well, with the merge finally happening, we were wondering, so what is the next, you know, highest impact work that Prismatic Labs can do. And our mission since the beginning has been scaling. So we started looking at the roadmap, taking a look and saying, what is the like longer-term vision for Prismatic and how do we further our impact and really help, you know, make it there be a thing that goes fast, it's cheap? So we started thinking about the role of Centric Roadmap,

just sort of the direction that we're all going. And with that, we reached out to the Offchain Labs team and said, you know, we have some ideas for collaboration. What do you guys think about this? We got EIP 4844 for data sharding coming out. And it makes sense to have a closer relationship. And like Stephen was saying, the more, I guess, dates we went on, the better we all felt about it.

And towards the end, we're like, wow, this is a really cool idea and a really cool relationship that's forming and we are so aligned on the same vision of scaling Ethereum that it really makes sense to not only have a close relationship because of the role of the strategic future but also to you know be working together because there are things that we think we do well and we know there are a lot of amazing things that I've chain lapsed as well and having that kind of synergy and and sharing knowledge and talent it just you know it's for the greater good So we were really excited to be joining forces with off-chain. So what are the big wins on the Prismatic Labs side of things?

Like Preston, what do you and Raoul and all the members of the Prismatic Labs? What's the big W here for you guys? Well, the big win that we have is that the support from off-chain is massive, right? We have some resources that are a much bigger organization that can help us sort of offload to a lot of the tasks that aren't core development. I think the big thing that Raoul and I learned over the last five years is that there's a lot of work that needs to be done, a lot of unfund work that comes with, I guess, running a business. Prismatic Labs is a business and we have to think constantly about funding. We have to think about, you know, what is our purpose, like our bigger place in the community, like long-term vision, especially after the merge where it's a very different world.

So right away, we've got a bunch of time back. We can leverage some of the resources capacity with off-chain labs. We have a bigger talent pool now. We can share knowledge and brains between off-chain and prismatic, working on the PRISM client. The big takeaway here is that we get to continue working on PRISM and do it even more of a focused fashion. that's the big win that that that really helped us you know rationalize to say this is the right thing to do we're all scaling and and right away we can realize the benefit even just this week does this how does this benefit the Ethereum community then present do you think is it is it kind of linked to that

so you have now more time to focus on actually building you and Raul and the rest of the team can actually focus on kind of like building the next feature set for Ethereum maybe you know shipping things like EIP 4844 faster potentially? Like you're less like, you know, I have more focus on that. Is this a win for the community? And so, you know, zooming out from Prismatic Labs, what would you say about the win for Ethereum here? Yeah, absolutely.

I mean, from the core development side, the layer one side, we get to iterate faster to be more focused in our work. And then the bigger picture of the longer term, we're all scaling Ethereum here. So that helps the Ethereum community in the bigger picture. One quick question I had for you Preston was about initially how Prismatic was funded because I think some people don't know the full history of this. Some listening might be kind of old enough in their Ethereum lore to kind of remember the dark days maybe of 2019

where he didn't have much direction in terms of this thing we called ETH2 and sharding and you know, wasn't even called the merge back then, but proof of stake. And Prismatic was a team that in the early days, I think you and Raoul kind of stepped up to the plate. But there wasn't a business model for this. Like there wasn't, as I remember it, now you were there, you could tell me. But there weren't a lot of VCs that were really excited about writing checks for something that already had a token. I mean, you're developing for a token that already exists. It's called ETH.

Why don't you launch your own layer one with its own token? and, you know, that's how we kind of make, so you're doing almost like this, this public good. And as I recall in the early days, Prismatic was very much grant funded. And I don't know if that was difficult at times. I can imagine it was, like knowing what the funding source was. Can you walk us through those early days and some of the, you know, maybe the struggles that you saw with the existing model for Prismatic? Yeah, so we were one of the first teams to start working on ETH II as it was pre-periodes.

previously called, we wanted to help you bring sharding to the Go-Etherium client. That was really the initial vision with Prismatic Labs. And this started at the beginning of 2018 around January, and it was right around the time that the Ethereum Foundation announced that they had a grants program. We applied for the grants program. We made it into the first round, to our surprise. You know, Raoul and I kind of just had met on the Internet and said, you know, here's an opportunity where two new people to the community we haven't really

contributed any meaningful way. So what's the, I don't know, the biggest, highest impact thing we could do? And that was to work on sharding and help scale Ethereum. Proof of stake was already in a test net at the time with Casper. The designs that had really changed since then. But throughout 2018, we were really just sort of working as a Moonlight Project. And there was a bit of funding and that was exciting. But it wasn't ever, at least in 2018, it wasn't enough for us to quit our jobs and to dive head first into crypto. We were all kind of new to crypto. So we didn't have a whole lot of finances in the same way that people who found Bitcoin in the beginning did.

So we were really just doing it for fun. We didn't think we'd make any money out of this, which became a struggle when the need for scaling, the need for working on this became higher in demand. And we really wanted to do it. Throughout that whole year, we did, you know, had a really awesome journey where the community came out and said, we're going to support public goods. And this talk about, you know, how do we support public goods and finance these. things that we all need to to scale ethereum right the the prism project is an open source free software anyone can use it it's fully transparent it's always out there it will never make you money it will never be something you have to pay for it's free to use which is a really hard uh model to sell right

like you just talk about having venture capital you know they say win win prism token and that was never an interest of ours. And then there were distractions like, okay, well, we, you know, grants may not be forever, especially towards the end of, India of 2018 when Ethereum went from like $1,400 to $200. So that was a really hard time. But, and we had distractions like, oh, should we do like, you know, where a block, should we expand to be a blockchain shop and really work on other L2? or other L-1s and just try to get some revenue through that.

But we said to ourselves, like, Ethereum is the best positioned, and this is amazing technology, we really want to just focus on that and minimize distractions. Thankfully, with the grants from the Ethereum Foundation, community support, even the signal from Vitalik himself when we complained publicly that we had funding, but it wasn't enough to go full-time. He sent us 1,000 Ether,

from his own personal wallet, and this is called the YOLO grant, at the time that was $100,000. So it was not a whole lot in the big picture, but it was a huge confidence boost. We said that, okay, if we do this, the community and notable figures in it are not going to let us fail for something as trivial as funding reasons. Like, we will figure it out. So 2019, All of us quit our jobs. Some of us had pretty nice jobs and took the leap. You got a job at Google, Preston. Yeah, I was working at Google, and that's a really comfortable job

where you can do a lot. You can have a lot of impact. But the problems are at Ethereum scaling are so attractive, they're so hard that we couldn't stop thinking about it. I was waking up hours before work and doing work and then staying up late and working on it. It was our passion. So with all of these things combined, you know, we were able to take that leap.

But over the years, like, it still was in the back of our mind. Like, okay, well, we were funded by grants, which is not sustainable, right? Like, thankfully, they kept coming and the people responsible for grants for managing their money well. So that was nice. But we still had no product to sell. We had no revenue. We never really did any, like, consulting for anybody or really took any other outside. jobs or anything like that or or consider doing a token. But it was a distraction to have to think

about it. And now we don't have those sort of distractions. We have support from off chain. We can really focus on getting back to work. And I think this is the big takeaway from the Ethereum community because, of course, the Prism client isn't going away. Like, in fact, actually, there's more labor hours that are able to be poured into the Prism client. And I would imagine, like, Preston, you are the co-founder of Prismatic Labs, you and Raul. And so I would imagine you had to like do like normal HR stuff and like pay people's salaries and things that you wouldn't really consider a dev to do. But Arbitrum, I'm sure, probably has like an HR person, right, right, Steven?

And so like now, now like we can offload a lot of that same labor onto Arbitrum's HR person and we can share that same resource between this layer two team and this layer one client. And so Steven, I want to get into your head, but just one last question to, to round this story out on Preston's side. Preston, like, what happens next for the Prism team? Like, are you actually going to, are you going to hire more? Like, can you, how has this impacted the trajectory of the Prism client? What's going on there? Yeah, I mean, in the short term, it's a full steam ahead, right? We have 10 or maybe 11 amazing engineers so working on the Prism client, and we have a lot of great work to do. So that all stays the same.

I think that, well, I know that off-chain is hiring and that, you know, Prism is now an off-chain project. So we'll have the be able to tap into a larger engineering talent pool and really build. At the same time, there are really exciting problems at off-chain as well. So there's a bit of cross-collaboration between the Prism team, Arbitrum team, and with that being that we can all sort of get together faster, get there faster. And my intuition is that probably, salaries have gone up, right? And so motivations to build on this thing also increase competitive

market rates, less distractions, stuff like that too? Yeah, exactly. We're no longer on the core dev salary. We can enjoy the benefits that option provides. It's really nice. It's really cool, I guess, notoriously, I mean, you work for a public good, and Ethereum and, you know, government jobs don't pay really well, right? So this is, you know, it got to be definitely better in the best of both worlds. I'm curious. even from your perspective, maybe speaking for off-chain labs and for Arbitrum. So how do you see this? Is this kind of like Arbitrum's contribution to public goods?

Is it Arbitrum's contribution to Ethereum? Obviously, the success of Arbitrum is very much dependent on the success of Ethereum and kind of the layer one itself. So is this just kind of a way to pay it forward? Or maybe it's not an or maybe it's an end question. what's in it for arbitram? What's in it for off-chain labs to do this? Is this completely altruistic or is there an incentive at play here? Great question.

It's definitely a bit of both, right? So absolutely we think that it's critical to continue funding the development of Prism and we're committed. Prism will continue to be developed exactly as it was, fully open source. and with as much or more resources as well as before, you know, as many resources, it says as Prism needs, you know, developers and needs, we will make sure that that need is filled.

So in our rent, so absolutely, you know, there's not like, it's not like we're, you know, we're joking about a Prism token. It's not like we're taking Prism and looking to monetize it, attaching a token to or anything like that. Prism will remain exact as it was and it'll be an open source project

to the benefit of the community. And one of many, of course, there is client diversity is important and that will be, you know, definitely our contribution where we can participate in the community. But more broadly, it's also a starting point

for our contribution to the community. And, you know, we mentioned, for example, EIP 4844, and that is something which, obviously, some of the prison team, Terrence in particular, and others are very, very involved with. And, you know, we have been involved in some of those conversations, you know, even before,

the acquisition and now we'll be not only continuing to contribute the prismatic resources that were that were there and those we will of course continue to support prismatics work on on these important eIPs and beyond will also be saying you know and already having these internal working groups where there's knowledge sharing and saying hey how can how can other off-chain engineers contribute to contribute to this as well so there's i think you'll see more contributions over time for us to not only continuing Prism's work, but also continuing to support that and adding engineering capacity to that as well. But to the second part of your question, I think there are absolutely are synergies and things

that we can do together better than the sum is better than or the whole is better than the sum of his parts. I would just mess that up. But you know what I mean? That expression. And what I mean by that is, you know, I focused before and how we have all these similarities and think about things the same way. We also have very, very different experiences.

working on a layer one client and working on a layer two are very different. You know, they have great engineers, we have great engineers working on both of them, but very different. And just looking over our shoulders and bringing ideas from one domain to the other, I think to be incredibly valuable, and we're already beginning to see that. Hey, you know, what about this arbitragee guy? See, you thought of that. Hey, Prism, why does this work in this way?

You know, have you thought of this? And it's just very technical conversations, but often these, I know, just shining the light from a slightly different angles is very valuable. And because we're aligned on the same goals, we all want to, you know, as Preston said, their goal early on was scaling and our goal is, of course, scaling, but it's also more broadly building out Ethereum is roll-up-centric roadmap and scaling is key to Ethereum. And key to the Ethereum's roadmap is having a strong layer one and a strong layer two. I think we're really aligned in that.

And just the synergies of working together and putting that brainpower together is going to be very beneficial, even for making both of our products better. And so this is what I'm hearing from you, Stephen, this is largely an aqua hire where you are putting the Prism team like proximate or adjacent to the Arbitrum tech stack. Maybe there's not a particular problem or like nut to crack that you need the Prism team for. But overall, you kind of think that having the Prism team around the Arbitrum Tech

stack might produce some sort of serendipity that might help improve the Arbitrum tech just by having these guys like just, you know, in the same like Slack channel or Discord or whatever you guys use it at Arbitrum. Is that kind of a summary? Yeah. So I think, you know, it's, you know, there is obviously in the early days, it's, it's very much of the, you know, being in their channels together. But I think over time, there will be, you know, much more organized cross, you know, cross domain collaborations as we think about these problems. And, and while the talent and the amazing team, you know, Preston and Raoul and the rest of their amazing team is obviously a big part of it. It's definitely an acquisition in a sense that we're

super excited to take the PRISM product and continue to fund that and continue to make sure that stays well funded and that's our commitment. So yeah, I think, you know, we think of very, very much as an acquisition where we're continuing to develop and committed to develop Prism as a client and committed to, you know, giving it all the resources that it has already continuing to fulfill his resource needs and also obviously the amazing team that prismatic clouds have assembled they're super excited to work on them both to have them continue to develop prism but also to work together with them on this shared roadmap and on the future you know the future the future to executing this roadmap will include layer one initiatives like data sharding later later two initiatives

and i think thinking about those things together will be very valuable not only for us but for the community as a whole. Yeah, what I do think is obviously, so the future of Ethereum is the, you know, the execution layers in layer two, right? Consensus layer is, you know, down in the stack. Prism, Prismatic and team is one example of the consensus layer client. There has been this criticism of core devs. And I don't think it's totally warranted, but like, oh, core devs are not, they're disconnected

from the app layer or from kind of the execution layer, right? And like, I think, you know, the consensus layer core dev folks would argue, well, like, the dabs don't understand what we deal with and what we go through. And what's nice about this is this brings together a bit of kind of like shared, shared learnings from kind of the consensus layer and an execution layer, like layer too. And I see that advantage. I also see the advantage of, you know, being able for, I guess, you know, for the sake of Ethereum, shipping EIPs like 4844 that much faster. And of course, EIP 4844 is proto-dank charting. It's going to make layer two's much cheaper.

It's a boom to the layer two ecosystem for sure. And this is in the best advantage of like the, this is, I think, a shared goal of everyone in Ethereum, everyone who builds apps, everyone who's doing layer two is like just everyone in Ethereum has the shared goal. Part of my question, though, Stephen, comes with like, so we have shared goals like getting EIP 4844 done. And clearly that's good for the Ethereum community, also good for layer twos. And that's great. Win, win, win. We all win.

What happens if in the future there's some EIP or there's some feature or there's some feature or there's something that starts to conflict with something that maybe off-chain labs wants or arbitram wants and like the consensus, the social consensus layer, the good of the wider Ethereum community? There has been some concern or question with this for all of the benefits. a concern about maybe a loss of credible neutrality of the prismatic team. And I want to hear Stephen on this, respond to maybe some of these questions, and then also Preston. But what do you think about this, Stephen? Is this a realistic? Is this a valid concern? And to any extent that it is,

what are some ways to sort of mitigate this? Great question. So I think in the abstract, fact, it's a very, very fair question to ask. Absolutely. Like, it's a very fair question to say, you know, what if hypothetically there is some point where arbitram's goals are different than maybe a standalone client's goal would be? Extremely fair question to ask. And my answer to that would be, you know, we are committed to continuing to develop Prism as a neutral client. to my neutral, we mean where we have people of integrity on both sides of this deal. And this was literally part of the of the other structure. You know, we thought about these questions and we said, you know, prism will remain neutral.

It will not push off-chain labs interests in any way that's sort of detrimental to the community. If those things would arise. So we're fully committed to that. And you might say, hell, hey, how do you, how do you, you know, obviously you have to trust the integrity of the people. But of course, you know, these are the same people that were built. building Prism beforehand, you heard Preston's story and in our hand, our hand as well. You know, we are absolutely committed, committed to that goal and we'll be operating prism, prism as such. The second thing I'll say is though, despite all that being true, you know,

I say if it arises, like I actually can't think today, you know, we are very, very much aligned in the goal of making Ethereum the best layer one, right? Which it is, but continuing to develop Ethereum and continuing to develop Ethereum layer two and actually. security of the role of centric roadmap. So if I actually, you know, when I've had this conversation with people and I say, what are those things that, that like, you know, off-chain arbitra might push, you know, we're hard pressed to find examples of those today, to be honest. I think we really are aligned and that is a big focus. That alignment is there. And I actually can't think of things today that, you know, would really advantage. There are things that would advantage

later to generally, like EIP 4844, which we're all working on. And, you know, and we're already reaching over the aisle both ways and working with our competitors on. I think that's great for the Ethereum community. So I'm not sure what those things are, but I'm also not saying that those things can arise. Today, I don't know what those things are, but absolutely if those things do arise, we are fully committed to operating prism neutrally, and the community will hold us in check and make sure that we do that, but we're pretty confident that we will. Stephen, on the community holding you in check, I want to get pressing away on this, but like, first of all, it's, it's Prism always going to remain open source because one of the constant checks that, of course,

the open source community has and the crypto community has is we have the right to fork. And so let's say bad scenario happens and somehow like you guys turn evil or something like this. And this is what crypto teaches us, you know, verify, don't trust. Well, couldn't we just as long as it's open source, fork prism code, have a new set of developers continue it in a different direction. and like, you know, pick up the project where it left off. Can you talk a little bit about commitment to you to open source ethos and kind of the

right to fork being ever present with Prism? Yes, absolutely. So Prism will remain fully open source under the same license. And the right to fork is absolutely will be maintained. And that was, you know, not to go too into the details of how this emerged, but the first the very first time there was a document produced, initially produced by the prison team, that principle was was in there. And that was literally never something that was ever discussed past that.

It was both sides that, yes, of course, that is something that we're committed to. And that won't change. So there are signatures on paper that say Prism will always remain open source. So that, yes, that that was the, that is the foundation of the entire deal of documents. I'm not going to pretend that I read the entirety of this turned into. But back in the documents that were digestible to, you know, in full to someone like me, yes, absolutely. That was, you know, one of the core principles that we built this deal on,

that Prism has to remain neutral. The Prism Discord will also continue to remain separate, by the way, from the Off-Chane Lab Discord to make sure that that community has a voice that's separate from ours as well. Because when you say, how do we keep the community in check? well, making sure there's a forum for that to happen and that forum continues and we don't sort of crush that forum, not that we would. Again, you know, it's sort of kind of strange to have these conversations because, like, we're imagining that we're the bad guy. But it's a very

good conversation to have. But I do also just want to put that disclaimer in. Like, we are very much Ethereum aligned. Like, you know, Arbitrim had its legitimacy by itself on its own by building a layer two in a way that, you know, was very much tech first. is tech first, and we delivered on that, and we continue to deliver on that. And this is taking two high integrity teams that are very much aligned. And there is no bad guy here. That being said, it's a fair question. So there's someone from the outside saying, but what if you become bad? What if you are acquired or this? You know, are there protections in place? And the answer is, absolutely, there are those protections, protections in place. And we will continue to make sure

that those and these are you know not not different from the principles and values that we're committed to in general and nothing changed and like i said that point was in our initial document and it was literally never like negotiated or debated this was um obvious from from both sides this is what we want and we and that was some of the initial alignment that we saw that made this um easy to come together Preston could you weigh on this because i know this is very important to you as well Yeah, you know, we built Prism based on transparency and that's not going to change, right? The principles that we had that brought, made, you know, the Prism client so successful, those continue on and we push us forward and continue to advocate for transparency,

open source, it's free forever, those kind of key principles. The cool part about the way that Ethereum is built, you know, we do have to think about these questions like what would happen if prison went away for whatever reason well that's why that we have this insurance policy of multi-client client diversity um last year this may have been a bit of a bigger issue when prison was like 75% of the network uh thankfully it's so much smaller amount today it's uh i don't know 30% 35% something like that um and what that means is you know prison is not like the authority on core development, right? It's not the only player in the game.

In fact, there's only so much that we can influence as a team without the significant buy-in of the rest of the core development community. So with that, it's like, you know, Ethereum is resilient to, like when we think of threat modeling about Ethereum, it is resilient to these kind of things. Like, what if a core development team let rogue or just, or just shut it down one day and rugged everybody, well, you have awesome alternatives as well. We're not going to do that.

Obviously, we love working on this stuff. It is an immense privilege to be building for Ethereum and to be building on such high-impact software. But we do think about that. We question ourselves. We make sure that we're doing the right thing always and sticking to the values, virtues, and mission of Ethereum and what the Ethereum community wants and deserves. And so this conversation thus far has brought up some memories. I have triggered some memories of my conversation with Vitalik.

And so I want to bring up some of the angles that I discussed with him here at DevCon about this particular acquisition and his thoughts on that. But I'll share those for after we get back from talking to some of these fantastic sponsors that make the show possible. Sequence is the all-in-one developer platform you need to build Web3 games and applications. For your users, Sequence is a smart wallet and it's the easiest, most intuitive onboarding your users will ever experience and comes with all the features users need to feel empowered in the Web3 world. Multi-chain support, NFT display, and users can buy SFTs,

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And I asked him about a whole range of subjects. One of them was this announcement. And this announcement being one of the bigger announcements, perhaps the biggest announcement that happened at DevCon. And I asked Vitalik's thoughts about the acquisition of Prismatic Labs by Arbitrum. And Stephen, you were talking about how there's no bad guy here. And I really just think that that angle is really emblematic by like, there's a commercial entity acquiring like an open source entity.

That's really like the angle that we're taking here. And Vitalik's response was that there's many, many nuances, right? Like on the optimism side of things, it was Proto Lambda that I think. think went from the EF to optimism. And so that's, while that's not the same thing as an actual, like, straight up acquisition, there has always been some sort of dynamic between layer two teams and layer ones. And so that was his thought about that. It's like, this is actually not completely unprecedented, although it is different with an acquisition. But then also I asked him the question of, okay, imagine that every single client team got acquired by a layer two or

some sort of commercial entity. And actually we had no clients left that were actually completely independent. Like what would that make him feel? And it's like, yes, but this is also a question of decentralization, right? Like, it's okay that some commercial entities acquire some clients as long as it doesn't, you know, think of it like a client diversity, right? And so now we have like commercial diversity. And so we have, I think what actually might be the version of a commercial entity that

actually is the closest thing to the Ethereum layer one possible, which is a layer two team. acquiring a layer one is actually the best version of a commercial entity to do that. And now we do have this like corner of Ethereum that is perpetually funded by the closest thing possible that is a commercial entity to be aligned with the Ethereum layer one. And so I think his overall general take is that like it's not so crazy. And and also we can't have too much of it, but also we should be grateful that we have this perpetual funding in the space. So Steven, no question. But those are the thoughts that I can remember from my interview with Vitalik. What do you think about this?

First, I'm looking forward to seeing the interview. That's first. But yeah, I totally, you know, I agree with just about all of that, which is, like you said, this is actually not unprecedented at all. I don't know if actually, I think the thing that might have been unprecedented is that you had a team like Prismatic that wasn't really doing any sort of external development work or be or other other other funding sources because a lot of the other layer you know the client teams they they do they do you know some of them do security auditing or they work for other layer

two's already or they have developers that are so i think this is actually actually you know almost like you said there obviously are nuances with an acquisition but it's it's definitely not unprecedented in principle of having these alignments and and definitely you know one learning that i had actually was you know to me you know while we did discussed all these things, it was clear that we were obviously, you know, the good guy isn't very much value aligned. And I realized, you know, with all this thing, that maybe we need to talk more about our values and make sure that people know how Ethereum aligned we are and that those values exist. Not that there are people that are doubting those, just to make sure that people, you know,

proactively know those values and that we have, you know, fully Ethereum alignment. I do agree with, you know, Vitalik, that having a diversity is very, very important, you know, having Arbitram's view, but also our competitors view and also independent teams and also teams that come from just completely different angles, the ecosystem. That's where the important is. In general, diversity of opinions and diversity of views is going to bring forward the best product. And so, yeah, it's a fair question to ask when two teams come together, you have a little less diversity because previously you had Arbitrum's voice. And remember, we already had a voice, but our prismatic voice is separate out there and another one, definitely. But you also solve another

problem in which Prismatic is now well funded and those voices are still remaining independent because of our commitment, of course, but now have actually more time to dedicate to that development. And I think one other one other one other point and this is more of a meta point which the community has to think about is what does public good funding look good funding look like? Where does it come from? And you know, I think this is actually a big success for that in us funding funding a development team, but those who may say, you know, we want these independent teams as well. I agree with them. Those are important. But I think it's important to think about how are those funded. And if that funding, by the way, comes, you know, if it comes from a particular source,

is that independence really exists anyway, right? So you can have, you know, those same questions even short of an acquisition. If there's, you know, one team that's funding a client team exclusively and they're sort of the lifeline, you have some of these same questions. So I think there are really important questions here to be asked in general about public funding in a way that allows independence. But what I can say is about this particular deal is this is of us obviously acquiring the product and the team, but also us committed to giving them and maintaining their own voice and their own Discord, their own developers. And the one thing I'll say about, you know, Preston's here, but we're on the whole team. This very much wasn't an acquisition of a team that's

like, oh, no, we need to be acquired. This was like a team that like literally, Like weeks earlier did the biggest event, you know, accomplished their goal. They're one of their first goals of the merge and really was one of the most successful teams, you know, in play. And these are people of extremely high integrity. And it's not like, you know, this wasn't a fiber sale. This was two teams that wanted to work together and fought through a lot of these very hard issues and really believe that this was best for the ecosystem and continue to believe that. Do you know, okay, so one thing I was just thinking of it on the backdrop of this. Of course, like we've got two very values aligned, very Ethereum aligned organizations and kind of like them merging.

Okay, cool. Get it. Like, we've made the case for this. But what happens if like Justin's son goes and tries to acquire Geth? Okay. Doquan, you know, comes back and he raises a whole bunch of VC money and he goes and acquires, I don't know, the lighthouse team or something like this. Has Arbitur just opened up the floodgates for like, client? team acquisitions. And I'm wondering, Preston, if, like, you think we have a defense here. And, like,

my inkling is the defense always goes back to layer zero, like the people. It goes back to, like, are the core devs for any amount of money or for any offer going to actually work on something they don't believe in? And the evidence for that is probably no, because they're already doing what they do and they could go work in Silicon Valley, make higher salaries. They could go, like, launch ETH competitor number five and give VC funded and like, you know, bank out that way. So my inclination is we're still ultimately protected by layer zero, which is like people who actually believe in the thing that we're building and the kind of the right to fork and the right to continue on that belief system. But is this instinct correct? I mean, put us in the mind of

a core dev. Is that our protection here? What's to prevent Geth from being acquired by someone who would mean harm to the Ethereum ecosystem? I definitely agree with that, right? Like, we had, you know, in Prismatic's journey, we had entertained the idea and sort of considered, you know, what are alternative sources of funding. But when it wasn't Ethereum, It just wasn't something we were interested in. And I think what's cool about our team and people like Prismatic is that we didn't come here to make money. We just came here to solve hard problems. Problems that you can't Google the answer.

You can't just look it up. Problems that have extremely high impact. Ethereum means to be the biggest technology, you know, ever maybe perhaps. it wants to be a global settlement layer. And to be able to work on that is extremely attractive to a lot of engineers. I would even go as far to say as there wasn't a dollar amount that you could have said to pull us away from Ethereum. That's something we always wanted to work on.

And I feel like with other core developers, they must share the same mindset. Because a lot of times this is really hard work. Sometimes it is a thankless job. Sometimes it is difficult. to do, especially to be so decentralized. It is very difficult work. But it is also extremely rewarding and very fun. So that layer zero, what you're talking about,

it's like we believe in Ethereum, and that's why we're here. And I know that every core developer is aligned in that. So I just want to ask some direct questions that just make this conversation really, really explicit. Like, Steven, do you think this acquisition of Prismatic Labs. This makes Arbitrom, like, a maintainer of, like, core critical Ethereum infrastructure.

And then does it also, would you say, like, give Arbitrum more direct representation in, like, Ethereum soft governance? It's a little bit, like, if you think, like, the core devs of Ethereum and, like, the, biweekly dev calls as, like, kind of like the Congress of Ethereum, where, like, they, like, decide on things, and hopefully the community accepts them. Do you think like now Arbitram has like a more direct access to what's going on in these conversations? Arbitram has obviously as fun as teammates that we're committed to funding their work that are obviously part of those conversations. Yes.

So definitely we do have more representation there. But I think the teammates have agreed to represent their values, which are the values that we, and the reasons why we chose to join forces. with them because we believed in those. And again, right now, I think those values are fully aligned. But, but, but, you know, as Preston just said, there was no, there was no dollar amount that could make those values change. And, you know, as he's heard Preston story earlier, when he had a job somewhere else, he was working up, you know, getting up early, working late. That wasn't where, you know, that wasn't where, where, where their, their hearts were.

And there were lots of, there were no shortage of shortage of other things they could do if they, you know, if their goal was taking home a large paycheck at the end of the day. So yes, of course, were represented. At this point, I think, you know, I don't see a difference in our, in our values. That idea hasn't emerged at that sort of point where we'd want A and they want B. But I'm confident that Preston would follow, you know, his belief, you know, his life's work. And I say Preston, it's Preston, Raoul, Terest, Nishan, the whole team, you know, I would want them to operate as such. And by the way, that's how I would want all our developers, you know, all of off-chains, earlier developers as well.

Like if our best check to make sure that we remain non-evil as an organization, which I strongly believe we are, is the people internally, the people that care. And that includes the ball of prismatics developers, but also all of off-chain developers. And I think that we all very much try to participate and listen to the community. And I don't think that will change at all. Yeah. And I do definitely take the point that having the prism team is an even more powerful check on arbitram like internally because these like we said like these core devs won't do anything

else other than work on Ethereum. And so the fact that that this deal was inked and the handshake was made, I think is indicative of the alignment here. And so I want to ask that question. What was Prismatic Labs worth? Well, what was the size of that deal? How much was actually handed over? How much was actually paid for? Steven, that one's for you. Yeah. So, I'm not going to say the exact financial terms, but I think the principle is what we're getting at here. It wasn't what was more prismatic labs was worth. It was also who prismatic labs would take an offer from, right? I'm sure that they were, you know, to your point before, there are people in other ecosystems that, you know, that we wanted to build some alignment.

And these might have been different. For us, it was very much the alignment first and the alignment that drove this. And, you know, not to repeat myself, but I'm going to repeat myself. You know, these weren't, wasn't a team that was looking for an exit or needed an exit in any way. This is a team that was looking for the best way to continue to do the work that they love in the most, you know, pure way and way that they didn't have to deal with certain overheads that are cumbersome. And trust me, I as a former developer in my day, I know a lot about this overhead. And I, I no longer do as much technical work as I once did. so I can very, very much relate, but that's what sort of led the deal.

So it's a long way of declining to answer, but I hope that it provided some useful context. Sure, of course. And one of the things that got me into Ethereum in the first place was this whole kind of like theoretical vibe of a regenerative financial system where we could fund things that are harder to fund. And so when I see good guys like Preston and everyone as the prismatic team getting a payday for their sweat and toil and blood sweat and tears into building Ethereum, that makes me happy and is definitely illustrative of why we're here in the first place. So Preston and all of

the Prismatic team, congrats. Congrats, guys. Thank you. So I think my last question will fulfill my commitment to the YouTube chat here. Steven, win Arb token. Stay tuned, but no comment today. There you go, chat. It's how we. we got. I do appreciate the energy of the chat and I'm glad that you are saying, you know, keeping us, keeping us in check and asking the important questions. When you do decide to release any information about that, just make sure you look us up there, Stephen, because I think you've got a chat room that'd be really excited. Stephen, Preston, congrats on the acquisition. It's been great to have you.

Thank you for explaining this next exciting chapter of Prism. development and Ethereum core development. We appreciate you guys coming on. Thanks for having us. Yeah, thanks so much. Guys, of course, got to end with our usual disclaimer. None of this has been financial advice. Eth is risky. So is crypto. The entire ecosystem is risky. So is Defi. You could definitely lose what you put in, but we are headed west. This is the frontier. It's not for everyone. But we're glad you're with us on the bankless journey. Thanks a lot.