Bankless - Refuting L2 Fud & State of Arbitrum | Steven Goldfeder

Episode Date: September 17, 2024

Steven Goldfeder is back on the podcast today to discuss Arbitrum’s and all Ethereum L2 FUD.  Is a win for Arbitrum also a win for Ethereum, or is Arbitrum competing for users and liquidity? Steven addresses governance concerns and discusses the decentralization of Arbitrum’s Sequencer. In the second half of the show, we get into the latest developments in the Arbitrum ecosystem, including Stylus, Bold, Orbit, and Timeboost. ------ 📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24  https://bankless.cc/spotify-premium  ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2    ⁠ 🦄UNISWAP | BROWSER EXTENSION https://bankless.cc/uniswap  ⚖️ ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum   🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle    🗣️TOKU | CRYPTO EMPLOYMENT  https://bankless.cc/toku   ------  ✨ Mint the episode on Zora ✨ https://zora.co/collect/zora:0x0c294913a7596b427add7dcbd6d7bbfc7338d53f/64?referrer=0x077Fe9e96Aa9b20Bd36F1C6290f54F8717C5674E  ------ TIMESTAMPS 0:00 Intro 4:01 L1 vs. L2 Relationship 10:45 Use Cases of the L1 vs. L2s  18:56 Fastest Blockchain 20:05 Decentralization Priority  25:15 Sequencer Debate 33:06 Arbitrum x Espresso  38:02 Optimistic Rollups Capturing Ethereum Governance?  41:58 What Does Arbitrum Want From the L1  45:21 Increasing Block Times? 49:17 Arbitrum Ecosystem  52:21 How Does Stylus Work? 57:22 Web2 Devs Now Web3 Devs   1:03:02 Arbitrum’s Next 10x 1:08:17 Closing & Disclaimers  ------ RESOURCES Steven Goldfeder https://x.com/sgoldfed   ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures  ⁠

Is it true that maybe they're taking transactions off of Arbitrum? Yeah, probably, but that's okay. We're growing this pie together, and together we're all Ethereum. Welcome to Bankless, where we explore the frontier of internet money and internet finance. And today, we're back on the frontier of layer two's with Stephen Goldfetter from Arbitrum. Lately after one of our recent podcasts, a flurry of conversations has happened on crypto Twitter and in various other crypto conversation channels about the Ethereum roadmap and the nature of the relationship between Ethereum layer two's and the layer one. people are kicking the tires of the Ethereum roll-up-centric roadmap just to double-check that this is the right choice.

We're on the right path. Some hot takes were shared. Some responses were made. And today on the show, Stephen from Arbitrum will clarify some of the technical elements of that conversation, the decentralization of Arbitrum sequencers, whether Arbitrum is competitive or cooperative with the Ethereum Layer 1, and whether or not we should increase the capacity of the block sizes on Ethereum Layer 1. In addition to all of that conversation, there's also just a ton of cool new gadget. coming out of the Arbitrum universe, Silas is allowing millions of Rust

C and C++ devs to become smart contract developers, along with all the code that's already been written in those languages. Turns out, there's a ton of cryptography that's written in Rust. And now with Arbitrum Stilis, that cryptography can become smart contracts, which I think is pretty cool.

I hope you all enjoy this episode with Stephen. It's pretty jam-packed, so strap yourself in. But first, a moment to talk about some of these fantastic sponsors that make the show possible, especially Cracken, our preferred crypto exchange for 2024, If you do not have an account with Cracking, consider clicking the links in the show notes to getting started with Cracken today. If you want a crypto trading experience backed by world-class security and award-winning support teams, then head over to Cracken, one of the longest-standing and most secure crypto platforms in the world. Cracken is on a journey to build a more accessible, inclusive, and fair financial system, making it simple and secure for everyone, everywhere to trade crypto.

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Stephen, welcome back to the podcast, man. Thanks for having me. Great to be back. Interesting time to be in the Layer 2 space. I know Arbitrum has been building a ton of stuff. We're going to talk about bold, stylist, time boost, many of the cool gadgets and bells and whistles coming out of the Arbitrum ecosystem. But first also, I think there's a big conversation going around in the Ethereumverse

as to like re-understanding what's a layer 2, specifically in the context of how intimately attached a layer 2 is. to the layer one. Steven, I know you've been like kind of tapped into this conversation. I want to start things off there. How do you think about L1 to L2 relations? Are layer two's equivalent to the layer one? Where is the line between a layer two and a layer one?

What's real arbitram's relationship with Ethereum? Like overall, can you start this conversations off for us? How do you think about this, this relationship here? Absolutely. I think that they're very symbiotic in that arbitrium is arbitram today because it has a very powerful layer one, that layer one being Ethereum underneath it. Without the powerful layer one underneath it, Arbitrum wouldn't be able to have, say, it's fast block times, it's low fees, the high level of security that it has. And this is a very symbiotic relationship here.

Arbitrum cannot exist without Ethereum. And frankly, Ethereum cannot reach its full potential without layer two's like Arbitrum. So there's a very strong symbiotic relationship between the two and the two complement each other very well. You know, there's this, it's like a tweet form. I think I was the first one to do it, but now I see it all the time, like Arbitrum is Ethereum, base is Ethereum, and obviously it's making a point, but I think it's a true point. It doesn't mean they're equivalent, right? If I say, hey, I live in New York and you live in California, we both live in the United States, and that's okay, right?

There can be different islands or different states or different parts of the same larger being, and I think that's the case here. You have different layer twos, you have Ethereum, layer one, and together, they make up this larger entity that is Ethereum, and they're all kind of critical to Ethereum being and reaching its full potential. There's one perspective out there that a dub for Arbitrum, a win for Arbitrum is a win for Ethereum. You know, Ethereum is one big ecosystem. Any dub that is earned inside of the ecosystem is a dub for the ecosystem as a whole. That's like the layer two growing the pie perspective. Maybe the opposite perspective is, you know, each layer two is

maximalist of itself first. You know, Arbitrum is about Arbitrum. If Arbitrum doesn't win the users of the layer one, the assets of the layer one, the liquidity of the layer one, then another layer two will. How do you think about this tension? Because I think like both can be true. And so

how do you think about that tension? Because all layer twos are in competition with each other. And I think one perspective is that if all layer twos are in competition with each other, it kind of converges as like trying to take away the user's liquidity assets that exist on the layer one.

How do you think about that? Yeah, I don't see that tension there. I don't think that's really true. No, it is the case that obviously the layer twos are somewhat competitive with each other. And, you know, I prefer that more activity happens than Arbitrime because we contribute to Arbitrumb technology and someone building optimism or base is probably going to rather it has there. But actually, I think, you know, a really good place to look back is Vitalik's 2020 roadmap.

The ETHCentric roadmap, this blog post has become like, you know, this really important blueprint for the community. We followed it quite well, where Vidalek actually, you know, says this as a feature. And he says, you know, a lot of people basically don't want to have a little level of influence over a large thing. They actually want to have, you know, a project or a sort of a piece of they control and he uses the analogy of these little islands. And the fact is that these little islands may be in competition. They may have, you know, different objectives and also, you know, prefer themselves over their neighbor. But there's no, they're still part of a larger entity. They're still part of Ethereum. And that's basically, you know, how I see this today. So, yes, a win for arbitrum is

absolutely a win for Ethereum. And win for Ethereum is absolutely a win for Arbitrum. And that doesn't mean, it's not like, you know, contradicted by the facts that there are different layer two. It's a win for Ethereum. It may not be a win for arbitram, but actually if you zoom out and say, well, we are part of the same, you know, Ethereum ecosystem. I think that there's a viewpoint that says that too. That might be a little bit extreme. But still, a win for arbitrum and a win for any layer two is absolutely a win for Ethereum, because we have to zoom out and say, like, you know, two things. Number one, who is the competition here? Right. So you have the same people that on one hand are saying, hey, you know, L2s shouldn't, you know, give grants or shouldn't

compete against in the verticals that they think should belong on the layer one. And I'm saying, hey, why is everyone going to Solana? Why is Solana seeing all this activity? How do we compete with them? It's like, there's her answer, right? The L2, embrace the L2 vision. It's part of Ethereum and the L2s are the scalability layer of Ethereum. And that's where these apps can go and can thrive. And that's how we compete with other ecosystems. And the nice thing is, because we have Ethereum, we have the security as well. Because Ethereum is underneath us, we have a massive advantage over these other monolithic

ecosystems that can offer the cheap fees, but can't offer that together with the same security and same decentralization that we have. So I think really it's important to embrace that vision. And it is true that at times, like, yes, it's possible, you know, a user might come from Ethereum to Arbitrum that would have otherwise stayed in Ethereum. You know, but it's like if you open up like a new highway, a new lane on the highway, it's true that a car that was in the original lane might go there. But the reason you're opening up the new lane is because you have a vision of there being enough capacity to saturate all of these lanes. And that's really the view that I have for Arbitrum and Ethereum generally, which is, you know, if we're stuck in time today and we can't imagine any growth, you might say, okay, we're all fighting. over this same pie, but that's not really what's happening.

We're all trying to grow the pie, and we're trying to create the future capacity. And yeah, it's true that projects might move over to Arbitrum that would have been on Ethereum otherwise, but together we're creating so much space for projects to be in Ethereum. And I don't care if a project, you know, stays in Arbitrum or stays in Ethereum today. What I want is Ethereum to have the capacity for the next wave.

And I know that if we don't open up the layer two lanes today, if you will, we won't have that capacity in the future. And we need to start that today and not worry about, oh no, are we taking some cars off of this lane? That's okay. We're creating more capacity, and the thesis here is that we're going to fill that capacity. And if you don't believe that,

and you think that we're just fighting over what we have today, then I think that, you know, you need to dream bigger and you need to really have a much better vision of what we're going to build, because that's not too exciting if we're stuck where we are today. Stephen, there's a tweet here that I want to share that I want to get your take on. This is coming from a zero-x bread,

who I think has been really like, nerds knifed about this like layer one, layer two conversation. And he has this graphic about like use cases, uh, and where they exist in like the Ethereum sphere. And so he has like the Ethereum layer one as like illustrated as kind of covering the maximally decentralized, super secure end of the spectrum where you find sovereign ownership over assets, defy, and maybe you, you hold your NFTs on the layer one. And then you have the layer two, uh, which is like buying coffee with like stable coins or like game asset ownerships, maybe also some, some NFTs. And I think the idea here is that, like, you'll allow the layer twos of Ethereum to do the low value, high frequency, high throughput activities.

But then you like the use cases that are meant for, like, the super secure use cases like defy and sovereign ownership over bare assets is left to the layer one. But he's illustrating attention here where actually layer twos on Ethereum can do the full spectrum. Layer twos can do both sovereign ownership over, like, you know, bare assets. It can be, in the fullness of time, a place to store your cryptopunk. But you can also buy your daily coffee with USC on Arbitrum as well, which kind of begs the question. Like, well, if the layer two's can do everything and there is this like inter layer two competition, what kind of is left for the layer one? How do you think about this like tension between use cases on layer twos versus use cases on layer one?

Yeah. So I think this chart, you know, there's how it should be here. that's their vision and that's that's a beautiful vision it's not my vision like i don't think that there's this arbitrary line where we have to draw that says hey l2s shouldn't touch defy for example which is what this line shows and by the way it's not vitalics vision either right so if you go back against that 2020 roadmap and you look in the comments there he actually makes a comment where he says i think that he says defy will be the one that drives us all because he says the defy apps are going to want to remain competitive for users and other fees and they're going to go on and and drive this layer too

a narrative. So that's a wonderful vision that this person has. It's not my vision. It's not Vitalx vision. Why is it not my vision? I don't know why you draw that arbitrary line and say that L2s can't do defy. Defi users also want cheap transactions. And I think you actually, like, let's go into defy for a second, right? Let's take, you know, a simple defy protocol. Let's take uniswap or any, you know, AMM, and actually compartmentalize their users and not just put it in this one thing that says defy, but says, who are these users? Well, There are the whales there that are trading like, I don't know, a million dollars at a time. And then there's a user that's trading $10 at a time.

And to put those people in the same bucket and say that, hey, you both need to use Ethereum, the fees are okay for you, is ignoring like probably the larger vertical, at least by people, by population, right? So I do think that there are users and are use cases out there that say, hey, I'm transacting at a certain volume and I have a certain comfort level that I actually want to keep on layer one. But to say that, like, okay, your defy user who really just wants to trade, you know,

$3 worth of a coin, like, who are we to say that they're not important? In fact, they are important. And in fact, they're probably in some, a majority of the users out there. And those are important use cases, too. Take another example. Take derivatives, right?

Derivatives didn't exist on Ethereum before Arborchrome came along because the transactions were just too expensive. They just wasn't able to support that, right? the GMX thrived on Arbitrum first. Uniswap and the like. AVE were on Ethereum and an Arbitrum and another layer two's, but the derivatives actually rose with layer two

because we were enabling a sector of defy that literally wasn't possible. You know, fast forward to today, Renegade Finance went live last week. This is a product that offers dark pools on Ethereum, on Arbitrum, and it's made possible by Arbitrum stylists. So you can't do this on Ethereum. So who's to say that, like, you know,

even if you had this notion that there are certain verticals, I think that the buckets that we drew there are just arbitrary and wrong and cut of the wrong place. You can talk about value. Like, Cryptopunks, I don't see a good reason to bring your Cryptopunk to arbitram, to be honest. Like, why would you? It's doing well on Ethereum.

It doesn't have, you know, really anything that you can do with the utility, like in a gaming world today. Maybe one day there will be and you can mirror it, but it's not, doesn't exist today. So I'm not here telling you, like, bring your crypto punk there. It's perfectly well on Ethereum. It's a status symbol, and that's where it should be. But at the same thing. time, I think we have to be a lot more nuanced about who the users are and who we're pricing out

and who we're actually including by having layer twos. And then the choice becomes, by the way, okay, do we want to include these people in layer twos? Right. The people aren't saying, so, so just take one step back, people aren't saying, oh, Stephen or Brett or whoever it is said that, like, I shouldn't launch my defy app on Arbitrum. Okay, fine, pay high fees on Ethereum. That's what Stephen and Brett say. Now, they're going to say, oh, let's go to Salana. Let's go somewhere else where we're going to get these fees, and then they're going to have a worse experience, a less secure experience, and they're not going to have the Ethereum experience. So we don't actually have that level of control that we think we have. What we want to do is say, there's a need in the market. There are

these users. There are these $3. DeFi traders. There are these users that want these products. How can we give them the Ethereum experience? How can we give them the best possible and the most secure blockchain experience at their level? And I think layer twos are the answer to that question. I do really like this idea that defy is actually strictly better on Ethereum layer two than it is on the Ethereum layer one. I think the evidence that derivatives taking off on layer twos is a great example of that. And also just like the congregation of like the $5 defy trader and the $5 million whale speculator, being in the same spot is actually generates welfare for everyone. There's a sufficiency when everyone's in the same place. And that's going to require a platform that can handle more.

people doing more transactions on a daily basis. And so, like, the natural evolution of Defi moving on to layer two is I actually think is a pretty strong point. Yeah. And by the way, there's, you know, another thing which is related, there was an interesting paper from Uniswap by, I believe it was by Austin Adams on their team that showed the, the effects on LP efficiency when you have, like, faster block times. So Ethereum block times, and I know the shortest will come up are obviously significantly slower,

but even amongst layer two's, Arbitrum has, you know, 250 millisecond block times on Arbitrum 1. 250 milliseconds. Yes. So four blocks a second. Exactly. Yes. And the arbitrage opportunities, you know, the arbitrage are the efficiency, the capital efficiency, leading to, like, faster arbitrage are just, you know, much more.

It means LPs do better. You know, they collect more fees. And it just leads to more efficient defy as well. So there are like a host of reasons. And again, you know, I think the false, you know, the false sort of the economy that people put here is like, okay, just do it on layer one, or like, oh, maybe Arbitron will just do this all in a van of Ethereum.

And the answer is those two things go together. Arbitrum can't. Arbitrum could not offer what is offering with the security that it's offering if it wasn't for Ethereum providing a critical service. And I think the good analogy here is the internet, right? So you have this, you know, TCIP, this stacked architecture. And the internet is probably the most successful protocol ever of all time.

and, you know, the, what one is this stacked architecture. And it's not, you're saying like, you know, oh, we should do everything in this level. No, it's the idea is that different layers of the stack are benefited by layers underneath them. And that's exactly what we're building here. It's an Ethereum and an Arbitram, which is Ethereum is critical. It's a critical layer of the stack. Just like TCIP is a critical layer of the stack. When I'm ordering food on my phone and Uber, I don't necessarily think about TCIP,

but we wouldn't be able to do that if it wasn't there. And I think that's important as well that people's, Sometimes they'll get like, you know, we're zooming, zooming, zooming in and saying, how is it possible that Ethereum isn't everything? And answer is, Ethereum doesn't have to be everything. Like, look at the internet. Ethereum is making everything possible at its layer of the stack, and it's okay to build on top of that as well. I think I remember asking, I wrote this tweet, is like, does MEV increase or decrease with block speeds? And Tim Ruffgarden, I think, responded to it showing with some, like, very technical paper that's, like, well beyond my capacity for understanding.

but the TLDR is the faster the block times are, the less total MEV there is. And so it's not just like obviously there's also less MEV per block because the blocks are sooner, but faster block times also just decrease the total aggregate amount of MEV, which would go so far to say that just like the faster you can speed up a block time, the less total MEP, the less total value there is extracted there. And I think 250 milliseconds blocks is like the fastest blocks that exist. I don't think there's a faster blockchain. So the only faster ones are actually, so to cannibalize ourselves, the only faster

one, so the Arbitrum orbit stack is actually able to go even faster. It can go up to 100 milliseconds. And a bunch of the public chains run at 250, but a bunch of Arbitum Orbit Stacks actually push in and go to 100. So yes, other than that, it's, you know, I think Solana is the next closest one and it's at 400 milliseconds. Okay. Okay, so then I think that brings us to the question.

If D5 strictly better and D5 is just means. move into layer two's, then the decentralization or security of layer two's also becomes a high priority of a conversation point. Can you kind of just like frame this conversation for us? The decentralization of transaction ordering, decentralizing the sequencer of Arbitrum. This conversation is a little bit of a meme. If I say decentralized a sequencer, that's kind of a meme statement. Maybe you can kind of like unpack that question for me and talk about like on the grand list of priorities for Arbitrum, where is that? Yeah, so the answer is decentralized and the sequencer is important.

It's a priority and it's actually something which, you know, we at OffChairn labs are collaborating together with the team called Espresso Systems and building a decentralized version of the sequencer and it's going really well. But let's like zoom out a little bit and talk about what is decentralized and sequencer because as you said, it is definitely a meme. And it's pretty loaded. Yeah. And like people like really don't know what it means.

and actually because, you know, there's good reason for that. So in a blockchain, like Arbitrum, in a layer two, there is something called the sequencer, and there's also something, though, called the validators. And I think these are two roles that people often confuse. And so let's talk about a transaction, the life cycle of a transaction. So I send a transaction to Arbitrum.

I could send it directly to Ethereum, but generally I'll send it to the sequencer, and the sequencer will do what its name suggests. It will sequence that transaction set. I will include it in this sequence. in this order, you know, your transaction will be included there. And the Sequencer sort of gives this fast promise. And remember, the Sequencer actually is then going to go ahead, you know, it's going to

post these transactions, which called the batch post who's going to post it on Ethereum. But the nice thing about the sequencer is it gives you a promise that's faster. It gives you a promise that's even faster than Ethereum, which you can, you know, rely on to the extent that you're comfortable trust in the Sequencer with that promise. Now, what happens from then on? Like, let's say the sequencer included a bad transaction, or the same. sequencer said, like, hey, take money out of David's account and put it in Stevens' account. Like, what would happen if the sequencer did this thing? And the answer is, on a chain like

arbitram that has operating fraud proofs, it would be rejected as invalid. Because what happens is there's another role called the validators, and the validators are the one that actually execute their transactions and say, is this valid? Is it not valid? So the sequencer sequences them and it says, here are the transactions, and the validators go ahead and run those transactions and said, okay, you know, David paid Stephen. Or, oh, okay, actually, this transaction that the sequencer included isn't valid. It doesn't have a signature. David didn't pay Stephen, so we're going to reject this transaction. Now, typically for efficiency, the sequencer isn't going to do that. It's going to, you know, exclude the bad transactions. But the point is,

when it comes to a trust and security, we're not relying on the sequencer for security. We're actually relying on the validators. Okay. So what is the issue, then why do you need a decentralized the sequencer? Or another word... Before we're going to decentralizing the sequence or can I ask, well, who are the validators? Because if the validators are also doing the checking for us, who are these people? Because then now all of a sudden I'm trusting that they're doing their job correctly, right? Excellent question.

So today on Arbitram 1, there's about a dozen validators that are on this allow list. And that includes, like, relatively, you know, well-known entities such as off-chain labs, Google, it includes the Ethereum Foundation. So it includes like, you know, and all you need to do, by the way, is trust one of them. That's the nice thing about the validators. Only one of them has to be honest. Yes, it's like the single honest validator assumption that you've, you know, that phrase, that's what that means.

As long as one of them is honest. And by the way, this is made possible by Ethereum again. How do we get around the typical consensus result that says you need to have a super majority? The answer is we have Ethereum. And therefore, layer twos can do their consensus with only one. one honest validator in their layer because what does that honest validator do? It appeals to Ethereum and relies on its consensus. So again, this really staged layer approach where layer twos can have that.

But that's not the goal and that's not the ideal. And actually, it's a good time we're having this conversation because Arbitram Bold is a brand new protocol for the challenge and fraud proofs that's going live hopefully soon. I would expect it to be voted on in the next few weeks, you know, to be put up for a vote in the Dow in the next few weeks. And when that happens, validation will open up for everyone. Okay, so we have 12 sophisticated validators who have the roughly, who have like the white list to be able to do this like kind of sophisticated job of making sure all the transactions are valid. That's been the state of things. And now that's going to governance vote to get opened up to the whole entire world. So the whole world can become one of the people that says, hey, that valid, that transaction wasn't valid.

Yes. And the nice thing there. And by the way, it's not actually that sophisticated thing. It's running a node, basically. And right now, if you run a node and your node says that's invalid, you know, the white list will say, okay, now you can actually go on chain and challenge that, put down a deposit and challenge that. So that's going to be opened up to everyone to do exactly. Okay. And now who's the sequencer?

Because the sequencer is a single box, right? So there's one operator of the sequencer? Yes. So this is, yeah, a great question. So the sequencer today is there's, there's, there's, two questions here, which is who is a sequencer and who gets to choose or change who the sequencer is, right? So those are two related questions. So the Arbitrum Dow, in the case of Arbitrum gets to choose who the sequencer is. But today, it gives that responsibility over

to the Arbitrum Foundation to choose who actually runs the box of the sequencer. But I think that's actually a really interesting point because I think this is something that people miss. One of the criticisms of the current centralized sequencer is the sequencer gets all this value. And that's number one. And therefore, they're going to have a disincentive to decentralize.

Now, I want to clear two misnomeras here. Number one is there's this other meme called sequencer revenue. And I don't know if you think that exists or it shouldn't exist, or at least in arbitram it shouldn't exist, but probably,

I think this is probably true for most chains on Ethereum for most L2s. It's chain revenue, right? Like, you know, it's like, you know, to give an analogy,

you have someone at the, you know, collecting, you know, you're at a theater, someone's collecting tickets at the door, and you say, okay, this is the ticket, ticket man revenue. No, this is like the revenue of the theater. This is just the person that's collecting that revenue. But, like, this person doesn't get to keep the money that they collect.

They're the front person for a much larger operation. And it's the same thing, actually, for the sequencer. We fundamentally internally don't use, like, the term sequencer revenue. It probably exists in certain places in documentation because, you know, it's kind of pervasive in the community. But at least my preference is the term chain revenue. This is revenue that belongs to the chain. Now, the chain has to also appoint a sequencer.

And the cool thing is that today, the answer to that first question is who gets to choose with the sequencer? It's already the Arbitrum Dow. The Arbitrum Dow gets to choose. So even though the Arbitrown Foundation is actually running, you know, running, it's in charge of running this box of the sequencer. It's not getting the profit. All that profit is going to the on-chain treasury of the Arbitrum Dow, which means there's zero economic, you know, incentive not to decentralize because you can basically, you know, the Dow can say, hey, instead of you, I actually want this committee to run this, you know, consensus protocol to decentralize the sequencer. We know how to do that. And it's something

which we're building together with espresso. And by the way, the time boost protocol, which is our favorite protocol for how the sequencer operates and how it assigns priority was chosen to be easy to decentralize. And that's literally the one that we're working on to decentralize. So literally why it was designed. But the point is there's no economic disincentive. because it already belongs to the Dow today. Off-Chance Labs doesn't get sequenced your revenue. The Arbitram Foundation doesn't get sequenced your revenue. It all goes to the Arbitram Dow,

and they could just as easily say to it, and just as you might say, hey, instead of setting up one toll booth, we're going to have 12 toll booths, so you know a distributed toll booth, the toll-booth collectors are still not the one that are making the money. It still goes to the Port Authority, if you will.

Let me see if I can steal man a response to that. So with a single box, a single centralized sequence, even if it is governed by the Dow, and even if all of the revenue of the sequencer goes to the chain, goes to the Dow, there's still the potential of this one single sequencer censoring a particular user or something. They could still do censorship. So in the grand roadmap of like the generalized Ethereum layer two space,

there's always been this idea of having a more multiple sequencers in order to get around this like censorship concern. because if we have multiple sequencers, one of them starts to censor someone. Well, there's other sequencers that are not making that same choice. And so therefore, that user just has to wait until a new sequencer puts a new transaction into the chain. And so this has been like the grand idea of like a decentralized sequencer. And then I think this opens up the economics conversation of like, well, if there is multiple sequencers, does that invalidate this idea of like chain revenue? because one of the handful of multiple sequencers can keep that revenue for themselves

because now they are in control of sequencing the transactions. Maybe they take some MEV and actually give less money back to the chain. I think that's maybe a steel man of a rebuttal. Tell me if I'm wrong or how I'm wrong or what's your response to that? Yeah, so the first thing you said, absolutely fully agree. That is the actually incentive to these centralized sequencer. there is a centralization aspect or a censorship aspect. I want to get back to that in a second

because there's already a lot in place that actually makes a censorship not as bad as you might think it is. But yes, that is the reason why you'd want to decentralize the sequencer. To the second point, I think, you know, you have to sort of step back for a second and say, what does it mean to decentralize a sequencer

before we think about how they can economically potentially manipulate it? And there are different models here. So there are some models that say, And this is not the model that Arbitrum is doing today, or, you know, it's on any roadmap that I'm familiar with. But there is a model that, you know, was called MIV. You've probably seen an MEP auction, which is basically says, hey, auction off the right to be the sequencer. The one who's able to pay the most.

They'll go ahead and collect that MEP. And then sort of, you know, this person, it's kind of like you have a single sequencer at any given point in time. But then over time that rotates, right? And that helps you from a censorship perspective because you can say, hey, even if this current one is censoring me, you know, in 10 minutes or an hour or whatever it is, like I'll be able to, or in the case of a base roll up by the next block, I'll be able to now go to the new sequencer. Like, there is obviously a censorship-resistant benefit there to that? Now, is it possible that now this individual sequencer will, you know, even if it's off-chain, set up some sort of thing and says, okay, you've got to pay me some fees to be included and start trying to collect, you know, out-of-band revenue. Of course, it is possible. But they're limited. by the fact that, you know, they don't have, you know, sort of, you know, a monopoly on this, and you can just wait them out and wait for the next one. But the type of sequence or decentralization actually being considered in the arbitral ecosystem

is a bit different than that model. It's going to be a distributed committee that sequences, right? And therefore, you know, the property they'll have is it's not that, like, there's one sequence or now and one sequence are in an hour and one sequence or an hour later, and therefore that's how you decentralized. But it's actually at any given point, it looks like there's one sequencer, but it's actually a consensus protocol that's backed, you know, by who knows, say a couple dozen nodes or the like. And maybe these nodes are voted on or chosen by the Dow who can actually participate in that committee. And that, you know, I think it's a lot harder to actually, you know, for them to try to collect revenue.

No, sure, if you manage to like break the key majority assumption of this protocol, then they, They can do those things, but it's going to be much harder for one or two people to sort of, you know, out-aband-do things because they're just, you know, a node. And as long as the consensus property and the honesty property is respected for this committee, then it's going to do the right thing. And it should be, you know, cartel-proof and, you know, ability to resist such attacks. And that's the model that we think about. So there's really not then one person that can insert themselves and try to do that. And also, by the way, again, remember, the Dow will have control over this. So if there is evidence that someone is doing something and trying to, you know, do things that are shady out of band, then they will hopefully be replaced by the Dow and they won't be part of this process anymore.

Right. Yeah. The Dow boot as the like the last line of defense. Yes. Can you tell me what you guys are up to with espresso? Because I think that the first time I actually ever heard about espresso was actually talking to you at ETH Denver 2020 or something very, very long ago. Yeah. Because this conversation is related to, like, Arbitrum's actual plans to, like, you know, quote-unquote decentralize the sequencer.

Tell us about Arbiturans plans to do this and how does Espresso work into this conversation. So espresso is building a marketplace for sequencers and, you know, a really interesting product as their core product. But also we are working with them as a research collaboration, research and development collaboration. You know, primarily they're doing the development, but we're contributing heavily on the research side. We actually build a, you know, kind of what I said, a decentralized. version of time boost. So just for two seconds, what is time boost? So another thing that people don't often, you know, discuss with nuance, when they talk about decentralized the sequencer, it's like, okay, we've decentralized sequencer. Now, what would you like it to do? Would you like

this decentralized sequencer to do first come for a serve ordering? Would you like it to do MEV auctions? Like, there are many, many, many ways to decentralize the sequencer and they look very, very different and they have different properties, right? You might say on the one hand, like, I want to do a first-come, first-serve auction, and I want this decentralized sequencer to guarantee that this fairness property is happening. On the other hand, you might say, I actually want to do an MVP auction. I don't care about any sort of like first-come, first-serve fairness. I just want to make sure that this decentralized property is making sure that this auction happens properly, and the chain is getting maximal revenue. Very, very different things with very, very different objectives, but they're

both still somehow decentralized in the sequencer. So time boost is actually kind of in the middle of those things. It turns out that for users, like average users of the chain, they're just playing their game or doing their defy transaction, and just want to get their transactions submitted relatively quickly, they want something more like first come for a serve. It doesn't necessarily need to be exactly first come for a serve, but they want fast inclusion. NBV researchers really want the ability to pay for ordering and say, hey, I want my transaction earlier than, or, you know, the first in the next block or something like that. And what Tynebu says is it kind of gives you the best of both worlds. It guarantees fast inclusion for everyone, but it inserts up to

about 100 to 200 milliseconds of delay where someone can buy a priority lane ticket and say, I want my transactions included with priority ahead of, you know, in the next block. So you get as a really nice property because you get the average users are happy because their transaction are not going to be delayed more than a couple hundred milliseconds. And the MV researchers are happy because rather than having to pay Amazon or whatever to try to gain a little bit of advantage, they can actually just buy that. directly from the chain, and the chain internalized the revenue. And the last property of time boost is, just like arbitration today, it doesn't allow front-running.

So the sequencer sees the transactions first, and it doesn't allow any sort of front-running. So you don't know that, you know, my transactions before it's already been included. There's back-running. I might try to get an arbitrage opportunity and get in really quickly, but I can't try to front-run you with any knowledge of what your transaction is. And that's where time boost is. It comes, so a time boost is a policy. Now, again, you just like first come for a server or MEV auction, you could do centralized time boost or decentralized time boost.

What Espresso is working on with us is building a decentralized version of time boost. And it turns out that the time boost design was literally designed to be decentralized. And it's very decentralization friendly despite what some may say. New projects are coming online to the Mantle Layer 2 every single week. Why is this happening? Maybe it's because Mantle has been on the frontier of Layer 2. design architecture since it first started building Mantle DA powered by technology from EigenDA. Maybe it's because users are coming onto the mantle layer two to capture some of the highest yields

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When you heard the statements, what was your first reaction to that? Like, is there any merit to this at all? No, there's zero merit to that at all. And actually, it really bothered me. It was kind of upsetting because, A, there's zero evidence. There's actually evidence to the contrary. So one of the bigger, you know, more controversial, you know, conversations of the Y'all called developer call in the last.

I would say a year or so, was this issue of 4844 versus withdrawals. So it seems like ancient history now that we've enabled withdrawals, and you can take out the E2 stake. But there was a big push among many core development teams, and I'm not saying they had the wrong reasons to be clear, to actually tie these two together. And it was the prison team, which was initially the only prism as part of Offchain Labs,

was the only core development team that was adamant and said, no, we think that this is going to delay withdrawals. We think that shifting withdrawals should be our highest priority. We do not think that withdrawals should be tied to 4844, and they actually moved 4844, you know, to the next hard form. We moved it back, right? What do you say? They moved it back, yeah.

Yes, exactly. So it wasn't included in Capella, which is one at the time. It was, and actually, you can go back. I think it was the November 24th, 2020, that was the ACD call. And you can listen, listen to the prison team fighting, fighting, fighting, against others who also had good intentions. I don't think anyone, I'm not saying that others were trying to push the optimistic agenda either, but like this accusation that like off-chain labs or prison was trying to do that,

it's like literally like, you know, if you look at it, like it's not true. We were the ones who were actually were pushing the opposite. And by the way, the prison team internally has free will to, you know, to do whatever, push whatever they will. They never heard for me saying push this or don't push this. They did that because they're the ones that are closest to that, to the problem, and that was the priority that they chose, and they have full autonomy to do that. So it was a little upsetting and a little insulting to see, you know, to see,

because, you know, I think that there are, I have lots of disagreements, the lots of people in the space, but I don't think that there are bad actors, or at least not very many that I've come across. And I think that, you know, even when an ACD call it gets contentious, I think people have different priorities, different vantage points. but the notion that the optimistic agenda sort of captured it was upsetting to me. And actually, if you look at, you know, future, sorry, more recent, you know, calls as well, you know, we've been, as Prism has been very, very conservative.

I think that they basically were against basically all the IPs that were added in Electra. Like, they've been very, very conservative of what gets in the chain. And, like, there's zero evidence of them pushing an optimistic agenda. And they haven't been. So, listen, I can only talk for Prism, but certainly it's not true, and I don't think see it anywhere else. And by the way, I don't know why 444 is an optimistic agenda item either. That's like another big, big mystery to me.

4844 made, you know, data availability cheaper for everyone. And that includes ZK roll-ups, which any true roll-up post this data on chain. And it's true that today, optimistic wallops are doing more transactions and have more bandwidth, so see more reductions from that because they're using more of this. this, but like fundamentally that was a necessary, a very, very big win for ZK roll-ups too. So I don't even know why that would be an optimistic roll-up versus ZK roll-up. But anyway, when it came to L1 priorities, i.e. withdrawals versus L2 priorities, i.e. 4844, we're on the record very, very strongly of saying, hey, make sure withdrawals get out, you know,

even if it means delaying 4844. So, Stephen, just wrapping up this part of the conversation here, a lot of this is coming from a conversation of just like, what do we want to expect out of the Ethereum Layer 1? What kind of capacity does the Ethereum Layer 1 have? From the perspective of Arbitrum, what does Arbitrum want out of the Ethereum Layer 1? Is the Ethereum Layer 1 serving all of Arbitrum's needs in a perfect 10 out of 10 fashion? Are there changes that Arbitrum would like to see out of the Ethereum layer 1? What's your perspective on just like the capacity of the layer 1 as it relates to Arbitrum's needs? So to answer the second part first,

I don't think that there's anything really that the layer one is doing that's holding back Arbitrum today. Like I said, you know, sort of in the beginning, I think that we as an ecosystem are very fortunate to have this tier design, this layer design, and the fact that layer one provides

all those necessary components that it provides makes it possible to have the layer twos that, like Arbitrum and others that are actually utilizing those as well. And I think we have to get out of this competitive mindset and say, okay, we're all growing this pie together. It's important to be at the layer one of the stack, and it's important to be a layer two of the stack.

These are both good roles. These are both important roles. They both need each other, and we don't need to, you know, be competitive, you know, to view them as competitive. But to answer the first part of your question, so separate from Arbitrum, I think that there's definitely a lot of improvements

and open research areas, which are ongoing that can improve the layer one. To name a few, I think state growth is still a big problem. one of the biggest problems that we have. I think it's less talked about today because, you know, Geph has shipped better pruning, but I think it's going to be a problem soon again and something that we need to focus on.

And it's also, by the way, going to be a problem for layer twos. You know, we have conversations around layer twos that are, you know, pushing the gas limit and increasing it. And to me, the biggest holdback here is state growth. And that's a very important conversation for layer one and for layer two and an area where I think,

increase research and increased research collaboration will lead to a better result for everyone. So again, collaboration where now you have technical results that can benefit both layer one and layer two and together benefit Ethereum. Other places, I think improving censorship resistance is important. Like clients, validation or stateless clients is another really interesting one. I think there are also some core questions about, you know, in the consensus protocol, are the things that we can do better or improve more. So, for example, currently, when you release a block,

all blocks are released very, very close to the end of the slot, the three-second mark, and then they must be processed by this fourth second mark. And what you have is basically nodes idle for six seconds. So can we do things like pipelining? And there's a lot of ongoing work here with, like, EPBS, EIP-7732. There's a ton of interesting research directions that can make layer one better from a censorship-resistance perspective, from a UX perspective of like client statelessness,

and there's no shortage of issues there. And I think focusing on those issues and really saying, okay, how can we make this the best layer that it is and not feeling threatened by the layer above it and saying how can we make it the best layer one and also, you know, take away, make sure that these layer twos don't come after us is probably the best approach to have just to focus on

how do we be the best, how do we the best layer one that we could be? There's a conversation around block times on the Ethereum layer one. And I think also there's always been a conversation around block times at the Ethereum layer one, and it's more of just a matter of like priority of the order of operations. Do we want to increase the Ethereum block times later after the verge, after we get a lot of optimizations in the Ethereum layer one? Or do we want to do it now?

Because we think that there's slack in it now. How does this block times, Ethereum layer one block times conversation relate to you, if at all? Do you have an opinion on it? Well, seven, like, if you think there's, like, if you're a lot of, If all else was equal, if we could snap our fingers and, like, we'd have faster block times, like, I, you know, I'd be in favor of that, right? Like, I'm certainly not in favor of, like, holding Ethereum back in any way, but I think that there are very good reasons for the block times we have now.

Not that said that we've reached a magical number and you can't go 1% less or 1% more, but directionally, you know, the reason we are where we have now is, you know, the reason why we can't, like, massively increase the gas limit or decrease the block time is because, you know, we are, you know, nodes are bandwidth constrained and, you know, we need to be able to, knows need to be able to keep up and process the network without, while keeping a good level of decentralization. But we don't want is that the, it becomes so expensive and so cost, you know, you know, costly to run a node, then now you have to have a data center or have to tend to sort of,

you know, these de facto centralization points where, hey, in theory, anyone can participate, but actually you can't. And there are good reasons for that. And I think, by the way, speaking back to that previous episode, one of the fallacies, you know, there was this, one of the fallacies there, there was this appeal to stakers to say, hey, stakers, you guys should, you know, let everyone know that you have more bandwidth and more capacity and we can make things faster now.

But that's actually the wrong community. Because it turns out that stakers generally run over-provision hardware. If I'm staking thousands of dollars in my herd, I'm not going to run at like the, you know, the minimum requirements, what we're our minimum target for running a node in the network. I'm going to run like super, super much higher than that. And so, but we're actually trying to target something, you know, much lower than your average staker for participation in the network.

So I think that's another point which is not really well understood, that your staker isn't your average node operator. And we actually target something significantly less, right, meaty, if you will, for your average node operator. Right, because if you target the average, you're actually cutting off everybody below average. Yeah, exactly. If you're saying, hey, and the stakers are nowhere near average also. The stakers are like the ones that have money on the line and they're going like probably over provisioning.

And the other point is that people like to sometimes look at the best case and the happy case and say, okay, you know, we can run faster now. But then you have to actually look at, let's say there's like, you know, what happens in the worst case? What happens when there are reorgs or splits in the network as well? What happens in a more adversarial environment than the happy case? Yes, and those are the cases where even today's certain nodes we're seeing having, when there's a reorg, we're seeing certain nodes fall off the network already today at, you know, at today's block time and today's gas limits. So those are the case we need to optimize for it to say, hey, when everything is going good,

we can, we have more slack here. That's great. But what about when there's, you know, when there's reorgs? And by the way, if you make, you know, block times faster, you're going to increase the number of York. So what happens there in those cases, those are the case we really need to focus on. And I think that's often missed, which is, you know, it's not just the happy case. In fact, it's specifically not the happy case. It's specifically the worst case because that's what we need to make sure Ethereum stays alive and can keep up. And your average node we're targeting can actually

keep up and not rely on the fact that, hey, okay, we're going to fall behind. But there's probably a few other nodes that are well provision and keep up. So we'll just, you know, get the state from them later on. Stephen, this has been great. I've learned quite a lot. I want to kind of dive into specifically some Arbitrum native stuff. We've talked about Bold a little bit. We've talked about orbits a little bit. We've talked about time boost. Haven't talked about stylists.

But overall, before we even dive into stylis specifically, there's just like so much going on in the Arbiverse. With so many things going on all at once, how would you kind of summarize just like the state of play in the Arbitrum universe? Like in the grand arc of Arbitrum, where are we? Where are we on that arc? I think the thing that unites all these things is continuing to be focused on the ethos of building best in class technology, shipping, shipping, shipping, talk less, ship more, and that, you know,

goes on different planes. So developer experience and user experience and user costs, you know, things like stylus and time boost to an extent as well. And then also things like, you know, security and decentralization, which are actually really important to us, which are bold time boosts as well. So to continuing to both make the chain more secure, more decentralized, and those are invariants, right? So, you know, when stylists went live, for example, fraud proofs were never broken, right? So now you have, okay, fraud proofs for all these other languages,

like Waz and which gives you rust and C&C++, those all go live together with it. So continuing to keep the security invariance saying how far can we push the developer experience and the user experience. There's this meme, you know, I've been saying this for a long time and others as well, that in order to get to the next billion users, we have to get to the next million developers. Well, a week ago, actually, there weren't a million developers

who could develop an arbitram. They're about 30,000, because there's about to be a few tens of thousands solidity developers. Today, there are now literally 13 plus or 15 plus million developers between Ross and CNC Plus Plus that can build an Arbitrum app overnight.

And that's, you know, basically the theme when it comes to developer experiences. And this actually goes back to the early days of Arbitrum, when if you look back in 2019, 2020, no one else back then was talking about building a roll-up that you could just launch EVM apps on, right? There were those that had their custom compilers, those that were just for payments,

though they had custom languages. But it was like a foreign concept, and Arbitron was the first, and now, like, you know, it turned out we proved the concept, and others could do that as well, and there are really lots of other great teams that are building that.

But I think this is sort of the next, you know, iteration of that when we talk about stylists. And the idea is, bending to developers rather than asking developers to bend to you. I think that's what made Arbitrum successful in the first place is that it worked for developers. And if we've now like 1,000x the number of developers that can build an Arbitrum,

that to me is extremely, extremely strong and extremely powerful. And it's not like Arbitram Nitro where when Arbitram Nitro went live, like you snapped your fingers. It was a hard snap. It took a while of the development. And like, fee slashed and everything was great. This is more of an opt-in. Now developers have this tool set.

Now they'll have to use it. But developers have been lining up. You mentioned Renegade Finance or others as well to use this. And I'm really excited for the next months and years we'll bring. I think this is a big differentiation point for our picture. Now, I think I'm going to do my best and try and ask a technical question, even though I think whatever stylus is is like well behind my technical expertise to be able to understand. But actually, how does it work?

Because, okay, we have Ethereum runs with solidity. You write solidity code. You have the Ethereum compiler, goes down to bytecode, and that turns into a smart contract. on the Ethereum blockchain. I kind of get that, I think. Stylus allows for different languages to be compiled down to bytecode that gets deployed on Ethereum

that also turns into smart contracts. How does, technically, how does this work? So technically, we have two co-equal virtual machines or VMs in the Arbitrant chains that are stylus enabled. Now, you have the EVM, which is exactly as it always was. Right. So we call Silas EVM Plus.

And the nice thing is, if you don't want to ignore it, If you don't ignore it and just do everything that you were doing, nothing broke. So you have the EVM as it was, but now you have a second virtual machine, which is Woz or WebAssembly. And a WebAssembly is the virtual machine that's really made for running web browsers. And you have really great language support. So Rust and C and C++ and other languages can compile down. Blue chip languages?

Yes. Yes. All these blue chip languages, if you will, yes, you can compile down and just run natively now at Arbitram Chains. And it's nice. And so to get back started to how it works for a second, you might imagine that this works where like, okay, so you have like the VM or the EVM and the WebAssembly VM, and it kind of like operate as separate zones

and maybe you'll have a bridge in between or you have, you know, asynchronous calls. But the really cool thing about what we've done, it was you've made it fully synchronous interaction on chain. So what that means is actually you can go and like a stylus, contract can call an EVM contract and it won't even know because the language that they split that they that they've, the ABI, the language they spoke and they speak on chain is identical. And actually what that means is a few things. If I have an app today that's a solidity app because the ABI is the same, because the storage

formats is the same, I can actually just upgrade the contracts to stylus and everything just works. So we've made it super compatible with it. It also means like say that you have some app today on chain and it's a solidity app and you're happy with it. But there's like one really expensive operation. Maybe it's like a crypto operation that you have is like hand-optimized solidity that's like really slow and expensive.

And you say, hey, I can actually just pull in an off-the-shelf, optimize Rust Library to do that function. So I keep 95% of my app in solidity. And I sprinkle in a little bit, you know, 5% of Rust. Like that's possible too because we've made them so synchronously compatible. And, you know, that's a little bit of how it works. But the one thing I'll mention it for the really old Ethereum era, the Ethereum OGs here, this is not a new idea. Yeah, this has been an Ethereum layer one topic.

I don't think we ever followed through on it on the theorem layer one, but it's been around. Yes, Ewasen. Ewasen, Ewasam, right, right, right, right. The blast from the past there, right. And the cool thing is, here's what's really cool is I have, you know, I have a vision. And this is, again, back to how layer one's, layer two can complement each other. that was the Ethereum topic a couple of years ago, and a lot has developed since then,

including Wasam itself, has become a lot more developed in performance since then. And for whatever reasons, that project, you know, didn't get to completion at the time. But I don't think we have to be done. I think that there's a world in which Ethereum itself could adopt stylists and could actually add it there as well. And we've done a lot of that hard work.

You know, way about when people talked all about a lot, experimentation on a layer two, and maybe we'll bring some of it back to layer one. So I think that would be a fantastic outcome as well for that to happen. But Stylist is going to, so it's three things. So it's the developers themselves, right? We mentioned that. And you have millions of developers.

It's the code that they've written. Because even if a developer can retrain, there's like years and years and decades and like millions of lines of code or more that's been written in these languages that you can just pull in. And the third thing is the cost. So Stylist gives you about an order of magnitude reduction in, costs for compute. And so, like, if you wanted to do some, like, some crypto's operation on chain or some AI operation on chain today that's not supported by a pre-compile, you're going to have a hard time for two reasons. Number one is there's no pre-compile. So you can go and try to get a pre-compile for your, you know, your crypto curve and maybe, you know, good luck,

maybe in a couple of years that will happen, probably not. You can try to write solidity code for it, but the problem is, like, A, there's no solidity code grant, so you have to start from scratch, and B, it's probably not going to be performance enough. So even if you actually get this solidity code written, you're probably not going to be able to run it on chain. Stylus hits all those, you know, with the same hammer because it gives you that massive cost benefit. At the same time, it says, don't need to rewrite it. Is there a well-known C library that does this operation?

Sure, you know, bring that in. And that's another big one as well. So it's the developers, it's the cost, and it's also just the legacy code that you can now just directly bring it on chain. You've already made this point, but I want you to hammer it home a little bit harder. how many developers are out there that are already very fluent in whatever language that they are already fluent in

and what does this do to really bridge the gap to bring them into the Arbitrum universe? They're estimated to be about a few tens of thousands, maybe 30,000 solidity developers out there, about 3 million Ross developers and about 12 million C and C++ developers out there. So if you just look at the magnitude of these things, there are now, you know, well, you know, 15 or so million developers

that can today write code. that can run on Arbitrcham chains, whereas literally a week ago, there were about 30,000 developers that did that. So we have massively opened up the ability for developers to do that. Again, it's not just about the developers. You know, a grid developer could retrain.

There's no question about that, but it's also about the code that they've written. So you go to like an enterprise or go to some gaming company and say, hey, you guys built a game. Turns out you can actually take some of that, you know, C++ code that you've written and run that on chain today.

And that's like, wow, like that's incredible. Like, there's so much more that you can do because of the code and because of that. So we have literally, you know, the meme has always been a million developers, but we don't need to train those million developers now because we have millions and millions of developers that can build an arbitrament.

So my conversations with Enterprise have massively changed, you know, over the course of the past couple of weeks. You know, I've been forecasting it for some time, but they've massively changed. Now I say, you know, it used to be the question of, hey, you have a solidity tour. They'd ask me, hey, how do we get solidity developers? And I say, okay, it's not so hard to get solidity developers.

You know, you can train your developers. But now it's like, hey, do you have a rustling, team? Do you have a C or C++ plus team? You guys are in a good shape to develop an arbitrum. And you're not going to be in your own zone. You're going to be right up there with the EVM apps and actually in many ways advantage because you have the advanced features and the advanced performance of the compilers for these languages, which are typically more performant. So my intuition here is that if you are a Rust dev or a C++ plus dev, all of that code that you've written has had nothing to do previously with ever like transferring tokens or

like swapping on defy because you would have needed to have written solidity for that. So is there some of like, is there like a nature of the code that has been written by these developers and what use cases that they would write into arbitrum? Just because of the experience that they've had, like they're not, they're not writing defy code on their like web two front end. That's just not what they're doing. It's just nonsensical. So like about the nature of the type of code or the type of use cases that this specifically

unlocks as it relates to like what the kind of logic would be on the arbitrage from chain. Is there is there anything to this? Do you understand the question? I feel like I phrase that oddly. I think so. Yeah. You let me know if I'm not answering it. But a lot of the earlier adopters we're seeing are doing like cryptography, advanced

cryptography code. So multi-party computations. They have these libraries. They've been working on this. But it didn't really connect to the blockchain before. And now you can actually connect that directly to the blockchain. Zero knowledge proves that this is the irony, actually. So, you know, Renegate Finance is, you know, they're the ones I mentioned a few times.

They're doing these dark pools on chain. And each one of their transactions has about the equivalence because it gives you this privacy, right? So it gives you privacy and guaranteed pricing and others can't front run and see your transactions. But each one of their transactions to get this privacy does on the order of a dozen zero-knowledge proof verifications. And it turns out that like no other chain or roll-up, including the ZK roll-ups, that's the ironic part, can support that. Is this ZK in the application layer? but for Arbitram, you can take these mature crypto libraries, you know, Ross or C or C++ crypto libraries,

and do really efficient verification and really efficient cryptographic operations that you couldn't do in another environment. So that's definitely a big one. Today, you could kind of think of it as like a custom pre-compile. It's not quite as performance as a pre-compile. But, like, today, if you don't have your pre-compile for your curve, you're just not going to do that.

Like, you can't just do anything on Ethereum, but now you can actually go not on your own blockchain. and Arbitrum 1, you know, Arbitron 1, you know, resident with all these other Defi apps and launch some fancy cryptography and not have to roll it yourself even, right? Pull off, off the shelf, audited, you know, well-used crypto libraries that are used elsewhere. I think there are similar opportunities in AI machine learning evaluation as well, where you can pull off, you know, take off-the-shelf code and run them as well. And the other one is, by the way, which is, you kind of comes back to one of the things we discussed earlier on

where, like, defy, there are different types of defy users. and even for things that are the same, lowering the cost can enable more users. So even if you're like a defy app that's working just fine today, maybe you're a derivatives app and you're working, maybe your GMX and you're working fine today,

but maybe there are places where stylus can actually make your fees cheaper and make you more efficient, and now you'll actually not only be able to offer current users lower fees, which is great, but maybe even pricing a whole new class of user and a whole new transaction type and a new transaction threshold

that before wasn't feasible because it would have been eaten way by the fees. And, you know, I think that, you know, that was just an example, but the idea is you don't have to be doing something cool and new to benefit for a stylist. You can also actually just be doing something that you're already doing fine today, but say, hey, can we do this 10x more efficiently and therefore pass those onto users and actually enable new users to enter the blockchain? That's going to be really important as well. Stephen, this has been great. That's pretty exciting. I would imagine this becomes extremely relevant in next Bull Run when

the next incoming users and therefore also devs come to and all of a sudden the bridge between being a dev of the non-cryptotype and then becoming a crypto dev, that bridge is much, much shorter. It seems very exciting. The last few questions here I've got for you, Stephen, is just like where does Arbitrum, in addition to Stilis and all the devs that you guys are now much more closer to, where does Arbitrum get its next 10x? What kind of investments are you guys making? You guys looking at the real world asset space, partnerships with Tradfai, where's the next 10X from Arbitstrom come from? Yeah, in terms of like where the ecosystem goes, obviously from the tech side, you know, I think we touched a bunch of those. And that's going to continue on as well.

At least, you know, I can't speak to what we'll get deployed on the Arbitrumb 1, Arbitstrom Dow chains, but I can't speak to the technology we're building generally for orbit stacks chains that will continue to, you know, continue to work on and say, hey, constantly ask, how can we make it? better from the ecosystem side as well. You know, if you like Zoom, you know, sorry, rewind and maybe a year or two, Arbitrum was called, at least Arbitral 1, was the DFI chain. And now that was it. And it was, which is great, by the way. Like, you know, defy is wonderful. It's, it's a, but like that was sometimes said maybe as an incident or limitation.

But if you look today, Arbitrum is still the DFI ecosystem, is still the DFI L2. But there are so many new use cases that and new verticals that have emerged, you know, look at gaming. You know, we take a look at some of the orbit chains and gaming. So you have proof of play, which is actually the top performing layer two or layer three of any chain in terms of their throughput is proof of play, building patronation, doing fantastic things. You have Zai, you have treasure, you have so many other chains as well. And if you look at, you mentioned more Tradfi and RWA. Franklin Templeton is one that recently expanded to Arbor Chairman is offering their funds on chain.

Something we wouldn't have thought was imaginable a couple of just five years ago. like Franklin Templeton, like this massive established financial titan, like actually doing things on Arbitrum. You know, similarly. Franklin Templeton has a real world assets tokenized on Arbitrum? Yes, like a fund. Wow. That's cool. That's they're going straight to a layer two.

I think they also have it on the Ethereum layer one, but it's also cool. They may. Yes. It's the, the idea, like, to me, that's always just kind of like a litmus test is like, does TradFi trust your tech stack? Because these are the most like conservative, like, at-risk, brand at-risk players in the world. And the idea of, like, issuing a token of real-world asset token straight onto a layer two, I think, is a huge, like, vote of confidence.

Yeah, and Trotify, you know, just generally, from my experience, they do a lot of diligence. They ask a lot of questions. They bring external firms. So, yeah, definitely there's a bar there that, you know, layer twos and Arbitrum are certainly passing in general. But others as well, you know, securitize, for example. The Dow did the Arbitrum Dow did this program where they were making funds available to invest in, you know, traditional funds on chain,

money market funds on chain, or other real-world assets. You have securitize coming to the Dow forums on behalf of a BlackRock fund as well. Like, fantastic, like, you know, you would have said, like, a year or two ago, like, I've actually heard people say this. Like, no one's ever going to talk to a Dow, and here you have securitized literally coming and, like, talking to the Dow and others as well saying,

hey, you know, we are traditional finance companies or funds, and we actually want to participate. participate in this program as well. And you have others as well. Robin Hood, Arbitrum, and Robin Hood have a fantastic partnership as well where, you know, a lot of the Arbitrum technology and the tokens on chain are exposed to Arbitrum users and the Arbitrum crypto app. Just today, actually, Paxos announced that they're expended to their first layer-toe ecosystem, and that's Arbitrum, which is going to do a lot for stable coins on chain as well as, you know, other tokenized assets on chain. And then there's also just like a mesh of just amazing crypto-native communities

on chains. You have ape chain, which is going alive imminently. You have Uzuki with their anime chain, you know, treasure, zai, proof of play. So there's no shortage of really, really amazing opportunities that spans such a wide gamut from gaming to some of the most buttoned up, you know, traditional finance players that exist, to some of the most, you know, D-Gen communities that exist in crypto, all finding their purpose and arbitrium. And I think a lot of that is the Arbitrum. stack is very, very customizable. I think that's one of its core differentiators. Super fast block time, which gives you a really good experience, particularly for users

that are familiar with more traditional, like, Web 2 experience. So you press a button and it happens. Super fast block time, super low cost, but also really customizable. So the same stack can do things like, you know, support an Arbitumorbid stack that's building in privacy, using fully homeworth encryption like Phoenix to building a stack that's targeting, you know, the Ave Chain community. and the Uzuki anime community, as well as all these others in between. And it's the same stack, but it's very, very versatile.

You know, I'll eat some of my own dog food. The same way I say, hey, Ethereum should be content with where it is in this layer one. Arbitrum is content with where it is layer two. And a lot of this innovation is actually happening at a layer three. And I don't view these layer three as competitive with Arbitrown. I'm super happy to see the success of, you know, layer three is like proof of place apex, and now they actually have a second chain called Boss chain. Fantastic to see that.

That's not competitive. Is it true that maybe they're taking transactions off of arbitram? Yeah, probably, but that's okay. We're growing this pie together, and together we're all Ethereum. Stephen, this has been great. Thank you so much for coming on today. Thank you. Bankless Nation, you guys know the deal.

Crypto is risky. You can lose what you put in, but we're headed west to the layer two's, to the layer threes. This is the frontier. It's not for everyone, but we are glad you were with us on the bankless journey. Thanks a lot.