Bankless - SotN #48 - Arbitrum LAUNCH, w/ Arbitrum Team

Episode Date: June 2, 2021

Arbitrum is one of Ethereum's hottest L2 scaling solutions, and it has LAUNCHED ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/  🎙️ WE'RE HIRING AN EDITOR: https://cryptocurrencyjobs.co/marketing/bankless-editor-writer/  🎖 CLAIM YOUR BADGE: https://newsletter.banklesshq.com/p/-guide-2-using-the-bankless-badge  ------ BANKLESS SPONSOR TOOLS: 💰 GEMINI | FIAT & CRYPTO EXCHANGE https://bankless.cc/go-gemini  🦊 METAMASK | DEFI PASSPORT https://bankless.cc/metamask  🦄 UNISWAP | DECENTRALIZED FUNDING http://bankless.cc/uniswap  🔀 KWENTA | EXCHANGE SYNTHETIC ASSETS https://bankless.cc/kwenta  ------ 📣 KYBER | DeFi’s First Dynamic Market Maker Protocol https://bankless.cc/kyber  ------ State of the Nation #48: Arbitrum LAUNCH Guests: Co-Founder & CEO: Steven Goldfeder CTO: Harry Kalodner Steven Goldfeder is Co-founder and Chief Executive Officer at Offchain Labs. He holds a PhD from Princeton University, where he worked at the intersection of cryptography and cryptocurrencies. Harry Kalodner is Co-Founder and Chief Technology Officer at Offchain Labs, where he leads the engineering team. Before Offchain, he attended Princeton as a PhD candidate, where his research explored economics, anonymity, and incentive compatibility of cryptocurrencies. Arbitrum released its Mainnet for Developers last Friday. This is an EVM-Compatible Layer 2 Optimistic Rollup, which allows for scaling Ethereum's app layer without sacrificing layer 1 Ethereum security & consensus. This is a massive step forward for the blockchain space and a culmination of years of technical research and testing. This is a milestone in effectively scaling blockchains, while maintaining core cypherpunk values. There are tremendous opportunities and possibilities in this new digital real estate. This hub of optimized blockspace keeps the economic security guarantees of Ethereum and poses to greatly improve the DeFi user experience. To scale to a billion users, projects like Arbitrum need to earn legitimacy and demonstrate efficacy as the Ethereum ecosystem continues to mature. In the immediate term, the next few months will be exciting to watch - will we see a DeFi Layer 2 Summer? ------ Resources: Arbitrum: https://arbitrum.io/  Arbitrum Twitter:  https://twitter.com/arbitrum?s=20  Arbitrum Discord: http://discord.gg/5KE54JwyTs  ----- Topics Covered: 0:00 Buffer 0:30 Intro 9:48 Arbitrum's Steven and Harry 13:00 Shipping A Layer 2 Product 17:51 A Fair Launch, Equal Opportunity 21:36 Migrating dApps to Layer 2 25:43 A Flourishing Ecosystem 29:17 Bridging the User Experience 33:16 Different than a Sidechain 36:50 Layer 2 ETH Fees 41:10 Resources & Scaling 47:03 Delay Period for Exiting 54:11 Complexity of Rollups 58:30 A Digital Nation-State 1:06:23 Ether is the Reserve Currency 1:11:23 Layer 2 DeFi Summer 1:16:30 Chainlink and Arbitrum 1:20:54 Squeezing the MEV Balloon 1:25:28 Predictions, DeFi Summer 1:30:50 Final Thoughts 1:36:38 Closing & Disclaimers ----- 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://newsletter.banklesshq.com/p/bankless-disclosures 

Bankless Nation, welcome to another State of the Nation episode. This is our opportunity to talk about something big that is happening, zero in on it, and relate it to some of the big picture themes we talk about in other places on the podcast in the newsletter. David, nothing bigger than layer two's at the moment. And in the layer two scene, nothing bigger right now than the launch of Arbitrum on Friday. Our guests are going to talk about the launch. of Arbitrum there from Arbitrum. David, any thoughts on what we're going to cover today?

The launch of Arbitrum and optimistic roll-ups is kind of one of those ground-shaking events in the world of crypto, right? And basically because there has been so much just, regardless of Ethereum, the concept of L-2s is being proven out here, right? L-2s are a technologically independent piece of technology that can be on any blockchain that can support it. And now it's, just happens to be coming to Ethereum. So the fact that we have blockchain independent blockchain agnostic code that is kind of the original thesis or a vision of how blockchains can scale is now arriving in this cryptocurrency industry. It's also happening to arrive on Ethereum. And so Arbitrum has launched its developer main net last Friday. And it's just a big deal. And so I'm really

happy to get into this conversation as to why this is such a big deal and what this means for the future of Ethereum and crypto at large. Yeah, we're going to go through the task of explaining what Arbitrum is. The context here is. We've called for Layer 2 summer. I think it's coming. Layer 2 is actually here on Ethereum. And this is Ethereum's scalability path. So, super important. David, let's get to some announcements really quick. We are looking for an editor of the bankless newsletter, somebody to help us write, somebody to edit articles, somebody to take ownership of that. If that is you, we will include a link to a job description in the show notes, bankless editor position, really excited to see some applications.

David, we also released a podcast with Eric Wall on Monday. Do you want to give a quick preview of that? Yeah, I've always wanted to get into a conversation with Eric Wall. So really happy that we actually got him on. Eric Wall is what we have called a lone wolf contrarian in the world of crypto, has his own opinions, has his own mental models, and isn't afraid to have sharp corners about his disagreements with other people. Eric Wall talked about, we actually went down a rabbit hole that I didn't expect,

which is the concept of like blockchain and crypto economic systems as organisms. So that was really interesting. And then also his conflict with the Bitcoin maximalists and how he, and he also had conversations about optimistic role or thoughts about optimistic rollups back in 2019. Very bullish. Very bullish. So a really just overall well-rounded conversation touching on a number of different things that I think can let you know how to think for yourself and how to think independently in the space. we also have a defy panel coming next Tuesday next Wednesday rather I believe and this is like

almost a I want to I don't want to say a makeup panel but apparently David I haven't seen it yet the video is not public release I just missed I was doing other things but you did a defy panel at coin desk consensus right and it was a little controversial um and uh you know you want kind of a redo so give us some context on our defy panel next Wednesday. Yeah, yeah, there was a panel at consensus that I was part of on Thursday called Defi, Who Needs Banks Anyways, the current state of decentralized financial technology. And there was this, a guy who's like part of a Bitcoin, he's a, it works on the Lightning Network for Bitcoin. And he self-described what his project was as a neo-crypto, a neo-bank that runs on top of Bitcoin. And it's quite literally the opposite of what, in my opinion,

the ethos of defy is. So it was very, to me, it was very much oil and water. It was like, why are you bringing a crypto banker onto a defy panel? So, who else is best suited to actually do the world's best defy panel ever? And that's what we're doing. And so that's next, not this coming Wednesday, next Wednesday. We got Van Spencer, Spencer Noon, and also Santiago from Parify Capital. Literally, I don't think there could be a better defy panel out there. So really excited to really get to the crux of do we actually need banks anyways? Is that what you're going to call it? Why do we need banks anyway?

Because I feel like that's every single episode of bankless ever that we've ever produced. Well, why would we change a good thing? Okay. Why do we need banks anyway next Wednesday, guides? Tune into that. Also, I want to let you guys know that Khyber has released something super cool, particularly for liquidity providers. So this is something they call a dynamic market maker.

I'm going to show you what this looks like. really quick, if I can. But basically, providing a dynamic way to adjust volatility and get liquidity providers the best possible fees. I really love this RIF on market making in D5. Of course, Uniswap V3 has its own version, its own RIF. But you should definitely check this out because what it adjusts is it sort of adjusts the levers for liquidity provider in real time based on pricing. So if there's additional volatility, there's ways to increase the fees. and the Khyber dynamic market maker will increase fees during periods of high volatility. So what's the net benefit of this?

If you're a liquidity provider, more fees. That's what liquidity providers want, after all. The other cool thing they're doing, the reason they wanted us to share this with the bankless community is they're actually doing some yield farming coming up. I've heard people like that. But soon. Yeah. So yield farming for the K&C token, kind of cool. We don't have information about that today.

but what I recommend you guys do is check out becoming a liquidity provider on the new Khyber. DMM will include a link in the shin notes. You can also go to bankless.c.c.c. slash Khyber and check that out. Just test it out and see what you think and get ready for the liquidity program coming up. Khyber is one of the oldest liquidity pools and oldest defy teams in Ethereum, right? They were they were defy before it was called defy. right and so always optimistic to see what happens when when khyber you know does something new and and

cool and they kind of have that that is kind of the benefit of khyber is a lot more expressive than what like a well now now all these apps applications are becoming really really expressive these days like what is uniswap v3 other than a more expressive uniswap but you know every single application khyber included becoming more expressive i just i like the model of optimizing for liquidity providers because liquidity really is the product for these automated market makers seems to be what they're doing all right david we're going to get to an minute but i'm going to to ask you the question I ask before every state of the nation, which is this. What is the state of the nation today, sir? This one's a good one. So for those that read the Market Monday piece

yesterday, which you totally showed, really great context for this conversation that we're getting into right now. We are speculating. The state of the nation is speculating. And we are specifically gold speculators. We are moving, going out west, California gold rush time. We are speculating for gold. And there's a number of conversations and questions I have for at the Arbenstrom team here in a second about what it's what is it like when just a bunch of new real estate gets unlocked out of Ethereum all at once which we already like are speculating that is going to be in really high demand. And so what happens when like a bunch of defy teams really want to claim some real estate from themselves? You know, speculating nice speculating on like what

happens next. And and I think if you have been paying attention to the bankless program, we have been speculating as to a Defy Summer 2.0, Layer 2 edition. And we have some questions for the Arbitrum team about how this is going to work. Oh, dude, this totally feels like new property, new real estate has just opened up, new land to explore, has just opened up. That's what these layer twos are. And there's gold out there. There's gold out there. That's one analogy. The other analogy, which I like, which is also from the Market Monday piece, is like, think of this as a theme park, you know? Think of you ever been to Disneyland, Disney World? You go in and there's, kind of the main street Disney opening. Well, each of these layer twos are almost like sub-parks

within the wider theme park that is Ethereum, right? And they're all kind of coming soon. Some of them are open, Polygons open, not quite a layer two. It's a side chain. We'll get into that. But like on the theme, there's product market fit. People love in Polygon. A lot of traffic being driven there. Now what does Arbitrum do? It's been under construction up to this point. And now we're at the point where it's going live in Mainnet, which means developers have access to it, and they're getting the park ready for Defi users. That's the theme here. Super exciting. I like that one, David. Go to West. Bankless graphic designers is just like killing it right now. Is this you? Did you do this? This is me. It's 10 seconds in Photoshop. I love it. I love the theme park theme.

All right, guys, we're going to get back to our guests in just a minute, so stick around. But before we do, we want to thank the sponsors that made this bankless episode possible. Synthetics is Ethereum's decentralized derivatives liquidity protocol. What does that mean? Synthetics is a platform for creating and trading synthetic assets, which are assets that are priced via an Oracle rather than bids or asks. Traders can use the Quenta Exchange, which hosts and trades all of the synthetic assets created by synthetics.

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Check out the power of AVE at AVE.com, that's AAVE.com. All right, guys, we are back. Super excited about this. Arbitrum just launched to Maynett, and we have the perfect people to tell us what is going on, what is happening. We have Stephen Goldfetter is the co-founder, chief executive officer at OffChane Labs. This is the company behind the technology of Arbitrum. He holds a PhD from Princeton. We also have Harry Cladner, who is also a co-founder.

He's the CTO at Off Chain Labs. He leads all of their engineering. Also attended Princeton. Guys, welcome to Bankless. It's great to have you. Thanks for having us. Super excited to be here. You know, where we want to start here is you guys shipped like you made it.

It's main net now. Super exciting. You know, with so many of these layer twos being pushed back over the years, right? Like dates pushed back. And like there's been quite frankly for people who have been in this space for a while, particularly in Ethereum, there's been a lot of. There's been a lot of disappointment with with layer twos. Right.

It was like, when's Raiden coming? Do you guys remember this, 2016, 2017? State channels are going to scale Ethereum, right? And then it was like, no, that's not the thing. Plasma is the thing, right? And they're like, okay, we'll investigate that. And now it's like, no, that's not the thing. Roll-ups are the thing.

But it's taken so long for us to get to a MayNet solution. Now you guys are here. You made it to MayNet. How does it feel? It feels, I mean, it feels awesome, obviously. It feels really, really good. and we've been working for quite a long time. You know, you speak about these other solutions.

I remember when we were forming the company in like 2018, and we were working it for years before that. We were raising funds and people would say, hey, are you state channels or are you plasma? Like, nah, like, oh, you're a state channel? So eventually we just round with it. We call ourselves state channels. Like, all right.

Yeah, no, it feels really awesome. And it feels like, you know, despite how long you've been in it, this is the beginning. Like, Friday was the beginning. and like, you know, not the finish line by any means. Like, we just started and we're doing it. And now it's like, you know, bring the savings to the users and the L2 experience. That's hot.

Harry, how are you feeling? I mean, it's, it's, it's, it's, it's, I'm really happy that we had a test net for a long time. Yes. We felt like, we really cared about like really having the tech out there and having users using it and like developing experience running the test net, like getting developer feedback. Like, we did that for a long time.

Since October, right? Yeah, I think Stephen, October. Yeah. So I think that's the reason why we're feeling pretty good right now, because, like, we, you know, we put it in the time before we got here. That's the rough side of both here. And rather than fighting fires is because you started in October, really. Oh, yeah.

There were lots of fires we fought since October, but the good news is you fight those on TestNet, and you get angry users on Discord, and but you don't actually, you know, that's the time where you want to learn what's wrong with the system and get future requests. and, you know, at this point, you know, we're obviously open to lots of users, but it was really the early users that their future request got in and they helped us really turn the product into what it is today.

All right, guys. So we're going to spend just a minute or two talking about what was actually launched. So we're going to get into the why, like what is arbitrum in a little bit, a bigger picture. But I think since this launch event, you guys managed to launch on Friday, I think folks want to understand what was actually launched. I'll just provide some context for bankless listeners. You guys are all familiar if you hear David and I talk about, layer two's. The difference between a side chain and a layer two is basically this. A layer two

is secured by the layer one, in this case secured by Ethereum. The economic security guarantees transfer over to the layer two. So this is a pure layer two solution. That's one distinction. Also the second is that it is EVM compatible, close to it. So all of the cool defy apps that we know and love on Mainnet can be transferred to arbitram. But let's talk about what exactly was released to Mainnet on Friday because I know it's not like the theme park's not completely open. Defi users can't access. It's mostly a developer launch. Let's start with you, Stephen. What was launched on Friday? Yeah, so I guess on Friday we sort of opened the theme park, but there are no rides yet. So we opened the theme park and we brought in the builders and said,

hey, come on and like launch the rides. The thing is, you know, when we put out our announcement maybe two and a half, three weeks ago now that we were going to do this on Friday. I expected maybe 20 projects to want access to it, and we had now growing over 300 projects, you know, have applied for access at this point. So we couldn't exactly, you know, it took us a bit of operational time to let everyone in and we're still rolling, rolling, allowing people in. And but yeah, so we obviously opened up the theme park. People are building the rides.

And, you know, when those rides are ready, well, we'll let in the people, letting the users. So it's right now it's a developer-only launch. Is that correct? Yeah, right now it's a developer-only launch. It's a wide developer launch, and we're doing a fair launch. But that means it's so operationally, it's taking us a few days to roll out to everyone. You know, we're doing things like we're seeding people's wallets for them. And, you know, there's just some operational overhead with everyone who are being on board at this point.

But what we're guaranteeing users is that even the last person to be onboarded, assuming that they applied before we launched and they filled up that form in time, will have enough time so that no one will have access to users before anyone else. So everyone will have time to build. Everyone will have at least a few weeks to build, and then we'll let users in and they'll get to choose which ride they want to run to, but there won't be some to have this advantage. And I think there's a really important throughline to talk about why you guys are doing that because it's part of the ethos of Ethereum to not make like a kingmaker, right?

And so you guys don't want to like allow like sushi swap and Ave to get in before like uniswaping compound, right? This is supposed to be some sort of like fair launch type of mechanism by not giving any specific party some privileged access to this new real estate, right? And so when you guys are launching Arbitrum, the way that listeners should really like mentally model this in their head is like you guys are like using the scissors to cut the red, like, you know, we're open now, but there's just empty land, right? And so like all these users, like people like me who can't code, like Arbitrum isn't really interesting to me. right now, I need to wait for developers and, you know, defy app makers to build the cool stuff, right? And so I'm still, as a user, I'm kind of still sitting on my hands waiting for like whoever, whichever developer development team can move the fastest and start to build out the rides

and attractions, right? And also important to keep this metaphor going, the rides and attractions that all these defy apps are going to build, those are going to be like, you know, users going to have to pay fees to use those, right? Like you use sushi swap, you pay the fee, you know, you use AVE, you use compound, you pay the fees. So that's the incentive for all these DeFi apps to build really as fast as possible because there's so much demand to use these new rides, these new attractions, because they have very low, all the scalability that we've always been asking for since like the beginning of time.

And so I kind of wanted to just put that mental model into people's heads about why the credible neutrality of a fair launch that you guys did with your guys with a fair launch with arbitram is really, really important, right? Because we don't want, we want everyone to have equal access to, like, all of this new real estate. And so, maybe you guys can illustrate, like, to what degree, like, how, when you guys opened up arbitram, like, and I'm assuming we're talking about, like, floodgates opening. How many, like, development teams are there? Like, who is tromping at the bit to get in here? Like, what's that, all that activity like?

Yeah. Yeah, that's exactly right. You know, basically the mental model is projects will execute their business models just like they're doing on Ethereum on Arbitrum, but they'll have significant advantages. But we're not going to be giving those advantages. So if you're a project that's winning on Ethereum, layer one, you'll hope you may, you'll likely win an Ethereum layer two, but it's not because we're giving you priority access. You know, the little guys are having the same access. And if they can outpace you on layer two, then then it'll be there is to win. Yeah, basically, it's really, you know, I don't want to steal the thunder from, from, from, from, from, from, from,

teams that want to do their announcements and want quiet, but like a lot of teams have announced already. So obviously Uniswap, Sushi Swap are well known, as are a bunch of others. You know, the ABE team has been pretty vocal as well. And really down the line, you know, lots and lots and lots of teams building on us. And we have, like I said, about 300 teams or request access, including some like individual developers that are, again, that are working on projects in their garage. And that's okay. Some of these teams will, some of these developers, depending on when they fill out before them, they'll get access before the, before the, before the, before the, the largest teams. But they'll all be on the same footing. They'll all have time so to build before

the park gates open. So yeah, it will take through the, you know, I would say through, if we're working in it now, it will take into this week, but all those teams will be on boarded this week. So, um, uh, unless all teams that will get access, meaning there are some users that try to like get in there to ape in early and we're like, hold up just, uh, you know, hang on. Um, but everyone that, you know, all the legitimate teams, uh, will, will get access this week, uh, or either have access or we'll get access this week. Okay, so these are the ride builders. They get access. They start building the rides. I'll also add some infrastructure projects I've noticed have joined Chainlink, for one.

Also, EtherScan, Block Explores. We're not only talking about Defi apps. We're also talking about infrastructure. But Harry, could you give us a sense of like, so again, like a question about layer two is, you know, even layer twos that have launched in the past, the problem is it's taken so long to get actual apps live on them. If I am a uniswap or an AVE, I've got some EVM code. It's written in solidity, right? How do I get it into arbitrum and how long is that going to take? Because the question is like, when is the park going to actually open for defy users?

I think we're trying to figure that out. Yeah, I mean, I think the teams that started deploying on Friday are already, I think, basically done. Wait, wait, wait, what? I mean, it's not like open, but the contracts are up there. I think there are a lot of like internal UIs that are up on top of them. There's not much to do, which is like the really cool thing of EVM compatibility is like, I, like the conversation with like these teams has basically been like, you know, and this is, I'll say like there are some projects that need special features.

There's additional testing to do. So right now what I'm talking about is like the core, like is, you know, can you do the can you do the basic interaction or the contracts on chain? Can you do swaps? Can you do that? Yeah, like we we asked for addresses. We whitelisted them and, you know, we funded them with some initial Eath because we hadn't enabled bridging of EF publicly yet. And then they messaged back and said, we're deployed. And that was kind of it. Okay, that is high. That had been on our test net. So they had gotten kind of some experience. But I think that, I think that they didn't, I don't think the major, I don't think kind of either between uniswap and sushi swap,

I think basically required no code changes, some tiny changes to the front end, but basically very little to do. So when you guys say EVM compatibility, you really mean it. Yeah, you know, there are some small, there are some edge cases, but there are edge cases you have to look for. So the vast majority of DAPs are not really going to hit any of those. And it's also like it's any version of solidity, it's Viper or Fay, like, it's kind of any of the tooling, basically, that works on Ethereum is kind of going to, is working on Arbitrum as well. And, you know, the initial wave of DAPs are mostly kind of ones that don't have a lot of interdependencies. And so, for instance, kind of like some people are going to be blocked for

some amount of time on like, chain, on like, you know, chain link getting up and running fully. So there are kind of, and part of the kind of coordination effort of this period, of time. It's kind of like making sure that like we have this like crazy network graph of like who depends on who mapped out and can like make sure to make the connections the right way and got all of that working. So like the things that are easy to do are the ones that don't sort of that are kind of the base player of the defy ecosystem and too low ecosystem. And then we're basically going to build our way up from there. But at each level, it's just kind of making sure that everybody knows the right addresses for everybody else. Everybody's talking to the right people.

The actual effort is is pretty low. And I think. you know anybody who's deployed on our test net would agree and anybody who's gotten the opportunity to deploy on our main net so far would also agree I think so I think this does a fantastic job illustrating why people have been so excited about optimistic roll-ups right just because you can copy and paste your code on on main chain Ethereum put it on the optimistic roll-ups maybe it works right off the bat maybe you do some checks make sure everything's running but like most likely scenario is that it is going to work as a copy and paste except for the the the the that you guys just talked about?

Yeah, it's, it makes our lives a lot easier because there are a lot of teams that we're coordinating with. And if each one required like a ton of time. Right. What would you say? So we in on the main chain of theorem, we have this very like, I would say like hardened structure that has just gotten used to like Avey's used to MakerDAO being there. MakerDAO is used to, you know, to Uniswap being there. Everything has gotten used to chain link being there with all of these dependencies. and money Legos that you guys need to recreate on Arbitrum,

what would you say is like the tallest obstacles that you guys are really trying to overcome to really allow that Defi Money Lego ecosystem to flourish as we've seen it flourish on the main chain? Yeah, I mean, I think things really just started coalescing when we announced that we're launching. Like until then, you know, we've been, you know, we're a small team. We have a dedicated business lead and myself. I've been like, you know, talking with teams for months and months and even longer. But it's sort of a snowball, right? So teams, the team, I know, there's this dependency graph and you've had to talk to teams.

Hey, I really want to come, but I can't come till they're there. I need a Dex. I need a lending platform. I need this specific. And then sort of once teams start announcing, there's a snowball effect. So I think at this point, you know, that's really behind us. It's really just getting the team's access, which we're doing and allowing them to deploy. And I think we're really just going to wake up one day when we turn on and basically everyone's going to be there, which is like I didn't expect that a few weeks to go, but

That's just sort of where we are today. So understanding the trajectory that you guys have seen thus far, like, how fast do you think this whole, like, user experience is going to come? Like, when can I, when can I put money into Avey on Arbitrum or any other lending protocol? Like, does it, do you think it's coming faster than you guys originally expected it? Yeah, so I don't have an exact date to commit to yet, but, you know, from our, from our, things are going relatively fast. Like Harry said, there are, without naming teams, there are teams that, that, uh,

said, hey, I need this much time, you know, I need a little longer to test things. And, and, you know, these are teams that, you know, that other teams depend on. Like we, like we said, we need our oracles up before. We need many price feeds up before, you know, users can use those. And that's just an example. All right. There are lots of dependencies. So building out the dependency graph, unfortunately, sometimes it's as slow as the, as the, as the slowest player for very important ones. But we're not going to wait for everyone, right? So we're going to wait for the, we're going to give everyone enough reasonable time and wait. until the, you know, the big infrastructure pieces are in place. So I would really look, I think,

mostly to the team is building on us for that information. We're coordinating with them, but we're not, we're not really calling the shots on that anymore. You know, my hope is obviously sooner, sooner than later. And I think we'll be relatively, you know, relatively soon. But the first thing that we're doing is, you know, we're going to give everyone enough time to deploy. So that's, I think we're guaranteeing, but that's a matter of weeks. And then certain teams are going to need a little bit more. but you know I think I think we'll be pretty you know I think it's

I'm still pretty confident that we'll be the first live layer two with apps on it because you know the process is unfolding and this is the process that everyone's going to need to go through right you know if they launch in this way so you guys have just like open Pandora's box and now you guys are just like balls in your court defy developers

like you guys go figure it out pretty pretty much and you know obviously we're doing a large coordination effort you know putting people in touch with other of other people putting different projects in touch. And so we're obviously manning that coordination effort. But fundamentally, a lot of the balls are not in our court anymore. That's super cool.

Super exciting. All right. I want to put, because a lot of defy users obviously listen to this, we're all in the process of going bankless and becoming more bankless. I want to get a sense from you guys of what the park is going to look like when it's open. So a lot of people who listen to bankless, they've, of course, have a experience with Ethereum main chain. So that's one model of operation. You have Metamask and you can

use hardware wallets and you have EtherScan and these are the tools that you use and you have the the Defi apps that you're familiar with. Some have also gone to other sub-themed parks, right? I think like Polygon is maybe one example of this. So this is not a pure layer two. This is a side chain. But what's cool when you travel from Ethereum to Polygon, you walk across the bridge, as it were, is all of the tools that used on Ethereum mainnet, and a lot of the user X experiences, the UX experiences, like it's the same. So it translates over.

So you just get to use your Ethereum Disneyland tools in this new subworld. Can you talk about maybe the similarities and the differences with maybe an arbitram and a polygon? So first of all, we talked about the defy apps. So I can imagine a uniswap or a sushi swap is waiting for us over there. maybe an Ave. And then I think there's compatibility with like MetaMask and maybe hardware wallets.

And is there also like a bridge? So with Polygon, you have to walk, you have to actually go across the bridge. Can you talk about that? Maybe Steven, you start? Sure. Yeah. I think it's a very similar experience from the users. And first thing I'll say, you know, I have tremendous respect for the Polygon team. You know, they're really killing it now with adoption and, you know, only good things to say to say about them. But I'll speak about some of the differences and some of the similarities. So the similarities are the experience is we'll have a bridge. We're an optimistic roll-ups. We derive our security from Ethereum.

So when you escrow your contracts in the bridge, when you escrow your funds in the bridge, they show up on the L-2. But again, and then you can move them from the L-2 to the layer one. We have this withdrawal period because we're an optimistic roll-up. But fundamentally, you can go back and forth over our bridge, and all the tooling will just work. We're bytecode compatible. That's what I like to say.

So there are sort of this, you know, people have this, oh, aside, you know, side chains have the Ethereum experience because they just use GF. L2s are much more complicated. The thing about arbitram that I think is unique is they give you the experience of a side chain because we accept EVM bytecode directly. All the tooling works. And but we give you the security of, of a layer two, right? The security of V3.

And, you know, I think that's, I guess that's our differentiator. But fundamentally, yeah, the experience is the same. You go over the bridge and your fund just work, you know, and there's protocol level bridge. There will be faster bridges. We have a relationship with OKX, I deal with OKX. They'll be enabling fast deposits and withdrawals directly onto the Arbitrum chain. So wait, I want to pause right there.

So we're talking about Fiat going directly from a crypto bank, crypto exchange, Fiat directly to Arbitrum as well as another way to get into the theme park. You don't have to go through the Ethereum front door main chain. You'd use the side door from the traditional world and bridge that way. exactly right, which I think is super critical. And, you know, one of the things people don't like so much about optimistic roll-ups is the delay period to get to get back. And you have projects like that are that are building bridges to Ethereum to solve that like Connect and Hop and Seller. And you also have projects like and you also have these like OKX relationships and these OKX collaborations that will also make that point pretty moot. So I think the user experience is going to be pretty excellent. And, you know, that limitation will be like a small, a small detail that doesn't actually. ever show up to users. And by the way, I'll tease that there are OKX is the first, but there are others that are coming quite, quite soon. Hey, Gemini, if Gemini, you're listening, Coinbase, if you're listening, really excited, guys. The reason we're so excited is because Dave and I've

been talking about this for so long. And we've kind of like said that this stuff, this sort of thing was going to happen. And now here it's happening. Since the beginning of Bankless, we've been talking about how this is coming here. It's here. Larry T. T. Summer's here. All right, Harry, I want to get to maybe some differences. So Stephen was talking about some of the similarities we've got here, right? So like similar experience, so maybe something like a side chain like polygon. But let's talk about the differences because there are a couple of I picked up on and want you to validate whether this is true and then talk about some others. So one is if you're on a side chain like polygon, right, there are still fees, transaction fees, but those are

denominated in the polygon token, Maddick. I think with Arbitrum, they're denominated in ether, but there are still transaction fees. Yet, also, I think with Arbitrum, users should expect those transaction fees to also be higher because you are paying for a portion of Ethereum's economic security. Maybe let's start with that. Is that a difference that you'd say is accurate? Yeah, yeah, absolutely.

No, that's a good description. So, I mean, essentially, there's kind of two main categories of a fee that you pay on Arbitrum. Now, it's kind of to the end user, there's just a single fee, but essentially it goes to two different places. The first is paying for L1 fees. Every Arbitrum transaction gets posted as data to Ethereum. And that's essentially the way that we,

that Roll-ups achieve the high level of security that they do is by kind of still heavily leaning on Ethereum. But essentially kind of using it to, using it in order to kind of come to agreement about what's going on in the chain, but in a much, much cheaper way than you would be doing if you were interacting with a traditional smart contract. Because essentially, we're only agreeing on the input data. We're not agreeing on the outputs. And arbitrum and the optimistic protocol, roll-up protocol is what kind of brings us all to agreement over the outputs. And so that was a little.

And so essentially we have- Can you quantify that for us, Harry? So like how much of a gas fee reduction is that? How much compression we able to do here? Right. Yeah. So I think that kind of, roughly speaking, simple transactions, well, transactions with a relatively low amount of call data. So they could do a lot of execution, but with a relatively low amount of call data, are currently coming in, I'm going to give a wide range because I don't remember the exact latest numbers, somewhere between kind of 1,000 and 2,500 gas, L1 gas for kind of like the L1 costs of kind of just posting the call data. And so that's kind of like the, and that's kind of one factor where a sort of,

of there's this trade-off with kind of systems like commit chain systems like side chain systems like Polygmatic on Polygon, where essentially kind of they don't require data for each transaction. They just post kind of very short summaries. With the trade-off being that Ethereum can't actually validate whether or not what's going on in the side chain is correct. It's instead kind of independently secure. And so essentially what you'll see is this kind of tradeoff where there's the higher level of security, but also higher, but also higher fees in relation that you are paying in order to get that level of security. And so kind of we end up on this spectrum where you have kind of Ethereum as the most secure and the most expensive,

arbitram as close, close to as secure, almost as secure and less expensive, but still, you know, not, not completely free. And then Paul, and then Maddick, the Maddoch chain as kind of significantly cheaper, but with its kind of own independent security mechanism that kind of doesn't have the same kind of confidence level as Ethereum. Love it. Okay. So that's the one source of fees is basically the cost to secure a subset of data on Ethereum. And we're talking like a 90, 95% reduction versus doing this on gas reduction versus doing this on Ethereum main chain, something in that magnitude, in that order. You said there were two sources of fees that. What's the second? Yeah, absolutely. And I think it's even more than 95%.

I'll say. I'm not going to remember exactly, like it depends a little bit on the transaction, but it's like a crazy amount. And the other source of fees is basically L2 computation and state. So essentially the same reason why Ethereum needs to charge fees also applies to arbitrage. That you need to make sure there's kind of not an infinite supply of capacity on the chain, because we still have nodes that need to be able to run user transactions. we can have more capacity and we will have more capacity than Ethereum, but there are still limits to it. And so there's still kind of people who need to actually run those transactions. And so kind of there's two sort of major kind of reasons why there are kind of there are fees

in L2, one of which is in order to actually kind of support the costs of the chain and the cost of upkeep, including kind of the cost of state growth, because state growth is something that we think a lot about just like is kind of a serious issue that that's kind of thought a lot about in the context of Ethereum. And I think that kind of the solutions that Ethereum is looking at are also kind of very similar to the solutions that Arbitrum will pursue over time. And the other is essentially a kind of the Arbitrum chain with its own gas market that kind of once enough demand for Arbitrum has come up, there's kind of a mechanism that was very heavily inspired by EIP 1559 that we'll be using on Arbitrum in order to kind of when there is so much demand,

which I think we're pretty confident at this point is going to happen to kind of even fill up all of the supply in Arbitrum. If transactions were free, the prices, the kind of L2 fee portion will kick in. And I think kind of still be significantly less than the LP1 fees, but it'll be there. In other words, if we didn't have fees on L2, the users would never get off the ride, right? You'd have bad scenario. That's what I guess a spam simple attack is. Users not getting off the ride.

Okay, so like in both of these fees are denominated in ETH. Is that correct? Yes. And both of them are kind of, it's a single fee that the user sees. In Metamask, there's one fee. In our block explorer, there'll be a breakdown where you actually see like, well, this is the total fee paid and these are the different kind of places it went. And is it correct?

So I know the fee to settle something on Ethereum and a real thing. up that obviously goes to a theory minors validators in the future but the the fee that is arbitram specific does that go to validators within arbitram or who gets that fee yeah so fundamentally um yeah that fee is gone is going to pay um we have this notion of invited validators we can't because of like civil tax like you said the current economic model doesn't allow us to just like say okay you pay everyone, you know, this V, because, because, yeah, then there's just not enough to pay people for their cost. So validation, you know, right now we're, we're whitelist in the developer period. Validation, once you open up, will be permissionless. Anyone can validate, and there will be

validators that we onboard to basically, as invited validators that can also share fees and get some of that fee revenue, as well as, you know, we're also operating the sequencer and be taking some of the fee revenue for us as well. But fundamentally, that's where that's where it goes. It goes really into the operation of the system. And, you know, over time, you know, our goal is to move more. Right now, it's kind of bespoke. You know, we have these, we're going to be working with validators. Over time, our goal is to move more and more of this on chain. So validators get paid directly on chain. And the fee revenue, you know, gets mostly, right now is sort of going through us. But like, the goal is to move as much of that on chain as we can. So layer two operators.

layer to development is something that we think should be funded, but it should become directly on-chain, and you know exactly where that's going. So with Ethereum, the way that we meter resource consumption is reconstrain block space, and then with EIP-159, the way that we meter resource consumption is by just increasing fees to make resource consumption come down. You guys said that you guys have a mechanism heavily inspired by EIP-1559, but what is the actual resource that needs to be metered?

Is it just data in the state of arbitram? And then how is that different from Ethereum? And also, can you guys, like, kind of measure out how much more resources that we have available on Arbitrum, which is basically a roundabout way of asking how much more scale do we have? Yeah. So in terms of kind of like the first part of the question for kind of what are the resources. So we have kind of a slightly different system than Ethereum, although it's kind of very similar, is kind of there are two different resources on arbitram that are kind of both paid in gas,

one of which is state growth, the other of which is computation. When kind of like designing the system and sort of figuring out like how to best sort of control its growth, for instance, kind of computation can be kind of can remain relatively cheap for kind of long term because computation doesn't make the system any more expensive to run a year from now. Whereas state is something that I think we're kind of, you know, there's significantly more concern about because this has kind of been a problem for quite a while on Ethereum, and it's something that kind of arbitrium operates within a similar model of. And so sort of separating out those two quantities to be kind of thought of as pretty distinct gives us sort of the freedom to, for

instance, way, kind of way different, like have different weights to like how expensive we want to make state growth versus how expensive we want to make computation. And I think that kind of part of the kind of system over time will be sort of adjusts. these in order to kind of find the most sustainable long-term path for the system. Because kind of most of the concerns with sort of ranting up and kind of increasing the capacity is basically this question of how hard are we comfortable with making it be to run a node. And there's kind of this interesting feature of roll-ups, which is that we need way fewer nodes because we don't need 51% honest nodes. We need one honest note.

But we want to be sure that people who don't want to trust the current people running nodes can run their own. So correct me if I'm wrong, but I just wanted to get this in my brain and also listeners' brains is that the reason why Arbitrum is scaling Ethereum is twofold, one you just said, which is that you need a lower number of honest active participants, and that number of solo that is just one. And we can, because of that, because we only need one honest participant, then we can scale a pretty decent amount. And the other reason is because we are actually using the power of cryptography,

we are able to just compress more transactions into smaller little packets. That's what a roll-up is. And that just takes up less space on Ethereum. Did I get that right? Yeah. I mean, there's kind of like there's these interesting kind of two different questions. There's like how much load roll-ups themselves put on Ethereum and how much load that roll-ups can handle in L2. And so on Ethereum, there's this kind of like currently, like by rough measure, Ethereum can support somewhere around like 4,500 transactions per second through all roll-ups. And so kind of like that's because that's the amount of like that's how much call data we can put. That's how many transactions we can actually post the data of. And then there's

the separate question, which is what will kind of a single individual roll up? What kind of capacity will it have? And that's kind of an area where we're kind of, I think it's going to ramp up over time. I think we're kind of going to be relatively cautious at the beginning and then sort of as demand grows, also grow capacity in order to kind of make sure that the system is as long-term kind of safe and sustainable as possible. I'd rather have kind of the system be a little congested for a short period of time until we kind of increase the capacity than be wildly off base and allow the state to grow a huge amount. And then it becomes impossible to run notes. And so we're kind of, we're going be we're being cautious about this, but I think that kind of as we adjust up the capacity,

we're going to kind of keep ahead of demand for some amount of time. This kind of opens up to be like what is the eventual future look like sort of question, which is a really interesting one, which is one kind of that I've talked about a lot, which is that like five years from now, there's not going to just be one roll up. Even if, and I don't think this will necessarily be the case, but even if kind of arbitrum is the roll-up tech, there will eventually end up being multiple arbitram chains. Because one cool thing that roll-ups let you do is they let you parallelize. So a single arbitram roll-up is very similar to a single Ethereum, whereas multiple arbitram roll-ups are very similar to sharding. Sharding is hard. We haven't figured it out for ETH2.0 yet,

exactly. That's still open research. And so kind of this is like the direction things are heading in, rather than the direction they're going to be anytime soon. But that's the way that we reach kind of a billion users, rather than kind of where we're going to be at for the next kind of period of time where we're still sort of just figuring out the process of having one roll-up chain that's really solid and a really good user experience. This is also the reason you guys called this thing, Arbitrum 1. So the technology is arbitram, but we're talking about the land that's been opened is Arbitrum 1.

There could be an Arbitrum 2. There could be an Arbitrum 3. There could be a bankless arbitram. I'll use the same tech. Who knows? absolutely and so like the decision to kind of start with one is really the decision around like multiple chains being way too confusing the technology is ready for it but the coordination challenge is not i think what's really interesting and what the listeners should take away is that you guys are facing some of the same core battles that ethereum has been facing right like state growth and resource consumption you guys are just dealing with this in a as in my mind like a microcosm right you guys have slightly different parameters as to like how you guys have to deal with this issue. Ethereum has 51% attacks to deal with.

You guys don't have to deal with 51% attacks. You guys just have one honest validator as like your consensus protocol. And that's kind of where these differences come in. But it's the same problems through and through. And the through line that listeners should really take away from is that let Ethereum tackle the 51% or proof of stake consensus issues. That's hard. There's a reason why like a native currency of. Ether is important for those systems. Arbitrum doesn't have to fight that fight. It has to fight

similar fights, but the main fight of just like 51% native currency consensus is taken care of, and that lets you guys focus on what your core competency is, and that's where a lot of the scale comes. So a decent amount of Arbitrum scale comes from the fact that Ether is securing Ethereum under a proof of work and a proof of state network, and you guys just don't have to deal with that already. You guys are kind of writing in the... the wake of Ethereum and its super strong settlement guarantees. So I want to throw that out there. Exactly.

Yeah. Couldn't have said it better. So we're off to talking about the differences. We talked about the similarities. And that was all a discussion about like actually gas fees, which brought it to there. So the difference between something like Polygon in arbitram is that if I'm an arbitram, I can expect to pay a bit more in terms of gas for these additional security and settlement guarantees, right?

Let's talk about another difference, which I think is the case. Withdrawal period. It's been a lot of talk about a withdrawal period in optimistic roll-ups. A one-week withdrawal period has been floated. And the way I'm envisioning this in my head is like, so once you cross the bridge, I send my ether, my tokens over the bridge. Like, we know how that works. And I'm now in this other sub-theme park, right?

If I want to get back, it's going to take a week to get back. Now, maybe I can exit via OKX. Gemini, Coinbase, like in some sort of the side door that we were talking about earlier. But if I want to go back to the Ethereum main chain, there is a delay period that something like a Polygon doesn't have. Can you talk about that? And maybe, Stephen, give us your take on this withdrawal period. Yeah. So one thing to say is, you know, the reason we have it is because we have a protocol level bridge that gives you the security of Ethereum, right? We can build an escrow type bridge an Arbitrm 2 that has no delay, but then that you don't get the security of the roll-ups.

So it's fundamental to the security of this bridge. It's not that we can't build the fast bridge. It's just that you know, you won't have the security, right? We could build a multi-sig bridge, for example, to Arbitrum that's fast both ways. It's just if you want the security of Ethereum, you have to use this bridge. And the reason why you have this delay is because optimistic roll-ups rely on fraud-proof technology, and you have to give everyone the ability to basically post-fraud proofs, right? And so the failure case here is I say, hey, look, this withdrawal is valid.

I'm taking all my money to Ethereum and it's invalid and someone knows that's invalid, but the period is so short that they can't get the multi-round process on chain. So that's why this period exists. But the thing I want to focus on is two things. Number one is as the ecosystem and arbitrament becomes much more and more and more vibrant, they're going to be users that just want to stay there. So I'm not saying this is not an issue. I'm not saying users won't want to go back to Ethereum or won't want to go cross-roll-up,

but there are a lot of users that are just going to stay and park their money in arbitrium because that's where the cheaper defy is going to be. And most of the big defy projects are going to be there. So again, this becomes less of a problem over time. And the other thing is, like I alluded to before, this is the protocol level bridge. Your application layer bridges like Connect, HOP, Cellar, C-bridge, and a bunch of others in this space as well that are, that are, basically using liquidity, what's called liquidity exits to get around this issue.

And the core idea here is you have an Ethan Ethereum, I have an Ethan Arbitrum. I could put mine over the bridge that will take me a week, or we could just swap our assets quickly. So you get my if, I get your eiff, I just got a quick exit, and yeah, I'll pay you a small fee for that. And a lot of people are building out technology along these lines, which means at the end of the day, to users, to users, this won't come up at all. And a typical user might just want to, you know, just, again, go on and off via OKX too. So that's another path, right? I'm on Ethereum. I want to get an Arbitrum.

I'll go to the OKA. Yeah. Yeah. I think that's such a nuanced, a much more nuanced take of how it's eventually going to evolve because there's not just one bridge over to Arbitram. Like there is one protocol supported bridge that is secured by the Ethereum military, right, the most secure bridge that's never going to go down, right? But we also have all of these other bridges.

Then some of them might pay, like there might be a toll to use it if you want to get there fast. You know, others like, but it would be much shorter. There's also going to be like sideways to get into arbitrium too directly from the fiat world, traditional finance and exchange. So in your mind, I mean, I don't know a lot of people are talking about this like, oh, the withdrawal period. It's like a long arduous process. But it feels like it's not going to impede UX.

It's there in case we need it, right? But there will be all of these other ways to get liquidity in and out of arbitram that don't, like, require that bridge. Is that the case? Yeah, that's exactly the case. Yeah, it's the combination of that that there are lots of really, really smart teams building application level of solutions that just get you in and out quickly. And the fact that I think that, you know, it's a really great part for building and users are going to get for a long time. What other drawbacks are we missing, guys? So gas fees, it's a bit more expensive than a side chain.

There's this withdrawal period for the primary economic security. Are there any other drawbacks? I think those are the main drawback. I don't even view math fees as the drawback because any system that tells you they don't have gas fees, it can't work, right? Gas, you know, some metering, some fees are fundamental to a system just to, you know, resource control and resource allocations. So I think the main drawback is the delay period that we have.

But again, I think, you know, really smart teams are working on this. The one thing I'll mention, you know, just to round this out, the one place where all these solutions that I mentioned don't work for withdrawing or NFTs. So if you want to withdraw an NFT, you're actually going to have to wait for it to go over the bridge. Generally, you don't necessarily need such fast liquidity over your NFTs. Like you'll keep your NFTs there. Maybe you want to move into Ethereum, but it's not like, you know, generally people don't need to do. You know, I think the delay is not going to be that much of an issue considering

what NFTs are used for, but that is something that, you know, I should mention, which all these solutions are really, really focused on fungible assets. I guess the other thing that could be mentioned here, which, you know, is it depends on how you, depending on how you think about it, it's, you know, I think it's a short-term downside, long-term doesn't matter, is essentially kind of complexity. All roll-ups are significantly more complicated than side-jinks. Like, this is just kind of what they're trying to do is more complicated.

This is why we wanted, we were on test net for a long time because like that, that's what it took in order to, I could, I could launch a, a kind of simple side chain tomorrow with a couple hours if I wanted to do. Like, kind of like, that tech is just sort of like simple enough and kind of been built long ago enough that sort of with things like tendermint, it's like really easy. roll-ups are, you know, are as kind of a pure L2 are doing something kind of much more interesting and much more complicated. And so like, you know, it's like, this is the reason why kind of we've taken a long time to build on test that, why we're kind of like going to be sort of like grad, kind of gradually decentralizing the system more and more until it reaches kind of its final fully decentralized form. And that's kind of like, you know, it's a necessary, it's a necessary journey to go through basically in order to kind of really hit the kind of full promise of LTIP.

Gary, do you think that in the future, deploying an optimistic roll-up chain will be as easy as what you just described a side chain to be? Yeah, absolutely. Yeah. Sick. Cool. We got a break for sponsors, Harry, but it's like one quick question on that. So where is the complexity?

And give us like the really short. Like, is it in this fraud-proof game? Is that where the complexity is with optimistic? roll-ups? And basically optimistic roll-ups and Z-K roll-ups. The complexity is in, like, how you're actually proving to Ethereum that what you're doing off-chain is actually correct. For ZK.

Roll-ups, it's, like, fancy cryptography. For optimistic roll-ups, it's fraud-proofs. That's, like, this magic thing that, like, all of the roll-ups have to do in their own way. That kind of, you know, is where sort of, like, the added, like, the added complexity is compared to side chains. All right, guys. And I think that Arbitrum

has like a pretty good form of this. The complexity kind of is controlled. It's mostly in the node. And I think it's kind of like in a pretty good place where we can get where we can be pretty confident in it. All right guys. So if any of the bankless listeners have read my, my Market Monday piece yesterday,

it was all a speculative version of the future about a possible DeFi summer round two where all these defy apps come to these L2s and they start liquidity mining incentives to really entice users to come to their defy app. So that is the conversation that is coming next in the state of the nation. But first, before we get there, we have to take a moment to talk about some of these fantastic sponsors that make the show possible.

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All right, guys, we are back. We are here with Stephen and Harry. We're talking all about Arbitrum. That was a fire first part of this. Guys, we are going to get into layer two season, whether you think that is happening. But first, I want to run this analogy by you. Because, so I was listening to the Zero Knowledge podcast. I think you were on that, Stephen, with maybe Ed, right? And it's a fantastic podcast. By the way, bankless listeners, you want to hear the history of arbitrams, some of the more technical details, go hit up that podcast. We'll try to get it included in the show notes. But I was also thinking like, all right, how do we make this thing easy to understand if you don't know much about blockchains and

cryptography and like the terms that we throw around like layer two and rollups and optimistic stuff and validators and all of these things. So I want to see if this analogy kind of lands with you. So we've often talked on bankless about Ethereum being almost like a digital nation of sorts. So the analogy is it provides defense. It has a currency. It has an economy. Like what is defense? That is the economic security of ETH as an asset, right? That is the crypto economic security that backs the entire system. Has the military, miners, validators in the military, as a tax system. You consume blocks, you get charged attacks, gases. It has the premium work. It's the court of law, Ethereum. Code is law, right? It has to compile somewhere. It has to be

code on Mainnet. That is the Supreme Court of Ethereum. So Ethereum main net as, I know we said it was a theme park, but it's also almost like a digital nation state, right? And where I see roll up chains going with Arbitrum is almost like an economic zone that uses that nation state to provide its economic security. So it's not completely independent. I must think of it as, you know, sort of the U.S. if you think of the U.S. has a federal government and then it has the state right economic zone. The states don't need to have their own military force. They don't, like, they don't, I live in Virginia. We don't have a military in Virginia. We rely on the Fed for that. But it does have a court system, right? And so I think arbitram does and optimistic roll-ups,

do you have like a court system. But if there is a dispute, in the economic zone, in the state court system, in kind of the state-run circuit courts, then what happens is that eventually gets all of the way to the federal court system. And that happens at kind of the nation-state level, if we're talking about a nation, a crypto-nation, right? So with arbitram, that happens in Ethereum. So arbitram as this economic zone doesn't have to bootstrap its own security because it gets that from its apparent nation state, but it is connected to the Ethereum nation state as this.

And here's the cool thing. So we know how courts of law work on circuit court in state court. But I think with arbitraum, what you guys are saying, this is a gleaning from the previous podcast is all it takes is one validator, one defense witness to say, hey, here's our evidence in the circuit court, right? this code like somebody cheated here there was some fraud detected here the code didn't run as it should have and that just gets escalated if that happens that gets escalated to the nation state supreme court on ethereum and then the the court just decides on the theorem like whether that's true or not right

anyway it was a helpful analogy for me to try to understand this i don't know if it works if you guys like resonate with this but it was my way of explaining how how how how Arbitrum and Ethereum are linked and how these systems work without using, like, cryptography words that people don't understand. How does it land, Stephen? I think it's great. I really do. I like it. I may actually start using it, to be honest. I'll credit you. Don't worry. But actually, it's funny because one thing this, you know, reminds me of is the Arbitrum name. So Arbitrum actually dates back to the days where Ed was in the project, and before where I was back in, you know, early 2014 days. And Arbitram, it comes from

like Latin for arbitration. And this is what the idea, right? So you have these sort of economic zones that sort of set up their own rules. And they basically do this arbitration that you don't really need to fall back to the federal and the state, you know, the larger systems, but they're there. And the reason they, the reason this works is because you know they're there, because it can fall back to that and because you have that enforcement if you need to. So yeah, I think that, that, that's exactly right. And, and you can have many of these zones that all rely on the, on the same federal military and the same federal super important resources, and it can scale out this way.

And whether that's many arbitram chains or whether that's other roll-ups as well, we can all basically use those two resources and set up our zones, our own zones, which will be able to scale in ways that one larger operation sort of just wouldn't be able to do. So I think it's really awesome. I don't know, Harry, but... Yeah, I totally agreed. I mean, my only worry is about word overloading.

like now we're talking about economic zones, but then there's also like, Cosmos has their notion of zones. Yeah, I know. I know. Well, we're all trying to come to consensus about the right, like, ways to use these words in this space. And so at some point, we kind of just have to make a mess of it all to really figure and settle things out. I'm reminded of our podcast that we did with Joel Mnegro where we talked about how like, you know, the consensus inside of the United States, when I swipe my credit card to get my morning coffee, ultimately the reason why that works is because there's effort. F-35 jets, you know, somewhere that will enforce me to do the right things no matter what. And at the end of the day, like, proof of stake Ethereum with staking ether is actually way more efficient than F-35 jets. And ultimately, that's what arbitram comes to be settled by is proof of stake Ethereum with

ether, the asset. And so, and also, importantly, like, if there is a dispute about my coffee transaction that goes all the way to the Supreme Court thinks... Oh, my God. I hope not, David. Think about like how many just like months and months. Your order's too complicated. Think about how many like just months and like jury members and lawyers and litigation.

And think about how crazy expensive that is in both dollar terms and time terms versus a settlement of a dispute on arbitrum, which it can happen in theory like atomically because of the power of cryptography. We are moving into a much more efficient, much more powerful world that is no longer secured by, you know, guns and militaries and rather just proof of stake in theory. I absolutely. I totally agree there. I also have another quick question for you. Like with that metaphor, one interesting design of the arbitram, which I didn't realize until you guys had the announcement post, is that you're actually planning to use the currency of the federal government, as it were, ether within your system, which is kind of like federal versus state. Why that decision, right? So why adopt ether as the reserve currency of this economic zone? I think the basic answer is our goal all along was, and it's taking us a long time to figure out what this means and how we get there, but our goal all along is to reduce friction, not out of friction. And fundamentally, if you're a roll-up, you get your security from Ethereum, which means you're posting transactions on Ethereum, right? For every transaction on the roll-up, there is something denominated in EF because that's the currency of Ethereum.

So if we were to introduce our own currency here to pay those fees, we'd basically just need an Oracle brief because that's the real, that's really what's happening underneath the hood. There's also the L2 feeds which we can dominate natively in a different currency. But fundamentally, it's that. And also, like, users want to use a system. Do they really want to get hold of another coin that could be volatile to use a system? Absolutely not. And one of the thing, you know, trust me, there were many, many people along the way.

You know, we, when we started arbitraim before 2017, so we went through all the cycles. There were many people along the way. And we tried to raise funds early on, you know, for our seed round. There were people that were trying to get us to do different things. And, you know, I'm happy we really stayed, stayed where we are. Because I think today that's one of our major advantages, the fact that we can be Heath native. And you don't have to. You're a user that has you.

You're a user that loves you. That's what you have the tools you need. Whether you're a developer or whether you're a user, you have the tools you need to use arbitram. And yeah, we believe, you know, fundamentally. And then that's, you know, obviously, ETH is, it's volatile enough. We don't need to introduce another new asset here. The users have to have to sort of interact with our system. I think that would be pretty bad for UX,

and it's exactly the opposite of what we're trying to do. We were always UX first, you know, everything else second. Was the design destination always Ethereum as a layer one? So definitely not, because as you know, if you mentioned the ZK podcast, as we mentioned, Arbitrim predates, you can look on YouTube for the first arbitram video, and it wasn't me. I was in that class and also doing a different product. and threshold decently say, which I did some work on back in my PhD.

But this was Ed leading this project and this predated Ethereum being live. So this was, you know, the videos from early 2015, it was a 2014 class. And, you know, these ideas have been percolating in Ed's head for years before that. So Ethereum wasn't a thing. And it took us time to really, you know, watch Ethereum grow and understand, hey, this is the ecosystem where everyone is, where all the mind share is, where, you know, And this is where we want to be and this is the experience we want to improve. You know, again, like we were raising funds initially, you know, right after the 2017 hype,

the best and easiest thing we would, we could should have done back then was ICO. But I guarantee you we wouldn't be here today if we did that. So, no, it definitely took us a lot of while to understand that like we wanted to build an L2. I mean, we've been doing this for years for years at this point. That's a crazy thing. It's like, it feels at some level, I think, to some people that Arbitram just came out of nowhere. But like, really, you guys have been skating to where you thought, the puck was going this entire time.

It just happened that like we got to roll-ups, right? You were doing roll-ups before it's called roll-ups. Absolutely. And, yeah, absolutely. We've been in this relatively early. And I'll also say, you know, credit to all the other great teams building out there. The competition brings ideas and, you know, it refines our ideas. So our ideas have definitely refined over time and, you know, other, you know, really the

community, the Ethereum community as a whole take down the competition for a second because we're all working towards the same goal. The Ethereum community has a goal has basically gotten to the design goals we want. As you mentioned, we've gotten past the initial scaling solutions and understand this is what we want. And I think we've been pretty close that all along. We've definitely refined our vision and understood, for example, the importance of EVM compatibility, like 100%. That's something which we understood. It took us a few more years to understand.

And we've definitely been skating along for a while. I think, yeah, a lot of people probably didn't hear about us until quite recently. But we've been building, you know, this is one of the. benefits of, you know, I've seen this in Ed. Ed is, you know, a 27-year Princeton professor. He's now full-time in the company, but this is, and I've seen, you know, I've had the ability to interact with many such types. And one of the things that these people have is the ability to see the future, basically, and to realize what's going to be hot. And, you know, Ed really has been very visionary in this. And I credit him for a lot of, of seeing and scaling way early on as an

issue. So you guys have read my, my Defi L2 summer post, and I've already been citing it a bunch time so far in this podcast, but now I want to go and attack this question directly. We've already heard that there are a ton of defy apps that are trying to move into Arbitrum because it's theorized by these DeFi apps that the real estate that Arbitrum offers is really, really valuable because of the low fees and scale, right? And so all these DeFi apps are like rushing out the gate to start building their attractions. Their attractions are going to charge fees towards the DeFi apps. That's why they want to be there because they are assuming that all of these users are also about to become following the defy apps. And so my theory about this summer,

and maybe it's longer than the summer, maybe it goes into the fall, but like the whole DeFi Summer Round 2 or L2 Summer Round 2 is kind of an attractive meme. We like memes of bankless. So I want to get your guys its gut take on this. Do you think that there's going to be like a rush towards extreme, maybe not extreme, but like awesome liquidity mining incentives by Defi apps because, you know, Sushi Swap is really aggressive with their integrations. And they like to build, build, build, build, build, and they also like to do liquidity mining. Always doing the same thing, like same sort of like ethos, like build really fast, incentivized with liquidity.

Do you guys think that we're like on the cusp of like an L2 DFI summer? Yeah, I think, you know, I totally think we are. And to, without linking any specifics, I'll tell you, I'm aware of a number of teams that are planning on doing liquidity mining directly and arbitram. And again, these are teams that are going to introduce. new tokens that are Arbitrm native. And these are also teams that are, you know, have live ecosystems and already have lots of experience here.

And they want to bring usage to Arbitrum because again, it really comes down to the economics for the teams. And that's what's going to make the system work. If they believe that there is a better market for them in Arbitrum and they'll be, they'll be well served by being on Arbitram as opposed to some other ecosystem, they're going to attract users there. So yeah, I can't spell any of the details today. But other than to say is I have, we have knowledge of lots of liquidity,

mining programs that will come online once Arbitrum opens up to users. You know, what you mentioned in the summer, the fall, I think the big question here is and the one which I know we discussed before, but still some uncertainty about it is exactly when we open up to users. You know, I don't, but I think once we open up, these liquidity mining programs are going to be ready, are going to be ready from day one. And we're going to see a rush of liquidity. There's just also a lot of excitement about it, which is, you know, there's even forgetting

about these, these, you know, obviously this helps and we'll bring a lot of users, but there's just so much excitement. You know, we get pinged from people all the time that just want to put liquidity into arbitram. It's like, first, let's put it in, then I'll figure out what I'm doing within and why it's there. So, yeah, I think there's going to be a gold rush. So, like, 10 projects with liquidity mining, 12, 15? Like, what's the, what's the ballpark number that we were talking about?

So, you know, I'm aware of a handful. I'm sure there are more, but I'm, you know, I'm personally aware, aware of a Because they don't even have to tell you if they're going to do it or not, right? Like maybe they have told you, but like they could do it without telling you regardless because that's what it is. Yeah, these are like matter of fact conversations. I'm on phone with the team. It's like, hey, by the way, you should know, thanks for giving us access to we plan on driving

lots of users to arbitram. And they, you know, this is not something we ask. This is not something that they have to tell us. This is just, you know, some, you know, we speak with teams all the time. And, and, you know, some teams have told us this. And of course, we're not going to say today who those teams are because we don't want to break anyone's confidence. But we're talking to enough teams. The anonymity set is large enough that I'm comfortable saying that you'll see at least a few of these and likely more. There's one super interesting kind of thing to throw in here, which is that there's kind of like two reasons you might want to do liquidity mining kind of in this way.

One of which is to bring users from Ethereum to Arbitrum. The other of which is to have the users who are coming to Arbitrum come to your, come to your DAF over your competitors. And so I think that like, oh, I think the users are coming. I think there's going to be a lot of kind of like where who becomes, who becomes dominant in the new L2 landscape. And I think there's kind of going to be a lot of fighting over that. So I think a lot of kind of the reason for for doing all of these new programs, kind of fighting for dominance kind of in, in this L2 landscape where people are going to be. What do you think about that fight for dominance?

Is it going to be about like the protocol design of the individual L2 or like optimistic rollup? Or do you think it's more about this coordination game that you said was particularly difficult? How do we get all of these protocols to kind of migrate over here? So I even, I was really just talking about within arbitrum, that you have kind of a lot of the Ethereum ecosystem deploying an arbitrum and there's going to be, you know, the same, the same fights that have played out, or not, I shouldn't say fights even, but the same kind of friendly competition that's played out on, on Ethereum. I would expect to also very similarly play out on Arbitra.

That fundamentally, that's the place where the users are going to want to be, the liquidity providers are going to want to be, it's going to be cheaper, it's going to have fast transactions, and the DAPs are already planning on being there. And so kind of getting a strong hold on that landscape is going to be very valuable for the DAPs that are deploying there. I hope people are ready for layer two vampire attacks. It sounds like that's what the prediction is.

Go ahead, David. So guys, the chain link army will have my head if I don't ask about chain link. And I do know that there's something intrinsic about the relationship between arbitram and chain link that I'm unfamiliar with. Maybe you guys can explain like I'm five, the relationship between chain link and arbitram and why the link army is so excited about this. Yeah, definitely. You've done them a favor because I keep seeing my Twitter notifications begging me to speak about this. I've got it before, but here goes. Yeah, so also first I'll speak about the history of our teams.

I did my PhD at Princeton, as you mentioned, but I also did a postdoc at Cornell, and I was fortunate to be advised by Ari Jules, who is Chainlink chief scientist and advisor. Currently, they're a chief scientist, why he's on leave for the year, but also, you know, a longtime advisor and really just an amazing person to work with. and Chainlink is so fortunate to have him. And so that's like the initial tie of our teams to Chainlink. And through that, you know, over time and events, I got to know Sergey as well, as did my co-founders and the rest of our team.

And I would say that both the Chainlink team as well as the Chainling community really were like early early believers in us. The Chanling community on Twitter has been really fantastic. And now we're sort of many, many other people, are aware of us as well, but if you go back to like, go back a year or two and like, look who's retweeting our tweets and it's like, it's like all chain link folks. And it was, it was encouraging. And you know, they're a super, they're a super valuable part of our community and we really, really, really value them very, very much. In terms of the technical integrations

and how we kind of working with chain link, so there are lots of collaborations that we're working on or exploring some deeper than others. And I'll give them, I'll give you some, some insight there. And number one is the most basic chain link price fees on arbitram. And with the fees lower, the demand for these feeds, with the fees lower, the demand for these feeds is going to be higher. So I expect to see lots of them on arbitram. And I know this is one of mentioned before how we built, how to get to the point we open up the users. Chalink has to be on the ground floor. This is one of those pieces of infrastructure that so many teams want and so many teams are relying on.

So, you know, they're a critical piece of infrastructure. there's also something else and this gets i don't want to open up another can of worms here but it sort of needs to be said to answer your question there's this question about miv transaction ordering and how that works on layer two so when i was at cornell tech working with ari i had a privilege to work with phil and arry i was a co-author on the initial mv paper and together with the flashboys paper we just had phil on so i ask yes you didn't know that wow that's cool i was uh i co-authored that paper now primarily phil's work but I was a co-author with Ari and Phil and some others. And then Ari and I and a few others led by a really great student, Cornell,

Mahimna Kalphar, worked on another line of work called Fair Ordering Consensus, right? Consensus systems that guarantee fair ordering. And, you know, there's lots of, I'm not going to wait into these debates now. There's lots of, you might have seen Ari had an op-ed and Phil responded. And, you know, my thinking is along the lines of, you know, I tend to agree with this. notion of as much as we can, we should design protocols that don't have MEP or don't increase MEP. To the extent that MEP is there, I think FlashPOTS is awesome. We should democratize it, like for sure, but we should also try to minimize it as much as possible. So how do you do that

in an L2, in a layer two? So I don't want to lose users here, but just to say, so Ari and I and some others wrote, I co-offered this paper led by Mahimna on fair ordering, and Ari's building that out at ChainLink this year. And there's definitely. a use of this service and arbitram to decentralize the sequencer to make a the sequencer is the one in the layer two with the one an arbitram that gets to choose the transaction ordering right now we're running it and we won't reorder transactions but to get it to a good guarantee you need a system a system like this so there's definitely points of collaboration that we're exploring there as well on how to introduce this this really new technology you know it was an academic paper last year and they're

they're they're really building it out and and how do we introduce that uh you know this is not finalized yet by any means, but I think there's there, that's another collaboration point there. Okay. So, Stephen, since you brought it up, we got to talk MEV for just a second, all right, just because like two weeks ago, we had an MEV episode that came out with Phil and some others. And we talked about MEV is kind of like we're just squeezing the balloon. Now we're squeezing the balloon and like the MEV problem is is on roll up chains. So I want to ask you this question. So like there is this role, this task kind of like a sequencer in the roll up chain, as he said, and Arbitrum might operate that.

My understanding is like, and this might be a distinction with optimism versus arbitram, which I'm curious about, because as I understand it, optimism might be trying to sort of auction off the value of MEV. And if anyone listen to MEV episode, they know MEV is super valuable. But you're talking here about potentially decentralizing the sequencing function, not to get super geeky. Like we don't want to get super geeky. But like what is kind of your take on MEV and Arbitrms take on MEV versus maybe optimism?

Because I think they're different. Yeah, they're quite different. And this is, you know, not one of the differences that people like to focus on, but this is a pretty critical core difference in our vision. So to my understanding, the last I've seen, you know, of their writings and their thoughts on this is just like you said, they pretend to auction off, MIV or MEPV auction, auction off the right to collect this MEP. We view that as a bad thing because that increases MEP. So the question is who's the sequencer?

So if you want a benevolent party, and again, this is differences in whether MVV is good or bad, we think that you should try to limit MB. But if you auction it off, fundamentally, if there's a million dollars of MV to be collected, and there's someone in the world that's willing to collect that, then they'll pay $9009,000 for the right to do that. And you can basically guarantee that the maximum MEP will be extracted if you auctioned it off, right? because I, as a person who don't want to extract that MV simply can't compete with the person who will, I'll lose the auction unless I'm operating at a loss.

So that will basically, in my view, not only, it actually makes MV worse than Ethereum Layer 1. Because the Ethereum Layer 1, it's sort of a minor can control MV for a single block. In layer two, the sequencer can control MV across multiple blocks. Also, a minor doesn't even know that it will have the ability. If this blocks mine, then it gets this right for this one block, whereas the sequencer can win the auction, And then it gets, you know, I don't know, I've seen them talk about 10 minute periods or who knows, but significant periods, maybe even longer, where the sequencer can go ahead and basically just reorder transactions within that period. And we've got to God mode. We talked about that. It's like God mode on the channel. Yeah. And we view that as dangerous. So the way that we want to do this is we say, hey, right now we're running the sequencer and you got to trust us on this, which is not something we want to do long term, but we're not going to reorder transactions. We're just going to post that.

But we don't want you to have to trust us long term. We also don't want to incentivize MBV extraction to the point where, like, you know, people are auctioned, paying for the right to get every last dollar out of it. So what do we do? We use a fair sequencing where we distribute the sequencer or not. So it's not just us running the sequencer. It's many people running the sequencer, including potentially chain link oracle, chain link nodes, as part of this coalition.

And the idea is that as long as the consensus property holds up, they won't be able to We order transaction. Traditional consensus algorithms care about one thing, agreement. So if we agree in the order and it's the exact opposite of the fair order, it's the exact opposite of the order they came in, traditional consensus is satisfied. We've agreed on an order. We can produce a block. Everyone agrees that's the block. It doesn't really care about ordering. Is this fair? Do we leave something out? Does it reorder? It doesn't matter. The innovation of the paper that I mentioned, our second paper, was designing a consensus system that can reorder transaction, that can guarantee, guarantee fairness that if enough of the nodes are honest, you won't be able to reorder

transactions. And just so we don't confuse users, we're still using Ethereum consensus. We're talking about replacing the sequencer with this with this thing just for ordering. And the fallback case, the worst case is, so I've heard the argument, oh, this might not work. The worst case is that it just falls back to maximal to maximum reordering if this consensus doesn't work. But the best case, and the case that I think is, if you get enough parties in this decentralized sequencer, you'll have a situation in which you really can't reorder transactions. And MEPV is all but eliminated basically on the layer two. Super cool, guys.

I'm so glad you guys are thinking about this. And the thought going through my head is, wow, these guys are smart. I'm glad they are working for a decentralized money system. I'm glad they're in the Ethereum ecosystem. Super cool. All right, well, we've got to talk about future predictions. So it seems to be the case that we've seen experiments like Binance Smart Chain. We've seen experiments like Polygon.

EVM with some empty blocks. That is called product market fit. Once you add the right defy apps, the defy apps are coming to Arbitrome. They're coming to other roll-up solutions. How fast do you think this is going to play out now? Remember the intro context here. It's like, we've been waiting so long for Ethereum scalability in layer two. What's the total locked value going to be like?

What's the liquidity going to be like? Take us through three months from now and then maybe a year from now. now. You want to start? Yeah. Yeah, and I'll start. And yeah, that's a good, yeah. So the answer is, of course, I don't know, but I'll play this game, you know, and take some guesses. I think it's very much a game. I like, let's start with three months from now because, you know, I'm very confident that three months from now will be live and open for users with significant liquidity, you know, with quite some, with quite some time for quite some time. That I can say with, you know, everything I mentioned before about who goes first, you know, three months from now is, is for sure, you know, we'll be, we'll be,

will be, the doors will be open and yours will be, you know, well-oiled already. People have gone in and people have already had enough time to go out with that seven-day period. So fundamentally, I think we're going to see a lot of value lock very quickly. I think, you know, like I said, this is the beginning. I think we might start seeing some of the limits of really, like, you know, congestion in our system. And we're going to have to work on, you know, increasing the performance and and getting the, you know, the cost down because right now we can run several Ethereum's worth. And we're keeping that, you know, pretty, we're keeping the speed limit pretty conservative. It has Harry mentioned because of state growth.

But I think we're going to have to confront these issues quickly and say, hey, how fast, you know, how fast we get to that Harry mentioned, we have multiple roll-up chains. I, I know, a week ago, I would have told you, you know, or at least one to two years away. But, you know, I think it might actually come sooner. I don't think that's three months. I don't think it's six months. But I think in a year from now, we'll be thinking about, hey, maybe we separate and have the NFT chain and the defy chain or whatever new vertical comes up because the idea is, hey, if I'm a defy project, right, and I don't really need a synchronously composed with the NFT projects, some of them do, but if I don't need to, why am I paying for their stake growth? So let's sort of, you know, shard in some sense, you have to be a multiple chain. So I think that's my prediction. That will come sooner than later. I do think, you know, this year we'll see billions of dollars locked in a roll-up chain.

which I think will be Arbitron 1. And I think we'll see a massive, massive onslaught of users, right? Users will just be coming for the first time. And we're also going to think about how do we cater to these new class of users, right? We love EVM. But fundamentally, you know, the main reason why we're using EVM, you know, people argue all the time, hey, this thing is better than EVM. Maybe it is, but all the developer interest now is an EVM.

That's what the developers know that's what they use. So you might have a system that's better, but no one knows how to use that. So step number one is getting EVM, the full EVM compatibility. Step number two and three is saying, how could we go beyond that even? Can we cater to a larger class of developers that are entering the system for the first time to have traditional language skills? And that's not what we're going to be thinking about on Arbitrum as well. But I think, yeah, sort of just rambling.

I don't know, those are some predictions that will come to. Super good. Harry, what would you add to those predictions? Yeah, I mean, I think I'm pretty. on board with that. I mean, I think the one like kind of prediction that I would add to this is I think that like we're going to, I think we're going to see the number of Ethereum users grow a lot that kind of one of the, that rule up solve a number of different problems. But the one that at this point I'm kind of most excited about isn't even lower fees. It's faster transactions. Having made a lot of Ethereum transactions on Friday when deploying a system and like staring at ether scan and refreshing. for long periods of time. You know, Ethereum is awesome, but it's not exactly like the best user experience ever.

And, you know, I think it's, you know, daunting to a lot of users that, like, haven't really kind of, you know, once you get, once you truly understand the value, it's totally worth it. But until that point, without the ability to really kind of dip your toes in the water and get a feel for it, there are a lot of users who are just being kind of pushed away right now by the fees, by the slowness. and kind of it's going to be a huge opportunity.

So I think like total value locked, and total value locked is obvious been going up all over the ecosystem massively. But the thing that hasn't been going up that much is user count. And so I think one of the really interesting things we're going to see is a lot of new users coming into the ecosystem, which to me is so exciting and, you know, a big part of getting to that bankless world.

Bankless Nation is about to grow. I think got a suspicion. This is going to be layer two summer. as well. David, you feeling like it's layer two summer after this conversation? Oh, it's around the corner. I already got my, uh, my beach hat and beach towel ready to go. Oh my God. I'm just feeling like I'm literally moving to California because I want defy summer. It's happening. Like it's happening, guys. Not the beach. Yeah. Guys, uh, super exciting stuff. Um, man, thanks for working on this for as long as you have. I know

a lot of hard problems needed to be solved to, to get to this point. Uh, you. You know, it does feel like we have some of the smartest folks in the world engaged on helping to create a bankless money system and get it ready for the billions and trillions of value and the millions and hundreds of millions of people who want to go bankless. So thank you for spending some time with us and for your contribution on these tough problems. Yeah, thanks for having us and for all the amazing work you do and helping building out that nation and really, really great to be here. Gosh, yeah. It's a lot of work ahead, a lot of education work ahead. Hey, can I, can I ask? So if a developer wants to start building rides in the Arbitrum one theme park, what should they do? And where can folks find out

more about Arbitrum in general? Sure. So if a developer wants access in our when Arbitram post, we had a link. They can come to our Discord and we'll share it as well for a Google Drive forum and they should sign up. Again, we're onboarding teams. For those that sign up now, it might take a you know, about a few days or, you know, to get them on board. You know, but they should sign up and we will, we will, we will comment at them and get them in the system. And to learn more about Arbitrum, my favorite resource is you find it in develop in our developer docs, which is developer that offshan labs.com. It's called Inside Arbitrim.

It's a really deep dive into Arbitram that's, I think, pretty accessible. And also just join our, join our discord, join our community. You know, we're happy to answer your questions. And we have a vibrant community that will answer your questions as well. and really, you know, get involved. And if you really, really want to get involved in Arbitrum, hey, fill out an application, DM me. We are hiring for every position.

That's all that. So I actually have one last question that I want to get to before we completely sign off here, because I was about to thank you guys for just contributing just really important knowledge into the public domain as perhaps free open source software developers. But I actually don't know if that's true. And so that leads me into the question,

is Arbitrum kind of, how does Arbitrum view itself as like an open source software development team or as like a commercial team that is looking to have like a business model. Where does this conversation go? Yeah, it's a really great question. And fundamentally, I think we really view ourselves as part of the Ethereum ecosystem.

You know, like I said, this is the beginning. So, you know, funding ourselves and making sure that we continue to remain funded is important. And this is something I realized early on. Some people shy away from having a bit business model in this space. But when I speak to teams, sometimes and some of the most sophisticated teams, the first question they have is, how do you make money? And I say, and they say,

and it's because I want you to make money, because I need to make sure you're going to be here and this thing doesn't go away. So, you know, like I said, the L2 fees are something that's important and something that, you know, it's for L2 operators generally, but, you know, we're part of that. We're operating the sequencer and we're developing the protocols. So I think there definitely is a business model there. I think over time, we'd like to, you know, like to basically disappear, you know, as the technology. I love to see Arbitrim become an open source project. Right now, it needs a central team, a central team pushing it. My dream would be that, like, you know, I can go on vacation and like, there's just like a, I haven't done in a few years,

but there's just a, there's just a, you know, a team, you know, an open source community, right? If we have like, you know, the guest team or whatever pick up the Arbitrude node, that would be like my absolute dream. But there's also the other thing I should mention is another thing of this bankless nation, something that people might not know is we see all this like enterprise money flowing into Bitcoin now. It's like the big story. I'm flowing into potentially Ethereum as well. But what I see and talking to teams all day long, it's not only the D5 teams I'm talking about. It's a Fortune 500 companies that are reaching out. And they're also like how to we get into Ethereum. Right. So whereas the money is flowing into Bitcoin and other assets, the enterprise

engineering, lots of it is flowing into Ethereum. And I think you're going to to see, and I know you're going to see, lots of big, big, big companies move into and offer services on Ethereum as well. And so, you know, these are things, these are models where, you know, these companies like to have support teams and teams that they, that they work with, you know, sort of more enterprising. So we view ourselves as pretty native, I hope it's become an open source project, but I do think that there will also be an enterprise story to this as well, again, and bringing them into the Ethereum ecosystem, not as a separate offering, not as becoming, you know, a hyperledger, but really bringing them into the Ethereum ecosystem. No offense, the hyperledger.

And that's, and that's probably going to be like the, the first place we see sort of more arbitram chains is because that's kind of like the, that's kind of the first, the question with more arbitral change is always like, who wants to have a fiefdom? And that's kind of like, and that, and the answer is the first people to want a thiefdom are going to, are going to be sort of the, you know, the companies that kind of want to have sort of that, that, that landscape to themselves and kind of then invite people in as opposed to kind of this like very shared landscape, which is the arbitrage from one chain. And it makes a lot of sense also, right? Because, you know, we mentioned the beginning. We have ether scan supporting us. We have Alchemy supporting us. You know, if I'm just a

user that wants to spit up my own roll of chain, so there's a lot of work to get to get to support from the infrastructure. You know, chain link chain is not going to support if I, you know, if random user decides they would launch an arbitrage and roll-up chain, it's not going to support that. However, if like Fortune 500 company, you know, has supports their chain, they'll be, they'll have an easier job getting the infrastructure on board, which is why I think those will fundamentally, I think will be community-driven long-term, but I think some of the next arbitrariness chains you'll see are really some enterprise chains. Well said, guys, this is an open financial system for the world. If you are

Wells Fargo, J.P. Morgan, a big bank. You can get involved by spinning up a roll-up chain. Why not? We just don't want our core protocols, base layers to be corruptible, but you are certainly invited to the party as well. You just have to swear fealty to Ethereum and Ether. But why not spin up a central bank digital currency in something like roll up? There's a really interesting canvas of opportunities in front of us. Stephen Harry, thank you so much for joining us and exploring this with us. Congrats on the launch. We're looking forward to cutting the tape on that theme park and having Defi users enter soon. Likewise, thanks so much for having us. Thank you.

Thanks, guys. All right. Risk and disclaimers, of course, ETH is risky. Crypto is risky. Those rides we were talking about, Defi, they're risky as well. You could lose what you put in. But we are headed west. This is the frontier.

It's not for everyone. But thanks for joining us on Bankless.