$ARB Airdrop & Arbitrum Governance Launch with Steven Goldfeder & Harry Kalodner

Wen Arbitrum token?! We've been asking CEO, Steven Goldfeder, and CTO Harry Kalodner this exact question each time they've been on Bankless. We're sad, but also overly delighted that, that question has officially been answered. Arbitrum's token $ARB will officially be airdropped later this week. In this episode, we dive into all of the juicy details of the airdrop and Arbitrum's plans for the future. ------ 🚀 JOIN BANKLESS PREMIUM: https://www.bankless.com/join ------ BANKLESS SPONSOR TOOLS: ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://bankless.cc/kraken 🦄UNISWAP | ON-CHAIN MARKETPLACE https://bankless.cc/uniswap 👻 PHANTOM | FRIENDLY MULTICHAIN WALLET https://bankless.cc/phantom-waitlist 🦊METAMASK LEARN | HELPFUL WEB3 RESOURCE https://bankless.cc/MetaMask 🚁 EARNIFI | CLAIM YOUR UNCLAIMED AIRDROPS https://bankless.cc/earnifi ----- Timestamps: 0:00 Intro 4:44 Wen Token? 8:30 Why Now? 11:52 Token Distribution & Treasury 20:12 Governance 26:11 Token Eligibility 35:08 Protocol Guild 38:55 Arbitrum Constitution 44:52 Rollup Decentralization 49:10 Orbits & Layer 3s 57:05 What's Next for Abitrum? 1:01:55 Closing & Disclaimers ----- Resources: Arbitrum https://twitter.com/arbitrum ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://www.bankless.com/disclosures

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:15Ryan Sean Adams?

  It is a big day for the Bankless Nation. We've got a special episode for you to celebrate the news. Arbitrum is dropping a token, the ARB token. We're going to talk about that and many of the announcements from today. David, who do we have on?

• 0:30David Hoffman?

  We have two of the co-founders of Arbitrum, Steven Goldfeder and Harry Kalodner. If you are familiar with the Arbitrum ecosystem, these men need no introductions. They have been with Arbitrum since day one, and the day has finally arrived. I think today is unofficially going to go down in Ethereum history as Arbitrum Day, or at least Arbitrum Token Day.

• 0:51Ryan Sean Adams?

  Every March 16th?

• 0:53David Hoffman?

  Every March 16th. We'll remember it today. Well, it is a big day because, I mean, of course, we all like to talk about tokens. Tokens are a very big deal. People love to talk about tokens.

• 1:01Ryan Sean Adams?

  More than that.

• 1:02David Hoffman?

  It's not the only announcement that Arbitrum is bringing to the table today. There are other things that we must discuss. So there is the Arbitrum Constitution. There is these cool things called Arbitrum Orbits. And these things all are what the Arbitrum token governs over. Remember, these are responsibility tokens, and now there are things to be responsible over. And there is a way for people to express that responsibility, which is the token that we all know and love, the A-R-B token. And that is what's happening today.

• 1:34Ryan Sean Adams?

  Well, I can't wait to accept my responsibility, and I can't wait to dive into this episode. Guys, we will be right back into the episode with Steven and Harry. But before we do, we want to thank the sponsors that made this possible, including Kraken, our number one recommended exchange, the exchange that didn't let you down in 2022.

• 1:54David Hoffman?

  Kraken has been a leader in the crypto industry for the last 12 years. Dedicated to accelerating the global adoption of crypto, Kraken puts an emphasis on security, transparency, and client support, which is why over 9 million clients have come to love Kraken's products. Whether you're a beginner or a pro, the Kraken UX is simple, intuitive, and frictionless, making the Kraken app a great place for all to get involved and learn about crypto. For those with experience, the redesigned Kraken Pro app and web experience is completely customizable to your trading needs, integrating key trading features into one seamless interface. Kraken has a 24/7, 365 client support team that is globally recognized. Kraken support is available wherever, whenever you need them, by phone, chat, or email. And for all of you NFT-ers out there,

• 2:38David Hoffman?

  the brand-new Kraken NFT beta platform gives you the best NFT trading experience possible: rarity rankings, no gas fees, and the ability to buy an NFT straight with cash. Does your crypto exchange prioritize its customers the way that Kraken does? And if not, sign up with Kraken at kraken.com/banklist. Learning about crypto is hard, until now. Introducing Metamask Learn, an open educational platform about crypto, Web3, self-custody, wallet management, and all the other topics needed to onboard people into this crazy world of crypto. Metamask Learn is an interactive platform, with each lesson offering a simulation for the task at hand, giving you actual, practical experience for navigating Web3. The purpose of Metamask Learn is to teach people the basics of self-custody and wallet security in a safe environment.

• 3:23David Hoffman?

  And while Metamask Learn always takes the time to define Web3-specific vocabulary, it is still a jargon-free experience for the crypto-curious user. Friendly, not scary. Metamask Learn is available in 10 languages, with more to be added soon, and it's meant to cater to a global Web3 audience. So, are you tired of having to explain crypto concepts to your friends? Go to learn.metamask.io and add Metamask Learn to your guides to get onboarded into the world of Web3. Arbitrum One is pioneering the world of secure Ethereum scalability and is continuing to accelerate the Web3 landscape. Hundreds of projects have already deployed on Arbitrum One, producing flourishing DeFi and NFT ecosystems. With the recent addition of Arbitrum Nova,

• 4:05David Hoffman?

  gaming and social dApps like Reddit are also now calling Arbitrum home. Both Arbitrum One and Nova leverage the security and decentralization of Ethereum and provide a builder experience that's intuitive, familiar, and fully EVM compatible. On Arbitrum, both builders and users will experience faster transaction speeds with significantly lower gas fees. With Arbitrum's recent migration to Arbitrum Nitro, it's also now 10 times faster than before. Visit arbitrum.io, where you can join the community, dive into the developer docs, bridge your assets, and start building your first app. With Arbitrum, experience Web3 development the way it was meant to be: secure, fast, cheap, and friction-free.

• 4:44Ryan Sean Adams?

  Hey, Bankless Nation. We have Harry and Stephen on this Arbitrum Day. Happy Arb Day, guys. It is great to have you back on Bankless. We've heard you got a few things to announce, so we're super excited to have you on. How's it going?

• 4:57David Hoffman?

  It's good. Happy Arb Day. Thanks for having us on here.

• 4:59Ryan Sean Adams?

  All right, so every time you come on, we ask the exact same question at some point during the conversation. Usually we save it to the end. Today, I'm going to bring it to the very front of this episode. Wen token? Wen Arbitrum token?

• 5:15David Hoffman?

  March 23rd. Did you guys not see the news?

• 5:22Ryan Sean Adams?

  Tell us about it. Where should we begin?

• 5:23David Hoffman?

  Congratulations, guys.

• 5:24Ryan Sean Adams?

  Yeah, congrats.

• 5:25David Hoffman?

  Yeah, I'm sure this has been a long time coming, of course. So Stephen, Harry, we were on a Twitter space today, so people that were tuning into that Twitter space as well, they might hear a rendition of these same questions. So, when was it known that a token would exist? And then, so that's the first question. Second question, when did you know that it was going to be launched in March 23rd?

• 5:49Speaker 02

  Yeah, so.

• 5:52Speaker 02

  We, it's funny, because if you look back like a bunch of years back, we were vehemently against a token. I'd love to post this like little snippet of Ed. Uh, I think it's on maybe twenty twenty or so where Ed said there are no plans to launch a token in Discord. And that was the truth at that time. Uh, for us, you know, the, it was really a technical. Decision that drove us, we realized as, as these, you know, if you went back in history, like the whole vision of what Arbitrum was, was, was different. You know, when they were like, uh, through the Arbitrum paper, there was, there, every chain was an app chain. So as the vision emerged, and there was like one. Public chain, um, for many, for many applications, for many projects, it became clear that decentralized governance was the only way.

• 6:30Speaker 02

  Um, you know, to, to actually have a secure decentralized layer two. Again, in the app chain world, everyone could just control their own, their own environment. But in this shared environment, you know, it was clear to us that a token plays in a very important role to decentralization. So I think it was a gradual process over time, but probably sometime, I would say maybe. Uh, probably in, in the year and a half, two years ago is when we called last and realized that. Um, at some point in the right time, when the technology is ready to be decentralized, um, this is an important step towards decentralization. When do we know? It was March twenty third. We've been targeting this vicinity for, for a while, um. But, um, it was on, was only, uh, in the last, you know, week or two that we actually honed in on, on this day.

• 7:15Speaker 02

  Um, and, you know, part of it is, yeah, there was a lot, a lot of turmoil earlier on. We wanted to make sure that there wasn't, uh. And the world wasn't failing on the day we did it as well. So, um, but, uh. You know, probably in the last, uh, we can have two weeks is when we really honed in on, on this day and plan for this day.

• 7:31David Hoffman?

  Beautiful. And, and yeah, go ahead, Harry.

• 7:34Speaker 03

  This is the, the other thing there being, I think a lot, you know, there, there are a lot of projects out there that kind of. Um, and I don't mean in the L Ts, I just mean in general where they kind of announce, announce token plans. And then there is kind of like a, a long, long, long journey to actually sort of like. Execute on those plans, whereas I think kind of from the beginning, we felt as though like. If we're, if we're gonna do the thing, we're, we're gonna do the thing. Um, and sort of like, you know, take it seriously and like come at it with kind of, you know, fully prepared, which was kind of, you know, I think critically important for us.

• 8:06David Hoffman?

  Mm hmm. I remember just talking to people out in the Twitter sphere and in various discords that y'all waited long enough that some people had like given up hope that Arbitrum would ever issue a token. And that's when I said, that's the moment that they will issue a token. When all, when all hope seems lost is when the token will arrive. Uh, and it seems to be that, that today is, is, is the day. I'm Steven, Harry, I'm wondering if you can kind of just like place us in history for Arbitrum, right? There's like, and also Ethereum history, right? And so it's, it's 2023 in Ethereum. Uh, we have 4844 ish around the corner. We have understood Ethereum to have this rollup centric roadmap. Then in Arbitrum history, we have, you know, Arbitrum Nitro is launched. We have Arbitrum Nova.

• 8:51David Hoffman?

  There's other future things in Arbitrum, uh, on the Arbitrum roadmap. Why, why is now the right time for Arbitrum? I go of all, of all times, of all milestones that Arbitrum could achieve, why is this the right milestone for the Arbitrum token to, to arrive, right? Why now?

• 9:09Speaker 02

  Uh, yeah, so it really falls into the right place in the technical roadmap. So you mentioned Nitro. Nitro was a critical upgrade, an important upgrade, an upgrade that gave us better compression, but for users, better throughput and lower fees. And really allowed us, allowed Arbitrum to handle the capacity that's, that's come to it. Yesterday, uh, anecdotally, um, we had Arbitrum, Arbitrum one had about 40 TPS sustained for a while. I think someone was like, uh, trying to test, test the waters there. And, um, so Nitro is really a critical component to, uh, making sure that Arbitrum could handle the traffic that's, that's coming today and the traffic that we imagine, uh, will continue to steadily increase

• 9:53Speaker 02

  in the future, a few months after Nitro. So I think it was in November, which is a few months ago.

• 10:00Speaker 02

  You know, we announced that about a dozen institutional validators have been validating the Arbitrum one, have agreed to validate the Arbitrum one chain and then included companies like Unit4T, Tenvia Coinbase, Ethereum Foundation, Google Cloud, really, really strong validator set, which was a very important step in the decentralization. They were added to the whitelist for the validators and they are providing security to the chain. So naturally, the next step for us was, okay, so there are independent validators, there is a fraud proof mechanism that actually gives the chain the connection to Ethereum. Now is the time to give up chain ownership and we had off-chain labs, don't want to have control over the chain. We want to give this chain to the DAO and to the community and it was a natural

• 10:43Speaker 02

  progression. Now there is this mature technology that is, you know, validated by roughly a dozen independent parties and it made sense to remove the, the, the most glaring remaining point of centralization was the ownership of the chain. And some people might, might ask like, well, why don't you just get rid of the ownership of the chain? Like you don't need an owner, the chain works. It has, and the answer for that is upgradability. An upgradability can be for new features of a DAO should choose to, choose to, uh, choose to, uh, deploy on the chain, but also it's for, you know, in emergency situations where there's, uh, hopefully not, but a security incident and, um, the chain needs to be upgraded away from that. So you have these two things that are sort of in, uh, you know, in conflict a little

• 11:29Speaker 02

  bit. On the one hand, you want someone to be able to upgrade the chain. On the other hand, we don't want there to be any centralized entities to have that power. And the natural solution is don't have a centralized entity, but give that power to the DAO, to the community. And this was the largest point of central, of centralization remaining of the chain. And naturally it was the, it was the one to tackle now.

• 11:51David Hoffman?

  Beautiful, beautiful. I want to get into some of the details of the actual Arbitrum token, the actual airdrop distribution and airdrop criteria. So I'm going to share my screen here and pull up this pie chart. And I'm wondering, Steven, if you could just walk us through this pie chart, right? So we got a various, a various set of participants here, investors, team and future team plus advisors, DAOs and Arbitrum ecosystem, individual wallets and DAO treasuries. So let's start with individual wallets, because that is, you know, quote unquote, the airdrop. Can we, can we start there? And we'll walk through this pie chart and then we'll go into how people became eligible for the airdrop.

• 12:28Speaker 02

  Absolutely. So individual wallets, like you said, is the typical airdrop. Those are the tokens that will go to user wallets. These are Arbitrum users and we can, I'll explain soon, or, you know, we can get into what the criteria is, how they're eligible, but fundamentally look at different types of usage in the chain and try to find, try to find the real users and eliminate some of the Cibels or the airdrop farmers to get to, you know, because they deal, you know, remember, the point is to give governance power to the user, to the community. You want to really get the actual users that are invested in the protocol to be represented. I'll go clockwise, I guess. The DAO treasury is next. That's also a community portion. It goes

• 13:12Speaker 02

  to the community fundamentally, but it goes to the DAO treasury. It's not given out in the airdrop. That will be used to fund the DAO over time, given to the community via grant programs. Part of that will also be a discretionary budget to the foundation, which will be proposed in AIP1, which is already proposed to give $750 million, a million tokens, sorry, 750 million ARP tokens to the, to the foundation. And the foundation will be able to do discretionary grant programs as well. Again, all approved by the DAO, but, you know, should it be approved by the DAO AIP1, but gives the foundation an operating budget as well to execute on the will of DAO hire people, et cetera, to do that.

• 13:55Speaker 02

  Um. The next bucket is team and future team and advisors, and this is basically um current and future uh people that are affiliated with off-chain labs, which is the initial company that built that built Arbitrum and um and also future employees of off-chain labs, there is, you know, will will also uh be eligible for for upside there. So there's a a bucket reserve for them too, and that that's um that's uh twenty twenty six point nine four percent. And then investors, these are the Arbitrum investors and the people um uh sorry, the off-chain labs investors, we raised three funding rounds uh to date, uh a series, uh a seed round, a series A and a series B.

• 14:35Speaker 02

  And um all those investors decide for their equity, which they'll keep, uh will also get token um token tokens. Um and it's a seventeen point five three percent of what they get. It's important, though, for these two, I just want to clarify. Whereas the airdrop, which we discussed, that will be available March twenty third, users will be able to claim it, uh transfer it to what they want with it. The investors and the team portion uh have some more restrictions attached to them. And uh number one is they are locked up. It's a four-year lockup with a one-year cliff. So what that means is um for the first year, their tokens will remain locked and no one will no one will get any will get any of them. Come the first, the one the first anniversary,

• 15:15Speaker 02

  um they will get one quarter of their tokens, and then they'll gradually, every month, um uh the the remainder will vest uh for the next three years. So four years, first year, nothing, then there's sort of a large amount, uh which is a for everything they would have gotten monthly over the first year, given them at the end of the first year, and then monthly uh from then on, that's true for investors, and that's true for the uh team and future team uh bucket as well. Uh the second uh restriction uh on the team is we've instructed everyone at off-chain labs not to vote uh directly with their tokens. Um but to really empower the community and increase the community, say, by going through the delegation process, and this will be

• 15:57Speaker 02

  uh part of the claiming process will be the ability to delegate tokens to community members, so the team will not be allowed to vote their tokens themselves, but they will be encouraged to delegate them to delegate them to community members that uh apply them for themselves as delegates. Uh, the next, uh, last slice, I guess, is the Dow airdrop. And this is um, a really interesting um, part of the airdrop, you know, we consider it part of the airdrop as well, but it doesn't go to individual users. Instead, it goes to DAOs in the arbitrum ecosystem, uh, so arbitrum ecosystem projects that have DAOs that have their own communities. And the idea is the individual, you know, we can talk about eligibility criteria, but the individual, uh, while it's, you know, will

• 16:39Speaker 02

  you can't ever be perfect. And, uh, we at Optician Labs, together with uh, the Arbitrum Foundation, as well as Nansen, worked very hard over the course of many months, trying to build criteria that sort of optimize for getting a large number of users, but also giving them something meaningful. And these things are in conflict, right? You can, you can try to give every user every touch of the chain, and then everyone gets something very little, or you can try to focus on um, a, you know, a smaller, but still significant set of users and try to give them something, um, more significant. Um, but of course, there will always be people that are missed. For example, someone that recently started using Arbitrum might only have a transaction or two, and they might not be eligible for the airdrop or for the individual airdrop. And it's hard to, you know, discern from them sometimes from an airdrop farmer.

• 17:20Speaker 02

  And so this gets a little bit difficult. So one thing, uh, that we've done is the Dow airdrop, which gives the tokens to these DAOs and they can decide how they distribute and use those tokens and how ultimately their community gets the benefit of those tokens. So another distribution channel, um, but but ultimately from communities that know their users much more intimately than those designing the airdrop for the entirety of the chain does, uh, do. So uh, much more targeted, um, airdrop as well. Together, those two buckets make up the airdrop. So if you look at the pie chart, though, um, that little one and the two next to it, those are the community portion, portion of the, of the, uh, of the, uh, of the distribution.

• 18:04Speaker 02

  And the left side is the, um, sort of what they call insider, which is investors, team, future team advisors. And you can see that of the majority of the tokens, um, roughly 56% will go to the community. Um, 12.75% initially, and then over time, um, more via the Dow Treasury.

• 18:26David Hoffman?

  Yeah, and this DAOs in the Arbitrum ecosystem airdrop, I think is actually particularly interesting because I don't think we've particularly seen that before. And this is actually a prediction that I made. So I'm going to go ahead and give myself a small pat on the back here that Arbitrum was sufficiently,

• 18:42David Hoffman?

  as a community, as an ecosystem, as its own ecosystem is large enough that there were actually now DAOs inside of Arbitrum that have their own native communities. And so I think really what this is meant to do is giving certain power over to the DAOs to decide from themselves who and how they should distribute the last of the arb tokens. And so here, I'm glad you went counterclockwise from the individual wallets because we could end up there. And I also just wanted to just double tap on the DAO treasury, the 43%, which I think is, yeah, the largest part of that supply here. This is really just about empowering the community with future tokens to do future things, right?

• 19:25David Hoffman?

  And so to me, I see the the individual wallets and the DAOs and the Arbitrum ecosystem as rewarding past behavior. And then the DAO treasury is like, all right, well, this is for future growth of the ecosystem, future allocations towards whatever the community decides. And the DAO treasury will be up to the community, right? And is that the right idea here?

• 19:46Speaker 02

  Absolutely, yeah. The DAO treasury will be fully up to the community to allocate. And, you know, that's, it belongs to the community. It's given to the community and the community will have to say where it goes over time. And yeah, that's, we expect the community to, you know, do very interesting things and build the Arbitrum ecosystem and enact the best interest of the Arbitrum ecosystem with its tokens.

• 20:11Ryan Sean Adams?

  So this is a governance token, which also brings the question of what exactly in the Arbitrum ecosystem does this token govern over? And so I think you were saying earlier, Stephen, that upgrades is a key feature, right? If you want to have some sort of human-driven upgrade, then there requires some sort of governance decision and that governance can have degrees of centralization or decentralization. This makes it more decentralized. But what exactly are they governing over? What are they kind of sovereign over? Is it the Arbitrum one chain? Is it Arbitrum Nova? Is it anything else beyond that?

• 20:51Speaker 02

  Yeah, so it's Arbitrum one and Arbitrum Nova. So actually, an interesting detail. The actual governance of voting will happen in Arbitrum one, but it will govern both Arbitrum one and Arbitrum Nova. And you sort of want the voting to be in one place because imagine that there is stuff going on in one and Nova. You don't want users to have to move over their tokens. So all the, you know, all the, all those users that want to take place in either of the governance will happen in Arbitrum one. But fundamentally, it will govern both of those chains. And it could be that the DAO will adopt a new chain to govern over time. You mentioned before earlier, and I'm sure we'll get into later that part of this announcement was making it easy for people to launch their own layer threes permissionlessly. That doesn't mean the DAO will govern them. If you actually want the DAO to say, hey, take ownership and own this chain, that would obviously require the DAO to agree to that.

• 21:34Speaker 02

  But the other thing that the other two big items that that it governs is the arbitrage, you know, the, the direction of the arbitrage ecosystem via its, its technologies, so via upgrades, but also via the spending and aligning, right? So it can foster the ecosystem by giving grants or trying to align with other projects and other developers. You know, today, we off-chain labs, what is our role? We're a service provider to the DAO. If the DAO asks us to build a feature and we know how to build that, we'll build it. You know, we, but fundamentally, we're servicing the DAO. I imagine over time that will become a more competitive space, but in a good sense, right? There will be others as well that want to build technology for the Arbitrum ecosystem. You know, we don't have a privileged role there and those tokens will be able to align with other service providers as well.

• 22:20Speaker 02

  And the last one, which I touched on, which I think is really interesting, is the ability, the DAO will have the ability to license additional layer two chains. So this is a bit of a nuance. There are two parts of Arbitrum Orbit. One is the layer three chains and layer three chains. These are, these are like, these are rollups or any trust chains. It can be either one of our technologies that settle onto a different Arbitrum chain. That's approved by the DAO, so like Arbitrum 1, Arbitrum Nova, those are permissionless, open, you can, without going to the DAO, without asking anyone, by nature of the license that exists today, uh, go ahead and launch your own Layer 3 chain, uh, you can modify the code, you can customize the chain to do really whatever you want. Um, but it may be a time where someone says, I don't want a Layer 3 chain,

• 23:04Speaker 02

  I want a Layer 2 chain. And the DAO might say, you know, one might say, hey, does it make sense for the DAO to share, and Arbitrum has best-in-class technology, does it make sense for the DAO to share this with a different Layer 2 chain? Is that competitive? Is that a good idea? And different people have different, this is a deep philosophical argument, and, and you know, many people have different opinions on this. But fundamentally, our, our thought was, it shouldn't be our opinion on this, it's a, it's a controversial topic, it should be the community's opinion. So the community, via DAO governance, will have the ability to launch, to license other L2 chains on Ethereum. One of the principles of the DAO, though, that is Ethereum-aligned, if, in the constitution, there's a series of values listed, and one of them is Ethereum alignment. So it will, um,

• 23:45Speaker 02

  it will, by nature of that, of that constitutional, uh, um, value, uh, look to approve Layer 2s that are on Ethereum, but whether or not it proves that it is fully, and grants that license is fully in the discretion of the DAO.

• 23:58Ryan Sean Adams?

  So just to make sure, I can, uh, repeat back what I heard and understand. So if, if I want to launch 3, then that is completely permissionless. I can just go do that on top of, um, Arbitrum 1 or Arbitrum Nitro. If I want, is that correct so far?

• 24:14Speaker 02

  Yes, Arbitrum 1 or Nova, yes.

• 24:16Ryan Sean Adams?

  Or Nova, excuse me. And if I want to, um, if I want to launch my own chain using Arbitrum technology, then it goes to arb DAO vote, basically. It goes to kind of token vote for this.

• 24:30Speaker 02

  So, yeah, your own Layer 2 chain, your own Layer 2 chain, yeah, exactly. Your own Layer 2 chain that settles directly to Ethereum, um, that's basically equivalent to Arbitrum 1 in terms of where it sits, that would have to, uh, be proposed to the DAO, and then it would be up to the DAO to decide whether it wants to grant that license or not.

• 24:47Ryan Sean Adams?

  Is the arb token being used as, um, you know, to pay for gas fees or anything else? Is, is, has that changed? Or is the Arbitrum ecosystem still using ETH as its, uh, unit of account and exchange here?

• 25:00Speaker 02

  That has not changed and that's, you know, enshrined one of the ETH alignment values enshrined in trying to the constitution is that that won't change. ETH is the gas token of the chains and the arb token will not be used for that as enshrined in the constitution.

• 25:18Speaker 03

  By the way, just just to kind of quickly circle back to that first category, just because to expand slightly, you know, protocol upgrades and kind of protocol control, because I think it's useful to sort of unpack it a little. Since it sounds relatively dry, but I think there's a lot of stuff that looks pretty interesting. So that includes kind of permissioning over who who is validating the chain and adding validators. It includes control over who actually runs the sequencer.

• 25:45Speaker 03

  Potentially kind of, you know, control over over sort of alterations to kind of how how kind of the sequencer handles things like like strategy around MEV. It controls certainly kind of protocol upgrades and sort of to what degree sort of new EIPs are adopted. So there's kind of a huge amount of kind of pretty, pretty important control there where where the DAO will will be kind of fundamentally in the driver's seat.

• 26:12David Hoffman?

  So guys, I want to get into a little bit of the eligibility for how people got their tokens. And one thing we we didn't talk about on the Twitter space this morning was how difficult it was to prune away all of the farmers. But I'm going to load up the this website here, this brand new Spiffy website, Arbitrum Dow Foundation, which is where you go to check your eligibility. So I'm going to go ahead and hit this button and I've got a wallet loaded up here and I've got 3,125 tokens. And I think these are all the categories here and each one of these categories has different teams. And Stephen, if you don't mind us walking through, you can speed run this pretty quickly, but just like sort of the the strategy here for how these these tiers were selected and and then some of the strategy also pruning away all of the farmers.

• 26:57David Hoffman?

  Can you just talk about the the strategy for eligibility here?

• 27:00Speaker 02

  Yeah, so um you know, bridging funds is obviously one of the key key metrics uh that that we use um which is do you have funds on the network and you'll see also these these top ones are for Arbitrum one. Mm hmm. Uh so transactions over time. So what that means is um you know uh how this is another way to see real real sustained users from users that um um may may uh come and go like some users sometimes do their transactions over a day and they come and and that you know that might be typical of an era of farm where they come they they transact once and they never come back but users that you know transact over two months or even more that that's some sustained usage of the chain and it's reasons to to believe that this is a more aligned user.

• 27:44Speaker 02

  Um transaction um you know frequency and interaction that says uh how many transactions or how many smart contracts if you know in a single transaction to want to interact with which again goes to um be a a you know a metric of how deep was the user of the of the chain was it a single interaction was it a more much more complex interaction there are different levels of that transaction value is exactly what it sounds like um and the idea being that um it's not the only category because we don't want to over you know over emphasize that there are ways to get larger draws by by using lower value but one one input is how much value was transacted and more more points are given for for more um assets bridge Arbitrum one just how much how much did one did one bridge

• 28:25Speaker 02

  and then uh the same thing those are for Arbitrum one Arbitrum Nova and the reason by the way about Arbitrum Nova it's not that it's a less important chain it's just it's a chain that had a much uh there's a smaller life life cycle it's it's only been around since August so it has a sort of uh minimized uh criteria which is um you know a single a single point system that sort of mashes in whether or not one interacted in Arbitrum Nova. All these are added up to a point system and we have it in our docs to conversion and um. There are also ways that people can can lose points, right? Those are sort of the positive ways. But if people do certain things like create, you know, pa- patterns that look very much like civils and farming, they can lose points as well.

• 29:06Speaker 02

  And so, uh, again, the idea being looking to align to the real users, not those that were, uh, not those that were give to give the governance power to the real users, not those that were just trying to farm the airdrop. And all those go ahead, go into a criteria, uh, there's a set of points. And the nice thing is, so I mentioned that auction labs worked with the Arbitrum Foundation and Nansen with this. Nansen, um, is actually putting out, I think, a, a large blog post, uh, on this and their process. And we've worked very closely together and we're also publishing, actually, we've already published all the data around this. So it's not like this opaque box, like these are the criteria. These are the categories are pretty broad and any user that's so inclined and so technically inclined can go ahead and actually do the analysis themselves and re, you know, repurpose the, repeat the analysis and say,

• 29:50Speaker 02

  okay, this is actually correct. Um, this is the amount of points that I have. And this is the, uh, this was done correctly and fairly.

• 29:57Ryan Sean Adams?

  I always think it's funny, we've come on an awful long way since the, the Uniswap airdrop, haven't we? Which is basically, did you, did you use Uniswap? Okay, you're getting tokens. Okay. Uh, now that would be game, that would be farm, that would be impossible to do. And so we're much more complicated and, uh, it, it sounds like the criteria you, you guys, uh, put forth was just, um, necessarily complicated to kind of wean out all of the, the farmers and, uh, the mercenaries and get to the actual users in, in the community. Uniswap had it real easy. But, but I almost wonder is like, um, you know, so this is obviously open source. This is posted, right? Guess what happens? They, they, they adapt, they adopt for the next one. I mean, a year or two later, the next, uh, airdrops are going to have to get even more complicated still.

• 30:42Ryan Sean Adams?

  Uh, that just definitely seems to be the trend, but, but well done on the, on the work to kind of, uh, weed out and, uh, focus on the, the good users here.

• 30:51Speaker 02

  One thing I like though, which I think, you know, to, to counter that, which might be helpful is, so we didn't only give positive points from things that look good. We actually took away points and this might be a deterrent in the future. It's just like, you could have, you know, if you just didn't do the farming, you'd actually get more points and more tokens. So by nature of these additional activities, you lose. So maybe I hope for additional, you know, uh, airdrops, you know, the people might think twice and say, I actually may not only not be helping myself, I actually may be actively hurting myself by doing this. So that's, um, you know, we, we can only hope that, that, that might have some effect.

• 31:24Speaker 03

  It feels like an arms race.

• 31:26David Hoffman?

  Totally is. Definitely an arms race. Guys, there's a lot more to talk about. There's a new constitution. And the word constitution gets me up and going because it implies some sort of network state, some sort of community ownership. I think there's still a lot more to talk about with the phase of decentralization that Arbitrum is in, as well as things like the Committee of validators and the Security Council. And we've talked about Layer 3s at a high level, but I want to go into that a little bit more. But first, a moment to talk about some of these fantastic sponsors that make this show possible.

• 31:58David Hoffman?

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• 32:39David Hoffman?

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• 33:23David Hoffman?

  and also manage your NFT sale listings from inside the wallet. Phantom is, of course, a multi-chain wallet, but it makes chain management easy, displaying your transactions in a human-readable format with automatic warnings for malicious transactions or phishing websites. Phantom has already saved over 20,000 users from getting scammed or hacked. So get on the Phantom waitlist and be one of the first to access the multi-chain beta. There's a link in the show notes, or you can go to phantom.app waitlist to get access in late February. Hey Bankless Nation. If you're listening to this, it's because you're on the free Bankless RSS feed. Did you know that there's an ad-free version of Bankless that comes with the Bankless Premium subscription? No ads, just straight to the content. But that's just one of many things that a premium subscription gets you.

• 34:06David Hoffman?

  There's also the Token Report, a monthly bullish, bearish, neutral report on the hottest tokens of the month. And the regular updates from the Token Report go into the Token Bible, your first-stop shop for every token worth investigating in crypto. Bankless Premium also gets you a 30% discount to the Permissionless Conference, which means it basically just pays for itself. There's also the Airdrop Guide to make sure you don't miss a drop in 2023. But really, the best part about Bankless Premium is hanging out with me, Ryan, and the rest of the Bankless team in the Inner Circle Discord only for Premium members. Want the alpha? Check out Ben the Analyst's DGEN pit, where you can ask him questions about the Token Report. Got a question? I've got my own Q&A room for any questions that you might have. At Bankless, we have huge things planned for 2023,

• 34:50David Hoffman?

  including a new website with login with your Ethereum address capabilities. And we're super excited to ship what we are calling Bankless 2.0 soon TM. So if you want extra help exploring the frontier, subscribe to Bankless Premium. It's under 50 cents a day and provides a wealth of knowledge and support on your journey west. I'll see you in the Discord.

• 35:10David Hoffman?

  And we are back, because it's Arbitrum Day, talking all things Arbitrum, especially arb tokens. One thing that we missed, though, when we were talking about the token distribution, is that one particular guild, one particular DAO, got an token airdrop of the arb tokens. Steven, walk us through Protocol Guild and why it was determined that they should, whoever they are, should get some arb tokens. So what's Protocol Guild? Who are they and why did you decide to give them some tokens?

• 35:36Speaker 02

  Yeah, Protocol Guild is a collective of ETH core developers and contributors from really the Ethereum Foundation and around the ecosystem in a variety of companies. I think it's roughly 100 individuals, if I'm remembering correctly. And they do really important and often thankless and thankless.

• 35:57Speaker 02

  Sometimes, uh, you know, uh, really community work that's important for everyone. Um, and we definitely have benefited tremendously from their work, both by the fact Arbitrum uh is a is built on Ethereum and also um, you know, our the Arbitrum technology uses Gath, uh, uses pieces of the Ethereum codebase. And um, when designing the airdrop, I think the thought was the thought between us, an off-chain, another Arbitrum foundation and uh was, you know, this would is something that would make sense and is owed to them almost uh because of the fantastic work that they do and really um, we'd like to uh include them in the airdrop. That's that's uh, even though they're they're not technically eligible, right?

• 36:40Speaker 02

  They're not an Arbitrum DAO, they're not on Arbitrum. I'm actually not even sure how they're gonna have to figure out how to get their tokens because they are on Ethereum. So that's gonna be uh, you know, I'm sure I'm sure they'll get there. But um, they definitely didn't meet the official criteria. But again, when you when you think about the principle, the point of the Arbitrum governance and and distributing the airdrop is to put the governance, the power in the hands of individuals and people who um are in acting in the best interest and who better at the chain and will and will and will work to to um, you know, to to further the interests of Ethereum and Arbitrum. And who better to uh to have represented in governance than uh and the folks at Protocol Guild? So

• 37:19Ryan Sean Adams?

  Yeah.

• 37:20Speaker 02

  exceptionally, yeah.

• 37:21Ryan Sean Adams?

  Just to be clear uh to everyone, Steven, so Protocol Guild is working on general Ethereum public goods, right? Um, Ethereum infrastructure stuff related to Arbitrum, but not part of Arbitrum. It benefits the entire ecosystem. This is a group of of builders that are building that uh that public good. Um, and they are also a DAO as well. So it's very cool to see Layer Two step up and start to support the uh the OG Layer One Ethereum where all of this stuff is uh is built and originates.

• 37:56Speaker 02

  I I think that like start, I mean, well, for a long time, obviously, we've been kind of

• 38:01Speaker 03

  Deeply, you know, had a ton of respect for kind of Ethereum development and L1 development and, you know, in a personal capacity for a long time. I think that like our, our acquisition of Prismatic Labs last, uh, Oc- October now, maybe, um, really kind of like, you know, brought home, kind of getting the chance to sort of work with core developers on a kind of day-to-day basis, really sort of just drove home kind of this idea of this extremely tight alignment between Layer One, Layer Two, where we're all really solving the same problems and we're all kind of very, you know, interdependent on each other. And that kind of, you know, I, I think there's a lot of hope that sort of

• 38:42Speaker 03

  as the, as the Arbitrum DAO kind of grows and expands that that, and I think kind of one of the principles of the DAO is Ethereum alignment, um, to try to hopefully kind of main, maintain that ethos, uh, in, in perpetuity.

• 38:57David Hoffman?

  So one of the big stories here is, uh, the constitution. Arbitrum's got a constitution. Uh, and the only way that a constitution comes about, if there are things to govern over and people to govern whatever we're governing over. But, uh, Harry, you want to walk us through just like the, at a very high level, we could, we, uh, I think at some point, listeners and viewers will have to read the constitution for themselves, especially if they have their newfound responsibility. But just give us the, the ethos, the social contract that the, uh, Arbitrum constitution has set in stone for us. Does it start with we the people? Is that how we start this? We the, we the arbitonauts?

• 39:33Speaker 03

  Like, that's a, that's a lost opportunity. Yeah. I'm kicking myself now. Uh, come on, guys. This is supposed to be a good net. No.

• 39:42Speaker 03

  Yeah. I mean, I think, you know, um, it, it's funny. It's the last section in the constitution, but like, I, I, a, a large chunk of the constitution has to do with kind of very kind of technical details of the governance of the chain. Um, and kind of the idea of there's, there's kind of constitutional and non-constitutional proposals. There's kind of the different categories of actions have various different sort of pathways to going through. I think it's kind of relatively quite in line with kind of what people expect from how DAOs function. I think that like in the Ethereum ecosystem where people participate in a lot of DAOs, there's a lot of value in not forcing people to learn some completely new system every time. Um, and so kind of staying within sort of expectations in terms of kind of maximizing participation and, and understanding uh, was valuable. But then you get to the, uh, to the bottom.

• 40:27Speaker 03

  To the the community value section, which I think is kind of really important and is this kind of idea of like, what does it mean to be Arbitrum, which I think we hadn't really kind of talked about a ton in the past. We tend to be kind of relatively heads down building and kind of that's the sort of thing that requires sort of really sort of zooming out and and introspecting a lot. And I think kind of the the development of the of the foundation sort of found a a series of values that I think kind of really align the whole community. Ethereum alignment is number one there. That fundamentally kind of being being part of Ethereum is sort of the whole thing.

• 41:06Speaker 03

  There isn't really, it doesn't really make sense to kind of be be sort of a a roll up project without that, I think, in in my in my personal view. Sustainability is a really interesting one. That's kind of the second thing listed there. The idea being that like this is so off chain labs has been around for since I think 2018 now. That will soon look like nothing in the lifetime of the Dow. That fundamentally like this is building a structure that should survive. You know, decades, centuries, more. It's hard to know, but you know, having that long term vision is is kind of incredibly important. Secure, security is is fundamentally like the thing

• 41:50Speaker 03

  that makes rollups matter. And so kind of maintaining that as a central focus is kind of fundamentally just critically important. Socially and technically inclusive. The kind of fair launch ethos that we started with quite a while ago now, I think, has really just grown and spread in the Arbitrum community in a way that sort of having it be a like open welcoming place where kind of new projects and new people can enter easily and feel at home is is kind of just in, you know, incredibly important and kind of core to how people think about it. And that also goes to the last principle, kind of neutral and open. And then last, but certainly not least,

• 42:30Speaker 03

  user focused, that like fundamentally, all of this eventually comes down to the users and having Arbitrum be a place where people actually want to be and interact and and kind of live their lives, live their, you know, digital lives online. And like that really kind of, I think, sums up to me in a big way, kind of what all of this is about.

• 42:50Ryan Sean Adams?

  So the Arbitrum values Ethereum aligned, sustainable, and to me, that that means oriented towards the long term, secure, socially inclusive, technically inclusive, user focused, and neutral and open. Those are the values that this community stands for.

• 43:15David Hoffman?

  Big thumbs up.

• 43:17Ryan Sean Adams?

  We like those.

• 43:20David Hoffman?

  And it's also important that like, Harry, you said it, and I'll just like double tap on it really quick. Like, the reason why we need a constitution is that like, this ship is sailing. Like, this is you guys casting off this ecosystem to maintain itself. And so the internal, I don't know, like, rules and laws and self-regulation that you guys have at off-chain labs does not matter anymore. Like, this is now in the hands of the community. And so you, this is like this code of conduct, if you will, for the Arbitrum network state. And so this is really why we need something like this. It's like, hey, guys, this is what we stand for. This is what we value. This is what we want. And that can change with a constitutional update.

• 44:02Ryan Sean Adams?

  The bird has left the nest, right? It's like, they're, you know, it's set on its own course.

• 44:09Speaker 03

  What I really like about these principles is I feel like they're the sort of thing that's kind of obvious in hindsight. That when you see it written down, I, you know, at least I personally, I would not expect there to be kind of a lot of, you know, dissension and debate. I think that probably these are things that like, people in the Arbitrum ecosystem just kind of felt day to day, even if they hadn't sort of like put words to it.

• 44:30Ryan Sean Adams?

  It's almost like it's, it's more important for the future, right? Like, when you onboard the next, you know, 10 million people, and there's difficult decisions to make, then you can point back to the founding values of this thing. And you say, hey, we could, you could check that decision against these values. That's where it becomes more important to scale that culture.

• 44:50Speaker 03

  Exactly.

• 44:52David Hoffman?

  I think one of the last subjects we'll have to talk about is one of the things that Arbitrum governance can actually govern over, which is who validates the Arbitrum chain. And so this gets into the conversation of phases of decentralization of our rollups, which I think we all know in the Ethereum ecosystem is something that we can improve upon and do better. Ethereum critics really like to talk about how centralized our Layer 2s are. So Harry, can you walk us through what today means for the overall state of decentralization for Arbitrum and Layer 2s in general?

• 45:23Speaker 03

  Yeah, absolutely. So fundamentally, like you were saying, sort of rollups, the path to decentralization for rollups has been one that has taken time. It's kind of, we all wish that from day one, all of it had been perfectly decentralized, but obviously there's kind of, the tech is complicated. And Vitalik, some number of months ago now, time in crypto is very hard to deal with.

• 45:49Speaker 03

  Great, a great kind of template for how we kind of think about rollup decentralization. And I think kind of with this change, the state that the chain had been in, where kind of we still, and before and after this change, there's there's upgradability. But the great thing about the kind of movement over to the DAO is that the only sort of instant upgrade mechanism that is left is this entity called the Security Council, which is elected, which is selected through elections every six months by the DAO, and has 12 members with a nine-person threshold,

• 46:30Speaker 03

  where the members are from all sorts of organizations and all sorts of locations all over the world in order to create as kind of strong a set as possible. And that sort of decentralization is kind of key to the actual real security properties of the chain. Because fundamentally, in a lot of ways, security is your weakest link, and kind of strengthening up that link is sort of this critical step to being in stage one, where we are now, the second stage of decentralization, along with having working fraud proofs, which is of course something that we started with actually when we first launched the chain. So we had that one very early, but the kind of second tier of how we control upgradability, or how the DAO controls upgradability now, is kind of the big change today.

• 47:13Ryan Sean Adams?

  So Harry, you guys are at stage two of decentralizing the Arbitrum rollup then. And refresh listeners, so how many stages are there in Vitalik's model that he put together? And what's kind of the end state? How close are we to that?

• 47:27Speaker 03

  Yep. So it's actually, so we're in, it started with stage zero. We're now in stage one, which is the second. So Vitalik in a classic-

• 47:37Ryan Sean Adams?

  He's got to start with zero, right? Okay.

• 47:38Speaker 03

  Yeah.

• 47:39Ryan Sean Adams?

  He's being a decentralization hardass. He's just being a programmer, right? Like, you can't start at zero, don't they? Okay.

• 47:45Speaker 03

  Exactly. So kind of stage one is like I described, basically the combination of having working fraud proofs and having a kind of sufficiently large upgrade multi-sig with a kind of sufficiently decentralized and high threshold. And that's where we end up today. The last stage is basically kind of making good on sort of an even more decentralized promise. And the kind of, and getting to sort of the final state with the kind of two big tiers of which. One is completely permissionless validation, where kind of today the DAO controls who can validate.

• 48:24Speaker 03

  And but the goal would be that power is removed from the DAO because everybody can validate. So there's no need to permission it at all. And the second part is to remove instant upgrade ability, which there has been a lot of very interesting kind of conversations about sort of methods by which that can be done. There's this kind of a clear and difficult balance here in terms of ability to kind of respond to security risks in the system and kind of desire for sort of strong kind of trustlessness and decentralization. And it'll be kind of really interesting to see the DAO sort of explore those trade-offs and kind of find the best ways to sort of, you know, if you can, have the best of the best of both worlds

• 49:08Speaker 03

  as kind of things move forward and evolve.

• 49:10Ryan Sean Adams?

  Okay, so can we talk about this too? So we've got the arb token. We've got governance in place. So this entire ecosystem is more decentralized. We've got Arbitrum 1, we've got Arbitrum Nova. What are these things you were talking about called orbits? Is this related to the concept of layer 3? I feel like the entire concept of, I mean, just when crypto is getting its head wrapped around layer 2s, we're throwing layer 3s at them. And I want you guys to help us imagine what layer 3s will be like, what they can do. In the same way, wow, was it like a year and a half ago, two years ago, when you first

• 49:52Ryan Sean Adams?

  came on and Arbitrum was one of the very first layer 2s to kind of launch? And you're painting the picture, the two of you guys were painting the picture for the Bankless community of like, we're doing this thing called a layer 2. Here's what it's going to be like. And I remember being very excited and blown away by that episode. Are we looking at a similar type of event for layer 3s? What are layer 3s and are orbits related to them?

• 50:18Speaker 03

  Before we go into that, I was just thinking the amusement park metaphor.

• 50:21Ryan Sean Adams?

  Yes, that's right. We had this, so for Bankless listeners, if you remember this episode, God, when was that? I don't know. 2022 destroyed me from a timeline perspective.

• 50:31David Hoffman?

  2021, yeah, this episode was in 2021.

• 50:32Ryan Sean Adams?

  This was in 2021. It was like late August or September, I think. We had this analogy of a layer 2 was coming and, you know, the theme, it was like a theme park on Ethereum and we didn't have the rides open yet, but builders were going to go build the rides and let everyone in and it would be amazing. This is basically what we have. I mean, I look at the small brain community and the treasury ecosystem. I mean, these are the rides.

• 50:57David Hoffman?

  Who really want you to give an E, Brian.

• 50:58Ryan Sean Adams?

  They gotta earn it. They gotta earn it, all right? You gotta earn it with those likes. So, yeah, what's layer 3 going to be like? Is this like an amusement park inside of an amusement park? Like an underground type of experience that we can all go and use? Like, how is it going to be different?

• 51:18Speaker 02

  So one way to, I think, describe it is like a priority lane. That's, uh, you have projects that they wanna be on a secured by Ethereum. But they want, um, their own, uh, priority lane. They don't want to congest with others. They don't want to have share capacity with others. One of the coolest things about layer threes and layer twos is Arbitrum has roughly an order of magnitude, so like, so 10 times the capacity of Ethereum. Any layer three chain would itself have that same capacity as well. So these layer three chains have the same capacity as the chain that they're, that they're built on. And, um, what I see, and I can, in conversation with projects, who want this and why do they want this? It's a, it's a few different types of projects that want it. One is projects that are doing really, really well.

• 52:00Speaker 02

  For example, um, you know, this is like, there's been a lot of public conversation about Yuga Labs, where, you know, they had the other side launch and the congested Ethereum, and there were a lot of people saying, hey, you need your own, your own, your own, your own priority lane on Ethereum. That could be a layer two, but it could be a layer three as well, and they have their own priority lane. They get the security of Ethereum. They're in the Ethereum ecosystem. But they have priority capacity and app developers or chain developers, I should say, can customize this, right? So Yuga Labs or someone else could say, hey, uh, we're gonna launch a chain, a layer three, and anyone can launch on this chain, but it's sort of our ecosystem by branding, or they can actually lock that in and say, we're gonna launch a chain and the only contracts allowed on this chain are ones that are deployed by, by Yuga Labs.

• 52:41Speaker 02

  It could still be secured by Ethereum. It just wouldn't have permissionless, um, app, uh, application, uh, deploy, deployment on it. Those are because customizations that we've heard projects there. I'm using Yuga Labs as an example because it's in, you know, a public, a lot of public conversation around it, but those are some of the conversations we've had. And the other big one is a lot of times projects want to make their token the center of a particular chain. So whereas our values say Ethereum, ETH, Ethereum aligned and ETH will remain the token of the public chain. So Arbitrum One and Arbitrum Nova, uh, that doesn't mean that a different, uh, team that's building a layer three will say, hey, we want our token or their token, I should say, to be the fee token of this chain. And I think we'll see, we'll see a lot of that happen as well.

• 53:25Speaker 02

  That's, uh, you know, a conversation with teams. That's something that comes up as well, but I think. Again, it's either about wanting to build an ecosystem that's tailored for them or wanting to have that specific and reserved capacity for them. And layer three is, you know, you might say, oh, this sounds like it's good for everyone, like everyone should have their own chain. Why do we even have public chains? It's not the case, really, there's like, you know, for for some projects, it's it's good, but there's also you have to think about the infrastructure. Right, EtherScan, Chainlink, you know, node providers like Alchemy, if you're a QuickNode, et cetera, et cetera. Are they going to go ahead and support a, you know, hundreds or thousands of other chains? Probably not, they might support the big ones. So if you're sufficiently successful, you might be able to get that infrastructure.

• 54:07Speaker 02

  But there is a benefit of being on the public chains to have access to the public infrastructure and also to have access to the synchronous interactions. You might say, hey, I want to be on the chain where Uniswap is, like I my protocol taps into Uniswap liquidity. That's another, right? So it's not like a silver bullet, everyone wants their own chain. It's better, really, there are some developers and some applications, depending on who they want to be co-resident, co-located with, what their capacity is, et cetera. Whether or not it makes sense for them to have their own chain. But that's sort of the vision and why some of the projects that we've spoken to want this. And, you know, we're putting this out there just as as as as an option, a tool for developers. And the other thing is it's good for experimentation.

• 54:46Speaker 02

  Right, you know, there are EIPs that, you know, that are proposed, but not yet on Ethereum, sometimes controversial. You can go ahead and launch an Arbitrum L3 chain on mainnet and you do it in a way that, you know, that EIP, an experimental chain with with different changes and sort of run them in a mainnet environment, a sort of a mainnet test and environment. So a lot of, I think, room for innovation here and testing grounds as well for for changes that may make themselves into other chains, even Ethereum itself.

• 55:18Speaker 03

  I just want to like add a kind of, so when we launched Arbitrum one, I I think kind of the things that like I think were the coolest were the things we didn't see coming. Were just kind of like the innovative weird uses of the tech that just like, you know, who who who came up with that stuff? And, you know, I I really sort of am looking, hoping and looking forward to sort of that being the case with sort of arbitrary ability to use the Arbitrum codebase to deploy L3s. I I fully expect people to come up with some crazy ideas that we couldn't possibly think of right now, which I'm very excited for.

• 55:56David Hoffman?

  Right, and this is what happens, of course, when you put code out into, you know, the universe. People do crazy things, and this is kind of the cool thing that keeps crypto fun and interesting and weird, right? Like, you don't know what happens next, but that's also kind of the point. The only comparable that I really know about is Uniswap V3 code. It's under license for a certain amount of time. I think that time is like four years that we are one year into or something. And a DeFi app on the Ethereum Layer One Volt's Protocol made a submission to Uniswap DAO to use the Uniswap V3 license to use a Uniswap V3 code. Uniswap DAO said, "Yeah, you can use it." Because in the proposal, Volt's Protocol gave Uniswap 1% of their tokens.

• 56:38David Hoffman?

  And so that's what convinced the Uniswap DAO to vote, "Yes, you can use our code." And we don't know what comes next with this Arbitrum codebase. But now, the point is, is that it's in the hands of the Arbitrum token holders, because now the token exists. And so that weird, future, unknown state will be determined by the people that have all of the responsibility, which is what we are celebrating here today.

• 57:02Ryan Sean Adams?

  Responsibility, definitely. So guys, as we draw this to a close, I'm just curious. Like, this has been a huge moment, of course, and a lot has gone into bringing the Arbitrum ecosystem to this point. This is a distribution of responsibility. This is distribution of ownership. This is a distribution of governance. But what is next for Arbitrum after this? Like, are you excited about EIP4844? Is that a thing that's interesting or coming? Is, are kind of the blossoming of the Layer 3, is that what you're most excited about? Arbitrum Nova, is that a thing?

• 57:45Ryan Sean Adams?

  Like, what is the next thing the crypto community should look for from Arbitrum?

• 57:53Speaker 02

  Yeah, so I guess this is the first time we're on here where I say, you know, we don't have control over the answer of that question, which is the interesting part, right? Like fundamentally, I can tell you what excites me. So I'm very excited about EIP 4844. I'm also very excited and hope the Dow continues to take steps. I expect the Dow to decentralize and get rid of that whitelist, which we know, which you've mentioned, which is really one of the last steps of decentral, of decentralization. So those to me are are really excited in terms of

• 58:21Ryan Sean Adams?

  And why, why 4844 for people who aren't aware of what's going to happen there?

• 58:26Speaker 02

  Yeah, so 4844 will basically, so rollups like Arbitrum, but really all rollups, they put a lot of data on Ethereum, and that's critical to the security. So we talk a lot about the fraud proofs, but in order for the fraud proofs to work, and even actually for validity proofs as EK rollups, you need the transaction data in a compressed form put on Ethereum. And it turns out that that's actually the largest cost for, at least for Arbitrum and optimistic rollups, is just putting that data on Ethereum. And if you have, you know, a five cent transaction fee, a five cent transaction fee, the majority is actually just passed through to Ethereum to put data on chain. And what what EIP 4844 will do, will have a introduce a really

• 59:09Speaker 02

  targeted at rollups, a cheaper path to put data on chain. And lots of different, lots of different estimates out there about, you know, I don't want to get into that because I'm not entirely sure myself of what the, which is correct, and how much cheaper it will be. But it's fair to say it'll be many times cheaper and significantly reduce the cost of using rollups and really make Ethereum even more competitive with with other chains. You have the security, you have decentralization, you have the scalability that comes from layer two, but now we're talking about scalability that comes from layer one. And these two working together will really make the fees even lower.

• 59:45Ryan Sean Adams?

  Harry, how about you? What excites you?

• 59:48Speaker 03

  Yeah, yeah, I mean, I mean, you know, in a lot of ways, like, you know, certainly just like the unknown of like, what will, what will the future? I don't think the future has ever felt more kind of just unknown. Um, which, like, after four years now of kind of being, being in the company position and kind of stewarding the chain ourselves, it's kind of like really a great feeling to sort of not, you know, not be in that position anymore. Um, I think, you know, certainly like, you know, like Stephen said, 4844 is very exciting. I think for me, probably the thing I would list as most exciting is basically the kind of prospect of, of kind of finding a path to hit stage two of that decentralization roadmap.

• 1:00:31Speaker 03

  I think getting to, getting to stage one, I, I think was a lot harder than getting to stage two. Um, like, kind of, I think the general feeling is that sort of getting to stage two is a, is a like very feasible thing with some technical challenges, but like very much something that like is kind of very possible and, and sort of getting to that would obviously mean kind of actually making good, you know, when, when, when sort of Ethereum kind of created this image of, of a roll up centric future, it kind of like, you know, I view that it has almost created a debt that like the roll up protocols owed to like be worth being that future. And, and kind of getting to stage two would be making good on that promise.

• 1:01:15David Hoffman?

  Guys, I'm, I'm sad because this is the last time in this episode that anyone will have ever asked you when token. You'll never hear that again.

• 1:01:26Speaker 02

  The Twitter replies. So usually I can't speak without a billion of when tokens and now, uh, they've all gone away.

• 1:01:33David Hoffman?

  Bummer. We're in a different era.

• 1:01:35Speaker 03

  Or dinner. What was it, Stephen? Dinner?

• 1:01:38Speaker 02

  Oh, um, the main course.

• 1:01:40Speaker 03

  The main course.

• 1:01:43David Hoffman?

  Oh guys, well congratulations for getting all the way to this point. And thank you for being pioneers into the frontier and taking so many of us along with you. Thank you for having us as always. Thanks for having us.

• 1:01:54Ryan Sean Adams?

  Nation, you can go check your eligibility for the arb token at arbitrum.foundation. We'll include a link in the show notes as always. Recent disclaimers, none of this has been financial advice. Eth is risky, so is crypto, so are layer twos like Arbitrum. All of DeFi is, you could lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.

• 1:02:19David Hoffman?

  Ryan, they're all asking for it, man.

• 1:02:21Ryan Sean Adams?

  Wait, did we get 400? No, 248, nine likes. I think we need one more like before this happens.

• 1:02:28David Hoffman?

  Oh, it's coming in. Oh, they're liking it right now.

• 1:02:31Ryan Sean Adams?

  I don't see it.

• 1:02:32David Hoffman?

  They want, they want it.

• 1:02:33Ryan Sean Adams?

  Given the officials to go.

• 1:02:34David Hoffman?

  I'm not only am I watching the YouTube chat, but I'm also watching the small brains discord.

• 1:02:38Ryan Sean Adams?

  How do you say it? How do you say? Eee! All right, let's do it together. One, two, three. Eee!