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

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

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

• 0:02Ryan Sean Adams?

  Hey, Bankless Nation. Welcome to another State of the Nation episode. We've got a really interesting topic for you to cover. This is the first, I think, in crypto history, maybe Ethereum history. The acquisition of Prismatic Labs by Offchain Labs. This is Arbitrum, a Layer 2, acquiring an Ethereum core development team, a core client team. That's what we're here to talk about. David, what are we getting into today?

• 0:29David Hoffman?

  Yeah, I didn't know that this was possible. I don't think anyone would realize, like, oh, yeah, you could acquire a client. And so this is what we're going to be talking about today. Why exactly did Arbitrum acquire a client, a Layer 1 client? What does that do for Arbitrum? What does that do for Prismatic Labs and Prism? What is the future of Prism? Is Prism staying the same? Is it changing? What's the future of Arbitrum? Is that staying the same? Is that changing? And there's also some broader questions as well. I remember, Ryan, during the depths of the bear market, 2018 to 2020, the Ethereum world was plagued by how do we fund our open source software teams, our open source Layer 1s?

• 1:10David Hoffman?

  Does Arbitrum, with the acquisition of Prismatic Labs, bring an answer to that table? Do we like that answer? Are there costs and trade offs with that answer of a commercial entity acquiring a Layer 1 client team? So there's a discussion here. There's many, many other things to discuss. It's like, what does this do to the Arbitrum tech stack? And overall, what is the win-win between Prismatic Labs and Offchain Labs? So these are the things we are all going to explore here on the State of the Nation today.

• 1:40Ryan Sean Adams?

  Yeah, I think it's really interesting. I think maybe the answer to the question is Layer 2 will help fund the development of Layer 1. That seems to be what's going on today. Full disclosure, as we get in, we do these disclosures at the beginning of every episode. I invested in Arbitrum. I don't think David did. So David, you could play the role of a bad cop, I guess. Arbitrum is also currently a Bankless sponsor. Preston and David are super good friends and hang out a lot. David, did you write that in the agenda?

• 2:06David Hoffman?

  Yeah, that is my disclaimer.

• 2:07Ryan Sean Adams?

  All right, disclaimers. Okay. I guess that's a disclaimer. Maybe we should have a friends disclosure page, but David would have to basically put everyone in crypto because he loves everyone. Anyway, you can always find access to our disclosures in the show notes. We'll try to mention them at the top of every episode, but they're always published. bankless.com/disclosures. Also, before we get in, want to tell you about our friends and sponsors at Push. Want to know about something cool. So Push is an app for Ethereum, for Polygon as well, and it answers questions like this. David, have you ever woken up in the middle of the night and you've been like, oh, my God, is my ENS about to expire? Like the five, the 10 I have, like, hmm, when was the expiration date? Did I set that

• 2:49Ryan Sean Adams?

  for a year? Or was that like five years? Or even like questions like, is my collateral okay?

• 2:55David Hoffman?

  Right, yeah, that's the more DJN answers. Like, did you wake up in the morning like, am I liquidated?

• 3:00Ryan Sean Adams?

  Well, did you know Push actually provides you a way to get notified for when these things happen? So for example, Ethereum ENS name renewals, you can opt in using Push, connect to your wallet, download the browser extension, download the mobile app, and you can opt into all sorts of notifications, including MakerDAO. These are governance updates, but also collateral ranges as well. Is your Uniswap pool out of range? Have you stopped making money? You can get notified about that. David, what else should we tell them about Push?

• 3:32David Hoffman?

  Yeah, overall, it's just something we need to start to mimic the web 2 UX, something like web 2, that's what UX is what they've optimized for. And it's actually really hard to get push notifications out of the Ethereum protocol. These things don't really work very well. So that is why Push is here to cover that gap. And especially as we get into the world of the metaverse, where there are many, many, many other types of notifications coming down the pipeline to explain to us what's going on in this digital world we're building. We're going to need something like Push to actually push notifications to our mobile devices in a web three manner.

• 4:04Ryan Sean Adams?

  Sorry. Take it from a robot like me, you want robots working for you. You don't have to do all the work yourself. Hire them. So click the link to the show notes, you'll find out more about that. Okay. Why are we talking about this today, David? What is the overall significance and what should listeners pay attention to as we talk to Steven from Arbitrum and Off Chain Labs and Preston from Prismatic?

• 4:27David Hoffman?

  Yeah, overall, it's kind of what I said in the intro. There is, we perhaps have found an answer to perpetual Layer 1 client development. There are synergies between a Layer 2 who needs tech and needs software that's similar to Layer 1. And so there's actually some sort of elegance behind the acquisition of a Layer 1 client team by a Layer 2. How sustainable is this? Can other people copy this model? Are we actually incentivizing more client teams to be built if we can kind of show them that there might be a payday at the end of this? And how good is that? All of these things are important questions. Actually, Ryan, in my time at DevCon, asked Vitalik Buterin this question

• 5:09David Hoffman?

  in a little micro interview that is currently in the hands of the Bankless editors. So Vitalik's take will shortly be up on the Bankless YouTube.

• 5:16Ryan Sean Adams?

  Oh, you're not even gonna tell us?

• 5:18David Hoffman?

  No, no, I'm not gonna tell you. Yeah, I'm just teasing it. Because I was so chaotic that week that I can't remember what his answer was.

• 5:27Ryan Sean Adams?

  Well, I've been appropriately teased, sir, because I don't recall you mentioning it to me either. Guys, we'll be right back this episode with Steven and Preston, talking about Arbitrum's acquisition of Prismatic. But before we do, we want to thank the sponsors that made this episode possible.

• 5:44David Hoffman?

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• 6:28David Hoffman?

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• 7:11David Hoffman?

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• 7:53David Hoffman?

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• 8:25Ryan Sean Adams?

  We are back, guys. A Layer 2 team has bought a Layer 1 client development team on Ethereum. We're here to talk about it. This, of course, is the Offchain Labs, aka Arbitrum, acquisition of Prism. It is, I think, the main, the top Ethereum 2, it used to be called Ethereum 2, beacon chain consensus client, I should say. We have the two folks that know the most about what has just happened. We've had them both on the podcast. Previously, they've been on different teams, and now they're on the same team, part of the same family. Of course, we're all the Ethereum family, I guess, but it's great to have you back. Steven Goldfetter, Steven is, of course, the co-founder and CEO of Offchain Labs, the team that's building Arbitrum and Preston Van Loon, is the co-founder of Prismatic Labs, a leading Ethereum L1 client,

• 9:10Ryan Sean Adams?

  one of the first organizations to start actually writing code for ETH 2.0. And, boy, I remember it well, when you guys stepped up to the plate and volunteered for that. It was awesome. First of all, I just want to say, congratulations on this arrangement, on this acquisition. It seems like a pretty good match.

• 9:28Speaker 02

  Thank you. Thank you so much. Yes, I definitely agree. It seems like a great match, and we're super excited about it.

• 9:33Ryan Sean Adams?

  Well, we're gonna get into it. And also, I want to ask, too, because I know you're both at DevCon, and that was just, was that just last week, David?

• 9:41David Hoffman?

  That was just last week. And actually, I was talking to Steven before you came on. Steven was actually not at DevCon, so actually it was just me and Preston at DevCon.

• 9:48Ryan Sean Adams?

  So the guy who wasn't at DevCon is saying you were both at DevCon, and he doesn't know anything about it. So, David, why don't you ask a DevCon question?

• 9:55David Hoffman?

  Yeah, Preston, how was your DevCon?

• 9:57Speaker 03

  It was amazing. You guys should have been there.

• 10:02Ryan Sean Adams?

  Well played. Well, why don't we start talking about Arbitrum and Prismatic then? So, Steven, like, how did this come about, first of all? And what do you see as the big win for both the organizations here?

• 10:16Speaker 02

  Yeah, so the way it came about as we got to know the Prismatic team pretty well over the course of the past several months or many months at this point. And the more time we spent together, starting virtually, then we actually had in-person sessions, the more it just made sense and we realized that we thought about a lot of things in the same way. In terms of our vision, our vision is to scale Ethereum and its roll-up centric roadmap, and that requires obviously layer one components and layer two components. And we had a lot of the same shared goals and even personal interests, the things that got us excited, the conversations, the whiteboarding sessions, the you might say the nerd out sessions, you know, we did a lot of those. And it was super, super exciting. And, you know, we

• 10:58Speaker 02

  really just meshed together and it felt right. And as those conversations, as those conversations move forward, we basically, you know, said, hey, we could accomplish a lot by joining forces and by working on solving this problem together. And, you know, the thing that we, in a very broad way, the thing that we accomplish is we're really very much, you know, working towards the same goal from different angles, of course, working on different parts of this puzzle and different parts of this problem. We have lots of shared experiences and lots of different experiences that we can apply and to one another's domain. And it just felt right and felt like we really were values wise aligned and everything else just sort of fell into place.

• 11:39David Hoffman?

  I'm sure there's a great dating metaphor here. So I'll lean into this a little bit more. So now that you guys are together, what was the dating process like from your side of things, Preston? What was it like to begin these conversations? And overall, like, how did these conversations get triggered in the first place? Like, I think everyone, when we heard the announcement, was like, oh, you can acquire a layer one client team? Who had this idea? And how did these conversations progress?

• 12:05Speaker 03

  Why did you swipe right?

• 12:09Speaker 03

  You know, well, with with the merge finally happening, we were wondering, so what is what is the next, you know, highest impact work that Prismatic Labs can do? And our our mission since the beginning has been scaling. So we we started looking at the roadmap, taking a look and saying, what is the like longer term vision for for Prismatic and and how do we further our impact and and really be help, you know, make Ethereum be a thing that goes fast, it's cheap. So we started thinking about the role of Centric Roadmap, the sort of the direction that we're all going. And with that, we reached out to the Offchain Labs team and said, you know, hey, we have some ideas for a collaboration.

• 12:52Speaker 03

  What do you guys think about this? We got EIP 4844 for data sharding coming out. And it it it makes sense to have a closer relationship. And like Steven was saying, the the more, I guess, dates we went on, the the better we all felt about it. And and towards the end, we're like, wow, this is a really cool idea and a really cool relationship that's forming. And we are so aligned on the same vision of scaling Ethereum that that it really makes sense to, you know, not only have a close relationship because of the role of Centric Future, but also to, you know, be working together because there are things that that we think we do well, and we know there are a lot of amazing things that

• 13:33Speaker 03

  Offchain Labs as well, and having that kind of synergy and and and sharing knowledge and talent. It just, you know, it it's for the greater good. So we're really excited to to to be joining forces with Offchain.

• 13:46David Hoffman?

  So what are the big wins on the Prismatic Labs side of things? Like Preston, what do you and Raul and all the members of the Prismatic Labs? What's the big W here for you guys?

• 13:56Speaker 03

  Well, the the the big win that we have is that the support from Offchain is is is massive, right? We have some resources there, a much bigger organization that can help us sort of offload a lot of the tasks that that aren't core development. I think the big thing that Raul and I learned over the last like five years is that there's a lot of work that needs to be done, a lot of unfunded work that comes with, I guess, running a business. Prismatic Labs is a business and we have to think constantly about funding. We have to think about, you know, what is our our like purpose, like our bigger place in the community, like long term vision, especially after the merge where It's a very different world. So right away, we we've got a bunch of time back.

• 14:42Speaker 03

  We can leverage some of the resources capacity with with off chain labs.

• 14:48Speaker 03

  We have a bigger talent pool now. We can share knowledge and brains between off chain and Prismatic, working on the Prism client. You know, the big takeaway here is that we get to continue working on Prism and do it even more of a focused fashion. That's the big win that that that really helped us, you know, rationalize this, say, this is the right thing to do. We're all scaling and and and right away, we can realize the benefit even just this week.

• 15:16Ryan Sean Adams?

  Does this, how does this benefit the Ethereum community then, President, do you think? Is it is it kind of linked to that? So you have now more time to focus on actually building. You and Raul and the rest of the team can actually focus on kind of like building the next feature set for Ethereum. Maybe, you know, shipping things like EIP 4844 faster, potentially, like you're less like, you know, have more focus on that. Is that is this a win for the community? And so, you know, zooming out from Prismatic Labs, what would you say about the win for Ethereum here?

• 15:51Speaker 03

  Yeah, absolutely. I mean, from the core development side, the layer one side, we get to iterate faster to be more focused in our in our work. And then the bigger picture, the longer term, we're all scaling Ethereum here. So that helps the Ethereum community in in the bigger picture.

• 16:09Ryan Sean Adams?

  One one quick, you know, question I had for you, President, is about like initially how Prismatic was funded? Because I think some people don't know the full history of this, like, you know, some listening might be kind of old enough in in their Ethereum lore to kind of remember the the dark days, maybe of 2019, where you didn't have much direction in terms of this thing we called ETH2 and sharding. And, you know, it wasn't even called the merge back then, but proof of stake. And Prismatic was a team that in the early days, I think you and Raul kind of stepped up to the plate. But there wasn't a business model. For this, like there wasn't, as I remember it now, you were there, you could, you could tell me, but there weren't a lot of

• 16:51Ryan Sean Adams?

  VCs that were really excited about writing checks for something that already had a token. I mean, you're developing for a token that already exists. It's called ETH. Why don't you launch your own layer one with its own token? And you know, that's how we kind of like, so you're doing almost like this, this public good. And as I recall in the early days, Prismatic was very much grant funded. And I don't know if, if that was difficult at times, I can imagine it was like, like knowing what the funding source was. Can you walk us through those early days and some of the you know, maybe the struggles that, that you saw with the, the existing model for Prismatic?

• 17:26Speaker 03

  Yeah, so we, we were one of the first teams to start working on ETH two, as it was previously called. We wanted to help you bring sharding to the go Ethereum client. That was really the initial vision with Prismatic Labs. And this started at the beginning of 2018, around January, and it was right around the time that the Ethereum Foundation announced that they had a grants program. We applied for the grants program. We, we made it to the first round to, to our surprise. You know, Raul and I kind of just had met on the internet and said, you know, here's an opportunity where

• 18:05Speaker 03

  we're two new people to, to the community who haven't really contributed in any meaningful way. So what's the, I don't know, the biggest, highest impact thing we could do? And that was to, to work on sharding and help scale Ethereum.

• 18:20Speaker 03

  Proof of Stake was already in a testnet at the time with Casper.

• 18:26Speaker 03

  Designs that had really changed since then. But throughout 2018, we were really just sort of working as a Moonlight project and, and there was a bit of funding and that was exciting, but it wasn't ever, at least in 2018, it wasn't enough for us to, to quit our jobs and to, to dive headfirst into crypto. We were all kind of new. You know, to crypto. So we didn't have a whole lot of finances in, in the same way that people who found Bitcoin in the beginning did. So we were really just doing it for fun. We didn't think we'd make any money out of this. Which became a struggle when, when the need for scaling, the need for working on this became higher in demand and, and we really wanted to do it.

• 19:12Speaker 03

  Throughout that whole year, we did, you know, had a really awesome journey where the community came out and said, we're going to support public goods. And, and this talk about, you know, how do we support public goods and, and, and, and finance these things that we all need to, to, uh, to scale Ethereum, right? The, the Prism project is an open source, free software. Anyone can use it. It's fully transparent. It's always out there. It will never, to you money. It will never be something you have to pay for. It's free to use, uh, which is a really hard, uh, model to sell, right? Like, you just talk about having venture capital, you know, they say win, win Prism token, and that was never an interest

• 19:55Speaker 03

  of ours. Um, and then the, there were distractions like, okay, well, we, you know, grants may not be forever, especially towards the end of, end of 2018, when Ethereum went from like $1,400 to, to $100. So it was a really hard time. But, um, and we had distractions like, oh, should we do like, you know, we're a block, should we expand to be a blockchain shop and, and really work on other L2s or other L1s and, and just try to get some revenue through that. Uh, but we said to ourselves like Ethereum is the best positioned, and this is amazing technology. We really want to just focus on that and minimize distractions.

• 20:38Speaker 03

  Uh, thankfully with the grants from the Ethereum Foundation, community support, uh, even the signal from Vitalik himself, when we complained, uh, publicly that, that we had funding, but it wasn't enough to, to go full time. He sent us a thousand Ether from his own personal wallet, and this was called the, the YOLO grant. Um, at the time that was $100,000. So it, it was not a whole lot in the big picture, but it was a, a huge confidence boost. We said that, okay, if we do this, the community and, and notable figures in it are, are not going to let us fail for something as, as trivial as, uh, uh,

• 21:20Speaker 03

  funding reasons, like we will figure it out. So 2019, uh, all of us quit our, our, our jobs. Some of us had pretty nice jobs and took the leap. And any

• 21:30David Hoffman?

  You got a job at Google, Preston.

• 21:32Speaker 03

  I, yeah, I was working at Google, and that's a really comfortable job, uh, where you can do a lot. You can have a lot of impact. Um. But the the problems are at Ethereum scaling are so attractive, they're so hard that that that we couldn't stop thinking about it. I I was like waking up hours before work and doing work and then staying up late and working on it.

• 21:55Speaker 03

  It was our passion. So with all these things combined, you know, we were able to take that leap. But over the years, like it still was in the back of our mind like, okay, well, we were funded by grants, which is not sustainable, right? Like thankfully, they kept coming and the people responsible for for grants for managing their money well. So that was nice, but we still had no product to sell. We had no revenue. We'd never really did any like consulting for for anybody or really took any other outside jobs or anything like that, or or considered doing a token. But it was a distraction to have to think about. And now we don't have those sort of distractions. We have support from off chain. We can really focus on getting back to work.

• 22:36David Hoffman?

  And I I think this is the big takeaway from the Ethereum community because of course, the the Prism client isn't going away like and in fact, actually, there's more labor hours that are able to be poured into the Prism client. And I would imagine like Preston, you you are the co-founder of Prismatic Labs, you and Raul. And so I would imagine you had to like do like normal HR stuff and like pay people salaries and things that you wouldn't really consider a dev to do. But Arbitrum, I'm sure probably has like an HR person, right? Right, Stephen? And so like now, now like we can offload a lot of that same labor onto Arbitrum's HR person. And we can share that same resource between this layer two team and this layer one client.

• 23:19David Hoffman?

  And so Stephen, I I wanted to get into your head, but just one last question to to round this story out on Preston's side. Preston, like what what happens next for the Prism team? Like, are you actually gonna are you gonna hire more? Like, what can you? How has this impacted the trajectory of the Prism client? What what's going on there?

• 23:40Speaker 03

  Yeah, I mean, in the short term, it's full steam ahead, right? We have 10 or maybe 11 amazing engineers working on the Prism client, and we have a lot of great work to do. So that all stays the same. I think that, well, I know that Offchain is hiring and that, you know, Prism is now an off-chain project. So we'll have, be able to tap into a larger engineering talent pool and really build. At the same time, there are really exciting problems at Offchain as well. So this is a bit of cross collaboration between the Prism team, Arbitrum team,

• 24:17Speaker 03

  and with that being that we can all sort of get together faster, get there faster.

• 24:22Ryan Sean Adams?

  And my intuition is that probably salaries have gone up, right? And so motivations to build on this thing also increase competitive market rates, less distractions, stuff like that, too.

• 24:33Speaker 03

  Yeah, exactly. We're no longer on the core dev salary. We can, we can enjoy the benefits that Offchain provides. It's really nice.

• 24:42Ryan Sean Adams?

  It's really cool. I guess notoriously, I mean, you work for a public good and Ethereum and, you know, government jobs don't pay really well, right? So this is, you know, it's got to be definitely better in the best of both worlds. I'm curious, Stephen, from your perspective, maybe speaking for Offchain Labs and for Arbitrum. So how do you see this? Is this kind of like Arbitrum's contribution to public goods? Is it Arbitrum's contribution to Ethereum? Obviously, the success of Arbitrum is very much dependent on the success of Ethereum and kind of the layer one itself. So is this just kind of a way to pay it forward? Or, and maybe it's not an or, maybe it's an end question. What's in it for Arbitrum?

• 25:27Ryan Sean Adams?

  What's in it for Offchain Labs to do this? Is this completely altruistic? Or is there an incentive at play here?

• 25:35Speaker 02

  Great question. It's definitely a bit of both, right? So absolutely, we think that it's critical to continue funding the development of Prism. And, you know, we're committed, Prism, you know, will continue to be developed exactly as it was, fully open source and with as much or more resources as well as before, you know, as many resources as Prism needs, you know, developers and needs, we will, we will make sure that that need is filled. So in our end, so absolutely, you know, there's not like, it's not like we're, you know, we're joking about a Prism token. It's not like we're taking Prism and looking to monetize it, attaching a token to it or anything like that. Prism will remain exactly as it was. And it'll be an open source project to the benefit of the community. And, and one of many, of course, there, there is a, you know, client diversity is important.

• 26:19Speaker 02

  And that will be, you know, one, you know, definitely our contribution or we, we can participate in the community. But more broadly, it's also a starting point for our contribution to the community. And, you know, we mentioned, for example, EIP 4844. And that is something which, obviously, some of the prison, prison team, you know, Terrance in particular and others are very, very involved, involved with. And, you know, we have been involved in some of those conversations, you know, even before the, the acquisition. And now we'll be not only continuing to contribute the prismatic resources that were, that, that were there and those we will, of course, continue to support. Prismatic's work on, on these important EIPs and beyond.

• 27:02Speaker 02

  We'll also be saying, you know, we're already having these internal working groups where there's knowledge sharing and saying, hey, how can, how can other off-chain engineers contribute, contribute to this as well? So there's, I think you'll see more contributions over time for us to not only continuing Prism's work, but also continuing to support that and adding engineering capacity to that as well. But to the second part of your question, I think there absolutely, absolutely are synergies and things that we can do together better than, you know, the, the sum is better than, or the whole is better than the sum of parts. I probably just messed that up, but you know what I mean? That expression. And, and what I mean by that is, you know, I focused before and how we have all these similarities and thinking about things the same way.

• 27:44Speaker 02

  We also have very, very different experiences, working on a layer one client and working on a layer two are very different. You know, they have great engineers, great, we have great engineers working on both of them, but very different. And just looking over our shoulders and bringing ideas from one domain to the other, I think could be incredibly valuable. Already beginning to see that, hey, you know, what about this Arbitrum guy? So you thought of that? Hey Prism, why does this work in this way? You know, have you thought of this? And it's just very technical conversations, but often these, I know, just shining the light from slightly different angles is very valuable. And because we're aligned on the same goals, right? We all want to, you know, as Preston said, their goal early on was scaling. And our goal is of course scaling, but it's also more broadly building out Ethereum's roll up centric roadmap.

• 28:27Speaker 02

  And scaling is key to Ethereum and key to Ethereum's roadmap is having a strong layer one and strongly and a strong layer two. I think we're really aligned in that and just the synergies of working together and putting that brain power together is going to be very beneficial even for non, even for, you know, for making both of our products better.

• 28:47David Hoffman?

  And so this is what I'm hearing from you, Stephen, is this is largely an aqua hire where you are putting the Prism team like proximate or adjacent to the Arbitrum tech stack. Maybe there's not a particular problem or like nut to crack that you need the Prism team for. But overall, you kind of think that having the Prism team around the Arbitrum tech stack might produce some sort of serendipity that might help improve the Arbitrum tech just by having these guys like just, you know, in the same like Slack channel or Discord or whatever you guys use at Arbitrum. Is that kind of a summary?

• 29:22Speaker 02

  Yeah. So I think, you know, it's, it's, you know, there is obviously in the early days, it's, it's very much of the, you know, being in those channels together. But I think over time there will be, you know, much more organized cross, you know, cross domain collaborations as we think about these problems. And, and while the talent and the amazing team, you know, Preston and Rahul and the rest of their amazing team is obviously a big part of it. It's definitely an acquisition in a sense that we're super excited to take the Prism product and, and, you know, and continue to fund that and continue to, to make sure that stays well funded and that's our commitment. So yeah, I think, you know, we think of very, very much as an acquisition. We're, we're, we're continuing to develop and committed to develop Prism as a client.

• 30:04Speaker 02

  And committed to, you know, giving it all the resources that it has already, continuing to fulfill its resource needs. And also, obviously, the amazing team that Prismatic Labs have assembled. We're super excited to work on them. Both to have them continue to develop Prism, but also to work together with them on this shared roadmap. And on the future, you know, the future, the future to, to executing this roadmap will include layer one initiatives like data sharding, layer, layer two initiatives. And I think thinking about those things together will be very valuable, not only for us, but for the community as a whole.

• 30:38Ryan Sean Adams?

  Yeah, what I, what I do think is obviously so the, the future of Ethereum is the, you know, the execution layer is in layer two, right? Consensus layer is, you know, down in the stack, the Prism, Prismatic and, and team is one example of a consensus layer client. There has been this criticism of core devs and I, I don't think it's totally warranted, but like, oh, core devs are not, they're disconnected from the app layer or from kind of the execution layer, right? And like, I think, you know, the consensus layer core dev folks would argue like the apps don't understand what we, what we deal with and what we go through. And what's nice about this is this brings together a bit of kind of like shared, shared learnings from kind of the consensus layer and an execution layer, like, like layer two. And I see that advantage.

• 31:23Ryan Sean Adams?

  I also see the advantage of, you know, being able for, I guess, you know, for the sake of Ethereum, shipping EIP is like 4844 that much faster. And of course, EIP 4844 is proto dank sharding. It's going to make layer twos much cheaper. It's a, it's a boom to the layer two ecosystem for sure. And this is in the, the best advantage of like the, this is. I think a shared goal of everyone in Ethereum, everyone who builds apps, everyone who's doing layer twos, like just everyone in Ethereum has the shared goal. I guess part of my question though, Stephen, comes with like, so we have shared goals like getting EIP 4844 done. Clearly that's good for Ethereum community. Also good for layer twos and that's great. Win, win, win. We all win.

• 32:09Ryan Sean Adams?

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

• 32:51Ryan Sean Adams?

  And you know, to any extent that it is, what are some ways to sort of mitigate this?

• 32:57Speaker 02

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

• 33:41Speaker 02

  It will not push Offchain Labs' interests in any way that's sort of detrimental to the community if those things would arise. So we're fully committed to that. And you might say, hell, hey, how do you, how do you, you know, obviously you have to trust the integrity of the people. But of course, you know, these are the same people that were building Prism beforehand. You know, you heard Preston's story and in our, our, our hand as well. You know, we are absolutely committed, committed to that goal and will be operating Prism, Prism as such. The second thing I'll say is though. Despite all that being true, you know, I say if it arises, I actually can't think today. You know, we are very, very much aligned on the goal of making Ethereum the best layer one, right?

• 34:23Speaker 02

  Which it is, but continuing to develop Ethereum and continuing to develop Ethereum layer one, layer two, and execute the role of Centric Roadmap. So if I actually, you know, when I've had this conversation with people and I say, what are those things that like, you know, off-chain arbitrary might push? We're hard pressed to find examples of those today, to be honest. I think we really are aligned and that is a big focus. The alignment is there. And I actually can't think of things today that, you know, would really advantage us. There are things that would advantage layer two generally, like EIP 4844, which we're all working on. And you know, and we're already reaching over the aisle and you know, both ways and working with our competitors on. And I think that's great for the Ethereum community. So I'm not sure what those things are, but I'm also not, not saying that those things can arise.

• 35:08Speaker 02

  Today, I don't know what those things are, but absolutely if those things do arise, we are fully, fully committed to operating Prism neutrally. And, and the community will hold us in check and make sure that we do that. But we're pretty confident that we will.

• 35:23Ryan Sean Adams?

  Stephen, on the community holding you in check, I want to get Preston way in on this. But like, first of all, is Prism always going to remain open source? Because like, one of the, the constant checks that of course, the open source community has and the crypto community has is we have the right to fork. And so let's say a bad scenario happens and somehow like you guys turn evil or something like this. And this is what crypto teaches us, you know, verify, don't, don't trust. Well, couldn't we just, as long as it's open source, fork Prism code, have a new set of developers continue it on in a different direction? And like, you know, pick, pick up the project where it left off. Can you talk a little bit about commitment to you to open source ethos?

• 36:07Ryan Sean Adams?

  And kind of the, the right to fork being ever-present with, with Prism?

• 36:13Speaker 02

  Yes, absolutely. So Prism will remain fully open source under the same license. And the right to fork is absolutely will be maintained. And that was, you know, not to go too into the details of how this emerged, but the first, the very first time there was a document produced, initially produced by the Prism team, that principle was in there. And that was literally never something that was ever discussed past that. It was both sides said, yes, of course, that is something that we're committed to and that won't change. So

• 36:45David Hoffman?

  So there are signatures on paper that say Prism will always remain open source.

• 36:51Speaker 02

  So that, yes, that was, that is the foundation of the entire deal documents. I'm not going to pretend that I, that I read the entirety of

• 37:02Speaker 02

  this turned into, but back in the, in the, in the documents that were digestible to, you know, in full to someone like me, yes, absolutely. That was, you know, one of the core principles that we, that we, that we built this deal, deal on, that Prism has to remain neutral. The Prism Discord will also continue to remain separate, by the way, from the Off-Chain Labs Discord to make sure that that community has a voice that's separate from ours as well. Because when you say, how do we keep the community in check? Well, making sure there's a forum for that to happen and that forum continues is going, and we don't sort of crush that forum. Not that we would, again, you know, it's sort of kind of strange to have these conversations because like, we're imagining that we're the bad guy, but it's a very good conversation to have. But, but I do also just want to put that disclaimer in like,

• 37:45Speaker 02

  we are very much Ethereum aligned. Like, you know, Arbitrum had its legitimacy by itself on its own by building a layer two in a way that, you know, was very much tech first, is tech first, and we delivered on that and we continue to deliver on that. And this is taking two high integrity teams that are very much aligned and there is no bad guy here. That being said, it's a fair question, so someone from the outside saying, But what if you become that? What if you are acquired or this? You know, are there protections in place? And the answer is absolutely, there are those protections protections in place. And and we will continue to make sure that those and and these are, you know, not not different from the principles and values that we're committed to.

• 38:28Speaker 02

  In in general, and nothing changed. And like I said, that point was in our initial document. And it was liver literally never like negotiated or debated. This was obvious from from both sides. This is what we want. And we will. And that was some of the initial alignment that we saw that made this easy to come together.

• 38:45Ryan Sean Adams?

  Preston, could you weigh on this? Because I know this is very important to you as well.

• 38:50Speaker 03

  Yeah, you know, we we built Prism based on transparency and that's not going to change, right? The the principles that we had that brought made, you know, the Prism client so successful. Those continue on and we push us forward and and and continue to advocate for transparency, open source is free forever. Uh, those kind of key principles. The cool part about the way that Ethereum is built, um, you know, we do have to think about these questions like what would happen if? If Prism went away for whatever reason? Well, that's why that we have this insurance policy of multi-client client diversity.

• 39:28Speaker 03

  Last year, this may have been a a bit of a bigger issue when Prism was uh like seventy-five percent of the network. Uh, thankfully, it's a much smaller amount today. It's uh, I don't know, thirty percent, thirty-five percent, something like that.

• 39:42Speaker 03

  And what that means is, you know, Prism is not like the the authority on on core development, right? It's not the only player in the game. Uh, in fact, there's only so much that we can influence uh as as a team without the significant buy-in of the rest of the core development uh community. Um, so with that, it's like, you know, Ethereum is resilient to to like when we think of threat modeling about Ethereum, it is resilient to these kind of things like what if what if a core development team went rogue or disappeared or just shut it down one day and rugged everybody? Well, you have awesome alternatives as well. We're not going to do that. Obviously, we love working on this stuff. It is is an immense privilege to

• 40:25Speaker 03

  to be building for Ethereum and to be building on such high-impact software. But we do think about that. We question ourselves. We make sure that we're doing the right thing always and sticking to the values, virtues and mission of Ethereum and what the Ethereum community wants and deserves.

• 40:42David Hoffman?

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

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• 43:45David Hoffman?

  And we're back with Steven and Preston. Steven from Arbitrum, Preston from Prismatic Labs. And I did, I think, something like 10 or 11 interviews at DevCon, and one of them was with Vitalik, and I asked him about a whole range of subjects. One of them was this announcement, and this announcement being one of the bigger announcements, perhaps the biggest announcement that happened at DevCon. And I asked Vitalik his thoughts about the acquisition of Prismatic Labs by Arbitrum. And Steven, you were talking about how there's no bad guy here. And I really just think that angle is really emblematic by like, there's a commercial entity acquiring like an open-source entity. That's really like the angle that we're taking here. And Vitalik's response was that there's many, many nuances, right?

• 44:30David Hoffman?

  Like, on the optimism side of things,

• 44:33David Hoffman?

  it was Proto Lambda that I think went from the EF to optimism. And so while that's not the same thing as an actual, like, straight-up acquisition, there has always been some sort of dynamic between Layer 2 teams and Layer 1s. And so that was his thought about that, is like, this is actually not completely unprecedented, although it is different with an acquisition. But then also, I asked him the question of, okay, imagine that every single client Team got acquired by a layer two or some sort of commercial entity. And actually, we had no clients left that were actually completely independent. Like, what would that make him feel? And it's like, yes, but this is also a question of decentralization, right?

• 45:14David Hoffman?

  Like, it's okay that some commercial entities acquire some clients as long as it doesn't, you know, think of it like a client diversity, right? And so now we have like commercial diversity. And so we have, I think, what actually might be the version of a commercial entity that actually is the closest thing to the Ethereum layer one possible, which is a layer two team. Acquiring a layer one is actually the best version of a commercial entity to do that. And now we do have this like corner of Ethereum that is perpetually funded by this closest thing possible that is a commercial entity to be aligned with the Ethereum layer one. And so I think his overall general take is that like, it's not so crazy. And also, we can't have too much of it.

• 45:57David Hoffman?

  But also, we should be grateful that we have this perpetual funding in the space. So Stephen, no question, but those are the thoughts that I can remember from my interview with Vitalik. What do you think about this?

• 46:07Speaker 02

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

• 46:48Speaker 02

  but it's definitely not unprecedented in principle of having these alignments. And definitely, you know, one learning that I had actually was, you know, to me, You know, while we discussed all these things, it was clear that we were obviously, you know, the good guy isn't very much value aligned. And I realized, you know, with all this thing that maybe we need to talk more about our values and and make sure that people know how Ethereum aligned we are. And and and that those values um exist. Not that there are people that are doubting those, just to make sure that people, you know, proactively know those values and that we have, you know, full fully Ethereum alignment. I do agree with, uh, you know, Vitalik, that having a diversity is is very, very important. Um, you know, having Arbitrum's view, but also our competitors' view, and also um,

• 47:32Speaker 02

  independent teams and also teams that come from just completely different angles, the ecosystem. That's that's where the where the important is, you know, in general, diversity uh of opinions and diversity of views is going to bring for forward the best product. And so, yeah, it's a fair question to ask when two teams come together, you have a little less diversity because, you know, previously you had Arbitrum's voice. And remember, we already had a voice. Uh, but our Prismatic's voice is separate. I did another one, definitely, but you also solve another problem in which um Prismatic is now well-funded and those voices are um still remaining independent um because of our of our commitment, of course. But now have actually more time to dedicate um to that development. Um, and I think one other, one other, one other point, and this is more of a meta point, um, which the community has to think about is

• 48:17Speaker 02

  um, what does public good funding look, goods funding look like? Where does it come from? And, you know, I think this is actually a big success for that i- in us funding, funding, in us funding a development team. But those who may say, you know, we want these independent teams as well. I I agree with them. Those are important. But I think it's important to think about how are those funded? And if that funding, by the way, comes, you know, if you, if it comes from a particular source, does that independence really exist anyway, right? So you can have, you know, those same questions even short of an acquisition. If there's, you know, uh, one team that's funding a client team exclusively, and they're sort of the lifeline, you have some of these same questions. So um, I think there are really important questions here to be asked in general about public funding in a way that allows independence.

• 48:59Speaker 02

  Um, but what I can say is about this particular deal is this is um of us obviously acquiring the product and the team, but also us committed to um giving them and maintaining their own voice in their own Discord, um, their own developers. And the one thing I'll say about um. You know, Preston's here, but well, and the whole team. This very much wasn't an acquisition of a team that's like, oh no, we need to be acquired. Right. This was like a team that like literally like weeks earlier did, you know, the biggest event, you know, accomplished, accomplished their goal, their, their, one of their first goals of, of the merge. And really was one of the mo- the most successful teams in, you know, in play. And these are people of extremely high integrity and it's not like, you know, this wasn't a fire sale.

• 49:40Speaker 02

  This was two teams that wanted to work together and fought through a lot of these very hard issues. And really believe that this is best for the ecosystem and, and continue to believe that.

• 49:49Ryan Sean Adams?

  Do you know, okay. So one, one thing I was just thinking of on the backdrop of this, of course, like we've got two very values aligned, very Ethereum aligned organizations and kind of like them merging. Okay, cool. Get it. Like we've made the case for this. But what happens if like, um, Justin's son goes and tries to acquire Geth? Okay. Uh, Do Kwan, you know, comes back and he raises a whole bunch of VC money and he goes and acquires, I don't know, the lighthouse team or something like this. Has Arbitrum just opened up the floodgates for like client team acquisitions? And I'm wondering, Preston, if, if like you think we have a defense here.

• 50:28Ryan Sean Adams?

  And like my inkling is the defense always goes back to layer zero, like the people. It goes back to like, are the core devs for any amount of money? Or for any offer going to actually work on something they don't believe on in? And the evidence for that is probably no, because they're already doing what they do. And they could go work in Silicon Valley, make higher salaries. They could go like launch ETH competitor number five and get VC funded. And like, you know, bank out that way.

• 51:06Ryan Sean Adams?

  So my inclination is we're still ultimately protected by layer zero, which is like people who actually believe in the thing that we're building and the kind of the right to fork and the right to continue on that belief system. But is this, is this instinct correct? I mean, put us in the mind of a, a core dev. Is that our protection here? What's to prevent, uh, Geth from being acquired by, um, someone who would mean harm to the Ethereum ecosystem?

• 51:37Speaker 03

  I definitely agree with that, right? Like, we had, you know, in Prismatic's journey, we had entertained the idea and sort of considered, you know, what are alternative sources of funding? But when it wasn't Ethereum, it just wasn't something we were interested in. And I think what's cool about our team and people like Prismatic is that we didn't, we didn't come here to make money. We just came here to solve hard problems. Problems that you, you can't Google the answer. You can't just look it up. Problems that have extremely high impact. Ethereum aims to be the biggest technology, you know, ever.

• 52:19Speaker 03

  Maybe perhaps it wants to be a global sediment layer and to be able to work on that is extremely attractive to a lot of engineers. I would even go as far to say is there, there, there wasn't a dollar amount that you could have said to, to pull us away from Ethereum. That's something we always wanted to work on. And I feel like with other core developers, they must share the same mindset because a lot of times this is really hard work. Sometimes it is a thankless job. Sometimes it is difficult to do, especially to be so decentralized. It is very difficult work. But it is also extremely rewarding and, and, and very fun.

• 53:01Speaker 03

  So, you know, that layer zero, what you're talking about, it's like, we believe in Ethereum and, and that's why we're here. And I know that every core developer is aligned in that.

• 53:12David Hoffman?

  And so I just want to ask some, some direct questions that just make this conversation really, really explicit. Like Stephen, do you think this acquisition of, of Prismatic Labs, this makes Arbitrum like a, a maintainer of like core, critical Ethereum infrastructure? And then does it, does it also, would you say, like, give Arbitrum more direct representation in like Ethereum soft governance? It's, it's a little bit like, if you think like the core devs of Ethereum and like the, the, the bi-weekly dev calls as like, kind of like the Congress of Ethereum where like, they like decide on things and hopefully the community accepts them. Do you think like now Arbitrum has like a more direct access to what's going on in these conversations?

• 53:55Speaker 02

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

• 54:39Speaker 02

  And there were lots of, there were no shortage of, shortage of other things they could do if they, you know, if their goal was taking home a large paycheck at the end of the day. So, yes, of course, we're represented. At this point, I think, you know, I don't see a difference in, in, in our, in our values. That, that, that idea hasn't, hasn't emerged, that, that sort of point where we'd want A and they want B. But I'm confident that Preston would follow, you know, his belief, you know, is his life's work. And when I say Preston, it's Preston, Raul, Terrance, Nishant, the whole team, you know, I would want them to, to operate as such. And by the way, that's how I would want all of our developers, you know, all of off-chain's earlier developers as well. Like, if, if our best check to make sure that we remain non-heal as an organization, which I strongly believe we are,

• 55:23Speaker 02

  is the people internally, the people that care. And that includes the ball of Prismatic's developers, but also all of off-chain, off-chain developers. And I think that we all very much try to participate and listen to the community. And I don't think that will change at all.

• 55:38David Hoffman?

  Yeah, and I do definitely take the point that having the Prism team is an even more powerful check on, on Arbitrum, like internally, because these, like we said, like these core devs won't do anything else other than work on Ethereum. And so the fact that, that this deal was inked and the handshake was made, I think is indicative of, of the alignment here. And so I want to ask that question. What was Prismatic Labs worth? Well, what was the size of that deal? How much was actually handed over? How much was actually paid for? Steven, that one's, that one's for you.

• 56:12Speaker 02

  Yeah, so I'm not going to say the exact financial terms, but I think the principle is, is, is what we're, is what we're getting at here. It wasn't what Prismatic Labs was worth. It was also who Prismatic Labs would take an offer from, right? I'm sure that there were, you know, to your point before, there are people in other ecosystems that know that that we wanted to build some alignment and these might have been different. For us, it was very much the alignment first and the alignment that drove this. And, you know, not to repeat myself, but I'm going to repeat myself. You know, these weren't, wasn't a team that was looking for an exit or needed an exit in any way. This was a team that was looking for the best way to continue to do the work that they love

• 56:55Speaker 02

  in the most, you know, pure way and way that they didn't have to deal with certain overheads that are cumbersome. And, and trust me, I as, as a former developer in my day, I know a lot about this overhead and I, I no longer do as much technical work as I, as I once did. So I can very, very much relate, but that's what sort of led the deal. So it's a long way of declining to answer, but I hope that I provided some useful context.

• 57:19David Hoffman?

  Sure, of course. And one of the things that got me into Ethereum in this first, in the first place was this whole kind of like theoretical vibe of a regenerative financial system where we could fund things that are harder to fund. And so when I see good guys like Preston and everyone at the, as the Prismatic team, getting a payday for their, their, like their sweat and toil and, and blood, sweat and tears into building Ethereum, that makes me happy and is definitely illustrative of, of why we're here in the first place. So Preston and all of the Prismatic team, congrats. Congrats, guys.

• 57:53Speaker 02

  Yeah, thank you.

• 57:55David Hoffman?

  So I think my last question will fulfill my commitment to the YouTube chat here. Steven, win arb token.

• 58:03Speaker 02

  Stay tuned, but no comment today.

• 58:07David Hoffman?

  There you go, chat. That's all we got.

• 58:10Speaker 02

  I do appreciate the energy of the chat and I'm glad that, that you are staying, you know, keeping us, keeping us in check and asking the important questions.

• 58:21Ryan Sean Adams?

  When you do decide to release any information about that, just make sure you look us up. There's Steven, because I think you got a chatroom that'd be really excited. Steven Preston, congrats on the acquisition. It's been great to have you. Thank you for explaining this next exciting chapter of Prism development and Ethereum core development. We appreciate you guys coming on.

• 58:43Speaker 02

  Thanks for having us.

• 58:44Ryan Sean Adams?

  Yeah, thanks so much. Guys, of course, got to end with our usual disclaimer. None of this has been financial advice. Ether is risky, so is crypto. The entire ecosystem is risky, so is DeFi. You could definitely lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.