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

Transcript

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 uh we have two of the co-founders of arbitrum Stephen goldfedter and Harry kalodner if you are familiar with the arbitrum ecosystem these men need no introductions they have been with arbitrum since day one uh 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 uh March 16th every March 16th we'll remember today well it is a big day because I mean of course we all like to talk about

Tokens The Tokens are a very big deal people love to talk about tokens more than that it's not the only announcement that Arboretum is bringing to the table today there are other things that we must discuss uh 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 are B token and that is what's happening today 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

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world of web 3. arbitrim1 is pioneering the world of secure ethereum scalable ability and is continuing to accelerate the web 3 landscape hundreds of projects have already deployed on arbitrum 1 producing flourishing defy and nft ecosystems with a recent addition of arbitrim Nova gaming and social dapps like Reddit are also now calling Arboretum home both arbitrim1 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 the arboretum's recent migration to orbital Nitro it's also now 10 times faster than before visit arboretum.io

where you can join the community dive into the developer docs Bridge your assets and start building your first app with arbitrum experience web 3 development the way it was meant to be secure fast cheap and friction free heavy ankles Nation we have Harry and Steven on this arbitrim day happy ARB day guys it is great to have you back on Bank list we've heard you got a few things to announce so super excited to have you on how's it going it's good happy ARB day thanks for having us on here all right so um every time you come on we ask the exact same question at some point during the conversation usually let me save it to the end today I'm going to bring it to the very front of this episode when token

token March 23rd do you guys not see the news tell us about it congratulations guys yeah congrats yeah I'm sure this has been a long time coming of course uh so uh Stephen Harry we were on a Twitter space today so people that were tuning into that tour space as well they might hear a rendition of these same questions uh 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 uh in March 23rd yeah so 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 um I think it's on maybe 2020 or so where Ed said there are no plans to launch a token and 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 Arboretum was was different you know they were like if they read the arbitrary paper there was like 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 um you know to to actually have a secure

decentralized layer too again in the app chain World everyone could just control their own their own environment but in the 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 the year and a half two years ago is when we call asked and realize 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 did we know was March 23rd we've been targeting this vicinity for for a while um but um it was was only uh in the last you know week or two that we actually honed in on on this day

um and you know part of it is you know there was a lot of turmoil earlier on we don't have to make sure that there wasn't uh the world wasn't failing on the day we did it as well so um but uh you know probably in the last week and a half two weeks is when we really honed it on on this day and plan for this day beautiful and yeah go ahead Harry this is the the other thing there being I think you know there are a lot of projects out there that kind of um that I don't mean in the LTS I just mean in general where they kind of announce announce token plans and then there was kind of like a a 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 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 I remember uh 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 Arboretum would ever issue a token and that's what I said that's the moment that they will issue a token when all when all hope scenes lost is when the token will arrive and it seems to be that that today is is the day um Stephen 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 in ethereum uh we have 4844 ish around the corner we have understood ethereum to have this roll-up Centric road map then in arbitrum history we have you know Nitro is launched we have arbitrum Nova there's other future things in arbitrum uh on the Arboretum road map why why is now the right time for arbitrum like of all of all times of all Milestones the arbitrum could achieve why is this the right milestone for the arbitrum token to to arrive right why now uh yeah so it really falls into the right place in the uh technical road map so you mentioned Nitro um Nitro was a critical upgrade and a

very 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 arbitrary one had about 40 TPS sustained for Ohio I think some someone was like uh trying to test test the waters there and um so Nitro was really a critical component to making sure that arbitrim could handle the traffic that's that's coming today and the traffic that we imagine uh will continue to steadily increase in the future a few months after Nitro so I think it was in November because a few months ago um uh you know all we announced that about a dozen institutional validators have

been validating the arbitrim one have agreed to validate the arbiting one uh chain and then included uh companies like unit 410 via coinbase ethereum Foundation Google Cloud really really strong validator set which was a very important step in the decentralizations they were added to the white list 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's 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 uh we want to give this chain to the Dow and to the community and it was a natural 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 most glaring remaining point of centralization was the ownership of the chain and some people 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 yeah it has and the answer of that is upgradability and upgradability can be for new features of a dow should choose to uh choose to uh Deploy on the Chain but also it's for you know 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 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 down the community and this was the largest point of central of centralization remaining of the chain and naturally it was a it was the one to tackle now beautiful beautiful I want to get into some of the details of the actual arbitrum uh token the actual airdrop distribution and airdrop criteria so I'm going to share my screen here and pull up this uh this pie chart and I'm wondering Stephen if you could just walk us through this pie chart right uh so we got a various a various set of participants here investors team and future team plus advisors uh Dows and arbitrum ecosystem individual Wallace

and endowed treasuries uh so let's start with individual wallets because that is you know quote unquote the airdrop uh can we can we start there and and we'll walk through this pie chart and then we'll go into how people became eligible for the airdrop absolutely so individual wallets like you said is the typical airdrop those are the uh tokens that will go to user wallets right these are arbitrum users and we can uh I'll explain soon or uh you know uh 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 sybils or the airdrop form members 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 uh to to be represented um I'll go clockwise I guess uh-huh the Dow treasury is next that's also a community portion um it goes to the community fundamentally but it goes to the Dow treasury um it's not given out in the airdrop that will be used to fund the Dow over time given to the community via Grant programs uh part of that will also be a discretionary budget to the foundation uh which will be proposed in aip1 which is already proposed to give 750 million dollars in a million tokens sorry 750 million ARB tokens to the um to the foundation and the foundation will be able to uh do discretionary

Grant programs as well again all approved by the Dow but uh you know should it be approved by the dally ip1 um but it gives the foundation an operating budget as well to uh execute on the uh will thou hire people Etc to do that 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 build that build arbitrum and um and also future employees of off-chain labs there's you know we'll we'll also be eligible for for upside there so there's a bucket reserve for them too and that that's um that's uh 20 26.94 and then investors these are the arbitrary investors and

maybe um sorry the off-chain labs investors we raise three funding rounds uh to date a series uh a seed round the series A and A series B and um all those investors decides for their equity which they'll keep uh we'll also get token um token tokens um and it's a 17.53 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 23rd users will be able to claim it transferred to a wrong with it the investors and the team portion uh have some more restrictions attached to them and number one is they are locked up it's a four year lock up with a one-year Cliff so what that means is

um for the first year the tokens will remain locked and no one will no one will get any we'll get any of them come to first the first anniversary they will get one quarter of their tokens and then they'll gradually every month um of the remainder will vest for the next three years so four years first year nothing then there's sort of a large amount which is a for everything they would have gotten monthly over the first year give it them at the end of the first year and then monthly from them on then on that's true for investors and that's true for the uh team and future team bucket as well the second restriction uh on the team is we've instructed everyone at off-chain Labs not to vote directly with their tokens but to really empower the community and increase the community Say

by going through the delegation process and this will be part of the claiming process will be the ability to delegate tokens to community members so the team will not be allowed to vote the 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 a really interesting um part of the airdropic you know we consider it part of the airdrop as well but it doesn't go to individual users instead it goes to Dows in the Arboretum ecosystem uh so arbitrum ecosystem projects that have Dows that have their own communities and the idea is the individual you know we can talk about

eligibility criteria but the individual uh wallets you know will you can be perfect and uh we at Option Labs together with uh the Arboretum Foundation as well as nanson 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 to 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 more significant um but of course there will always be people that are missed for example someone that recently started using arbitrim might only have a transaction or two and they might not be eligible for your job but for the individual

airdrop and it's hard to discern for them sometimes from an air from an airdrop farmer and so this gets a little bit difficult so one thing uh that we've done is the Dow air drop which gives the tokens to these Dows 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 much more targeted airdrop as well together those two buckets make up the air drop so if you look at the pie chart though um that little one and the two next to it those are the community portion the

portion of the of the uh of the uh out of the distribution 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 the majority of the tokens um roughly 56 percent will go to the community 12.75 initially and then over time um more via the Dow Treasury yeah and this uh Dows 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 uh arbitrim was sufficiently um uh as a community as an ecosystem as

its own uh ecosystem is large enough that there were actually now Dows inside of Arboretum that have their own native communities uh and so I think really what this is meant to do is uh giving certain power over to the Dallas to decide from themselves who and how they should distribute the last of the ARB tokens uh and so here I'm glad you went counter uh glad you went clockwise from the individual walls because we could end up there and I also just wanted to just double tap on the the Dow treasury the the 43 which I think is yeah the largest uh part of that Supply here this is really just about empowering the community with future uh tokens to do future things right and so to me I see

the the individual wallets and the dowels and the argumentum ecosystem as rewarding past behavior and then the Dow treasury is like all right well this is for future growth of the ecosystem future uh allocations towards whatever the community decides and the Dow treasury will be up to the community right and is it the right uh idea here absolutely yeah the doubt treasury will be fully up to the community to to allocate and you know that that's it it belongs to the community it's given to the community and the community will have to say where it goes um over time and um yeah that's uh yeah we expect the community to uh you know do very interesting things and build the arbitrary ecosystem and enact the best interest of the arbitrary

ecosystem uh with its tokens so this is a governance token which also uh brings the question of what exactly in the arbitrim 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 what are they kind of sovereign over is it the arbitrum one chain is it arbitrum Nova is it anything else beyond that um yeah so it's arbitrary one and

arbitrino Nova so actually an interesting detail the actual governance of voting will happen in Arboretum one but it will govern both rb1 and Robertson Nova and he sort of wanted the building to be in one place because imagine that there is stuff going on in one Anova 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 and either of the governance will have an arbitrum one but fundamentally it will govern both of those chains and it could be that the Dow will adopt a new chain to govern over time you mentioned before earlier and I'm sure we'll get into later that um part of this announcement was making it easy for people to launch their own layer threes permissionlessly that doesn't mean that that will govern them if you actually want the Dow to say hey

take ownership and own this chain that would obviously require um the Dow to uh agree to that um but the other thing that they the other two big items that it governs is um the arbitrary you know the the direction of the arbitrary ecosystem via it's technology so the upgrades but also vlb spending and aligning right so it can foster the ecosystem by giving grants or trying to 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 Dow if the Dow asks us to build a feature and we know how to build that we'll build it you know we um but fundamentally we're servicing the doubt 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 Arboretum ecosystem you know we don't have a privileged role there um and those tokens will be able to uh align with other service providers as well and the last one which I touched on which I think is really interesting is the ability the Dow will have the ability to license additional layer 2 Chains so this is a bit of a Nuance there are two parts of arbitrumorbit one is layer three chains and layer three chains these are these are like these are Roll-Ups or in each class chains it could be either one of our technologies that settle onto a different arbitrine chain that's approved by the Dow so like arbitrary one Arbiter Nova those are permissionless open you can without going to the Dow 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 to leave a food chain I want a layer two chain and the Dow might say you know one might say hey does it make sense for the Dow to share an arbitrum has Best in Class technology does it make sense for the doubt to share this with a different layer two chain is that competitive is that a good idea and different people have different uses D philosophy argument 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 the Dow governance will

have the ability to launch to license other L2 chains and ethereum one of the principles of the Dow though that is ethereum aligned in the Constitution there's a series of values listed and one of them is ethereum alignment so it will um it will by nature of that of that constitutional uh um value look to approve layer twos that are on ethereum but whether or not it approves that is fully and grants that license is fully in the discretion of the doubt so just to make sure I can repeat back what I heard and understand so if if I want to learn three then that is completely permissionless I can just go do that on top of arbitrary one or arbitrum Nitro if I want is that correct so far

yes Armature one or Nova yes or Nova excuse me and if I want to um if I want to launch my own chain using arbitrim technology then it goes to ARB Dao vote basically it goes to kind of token vote for this so yeah your own layer two chain yeah exactly you're a narrow two chain that settles directly to ethereum um that's basically equivalent to Arboretum one in terms of where it sits that would have to uh be proposed to the Dow and they would go up to down to decide whether it wants to grant that license or not is the ARP token being used as a you know to pay for gas fees or anything else as as that changed or is the arbitrum ecosystem still using eth as its uh unit of

account and exchange here that has not changed and that's you know enshrined one of the eth alignment values and trying and trying to the Constitution is that that won't change um eth is the gas token of the chains and uh the r token will not uh be used for that um uh as in trying to the Constitution by the way just just to kind of quickly Circle back to that first category just because it to expand slightly and you know protocol upgrades and kind of protocol controls because I think it's useful to sort of unpack it a little um since it sounds relatively dry but I think there's a lot of stuff in there that's pretty interesting so that includes kind of permissioning over um who who is validating the chain and adding validators it can it includes

control over who actually runs the sequencer um 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 um it controls certainly kind of protocol upgrades and sort of to what degree sort of new eips are adopted um so there's kind of a huge amount of kind of pretty pretty important control there where where the Dow will will be kind of fundamentally in the driver's seat it's because I want to get into a little bit of the eligibility for how people got their tokens and uh 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 uh but I'm

going to load up the this website here this brand new 50 website arbitrome doubt 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 3125 tokens uh and I think these are all the categories here and each one of these categories has different teams and uh Steven if you don't mind us walking through you can speedrun this pretty quickly but just like sort of the uh the strategy here for how these these tiers were selected and and then uh some of the strategy also pruning away all the farmers can you just talk about the strategy for eligibility here yeah so um you know bridging funds is obviously one of the key key metrics uh that we use

um which is do you have funds on the network and you'll see also these these top ones are for Arbitron one um 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 uh come and go like some users sometimes do their transactions over a day and they come in and that you know that might be typical of an airbag Farmer they come they transact once and they never come back but users that you know transact in over two months or even more that that's just some sustained usage of the chain and it's reasons you know to to believe that this is a more aligned user 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 they want to interact with which again goes to um the a metric of how deep was the use of the chain was it a single interaction was it a much more complex interaction there are different levels of that transaction value is exactly what it sounds like um and the idea being that it's not the only category because we don't want to over you know over emphasize or there are ways to get larger drops by by using lower value but one one input is how much value was transacting it and more points are given for for more assets breaching one just how much how much did one did one bridge and then uh the same thing those are for arbit room one arbitrary Nova and the reason why the wave of Armature Nova is not that it's a

less important chain it's just it's a chain that had a much uh smaller light life cycle 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 an arbitranova all these are added up to a point system and we have it in our docs the conversion and um there are also ways that people can can lose points right right or those are sort of the positive ways but if people um do certain things like create you know patterns that look very much like symbols and farming they can lose points as well 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 and go into about criteria there's a set of points and the nice thing is so I mentioned that option Labs worked with the arbitrine foundation and Nancy with this nanson is actually putting out I think a large blog post on this their process have worked very closely together and we're also publishing we actually have already published all the data around this so it's not like this opaque box like these are the criteria these are the categories they're 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 okay this is actually correct um this is the amount of points that I have and this is the This was done

correctly and fairly I always think it's funny we've come on off a long way since the the uniswap airdrop haven't we which is yeah 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 sounds like the criteria you guys put forth was just um necessarily complicated to kind of we clean out all of the the farmers and the mercenaries and get to the actual users in in the community 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 air drops are gonna

have to get even more complicated still uh that just definitely seems to be the trend but but well done on the on the work to kind of weed out and focus on the the good users here the one thing I like though which I think you know to counter that which might be helpful is so we didn't only give positive points for things that look good we actually took away points and this might be a deterrent in the future as test line 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 it's good these additional activities you lose so maybe I hope for additional you know uh air jobs you know people might think twice and said I actually made not only not be helping myself I actually may be active hurting myself by doing

this so that's um you know we can only hope that that might have some effect it feels like an arms race yes definitely an arms race guys there's a lot more to talk about um there's a new constitution uh and the the word constitution gets me up and going because it implies some sort of network State some sort of community ownership uh I think there's still a lot more to talk about with the phase of decentralization that arbitrum is in uh as well as things like the committee of validators and the security Council and we've talked about layer threes at a high level but I want to go into that a little bit more but first some moment to talk about some of these fantastic sponsors that make this show possible uniswap is the largest on-chain Marketplace for self-custody digital

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give them some tokens yeah protocol Guild is a collective of core developers and contributors from really the ethereum foundation and around the ecosystem in a variety of companies I think it's roughly 100 100 individuals if I if I'm remembering correctly and they do really important and often uh thankless and uh thank and uh thankless and sometimes uh you know really Community work that's important for everyone and we definitely have benefited tremendously from their work both by the fact that our return uh is a is built on ethereum and also so um you know our the arbitrary of Technology uses gef uses pieces of the ethereum code base and when designing

the airdrop I think the thought was the thought between us an off chain and the arbitrary foundation and it 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 include them in the airdrop that's that's uh even though they're they're not technically eligible right they're not an arboretum Dow they're not on arbitrim 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 going to 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 think about the principle the point of the arbitrary 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 out of the chain and will and will and will work to to um you know to to further the interests of ethereum and orbitrim and who better to uh to have represented in governance than uh and the folks at protocol Guild so yeah exceptionally yeah just to be clear uh to everyone Stephen so protocol Guild is working on general ethereum public goods right um ethereum infrastructure stuff related to arbitrim but not part of arbitrim 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 I think that like start I mean well for a long time obviously we've been kind of 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 October now maybe um really kind of like you know brought hope 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 as the as the arbits from 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 mean maintain that ethos uh in perpetuity foreign so one of the big stories here is uh the Constitution Arboretum Scott 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 that at a very high level 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 ethos the social contract that the arbitrum constitution has set in stone for us to start with We the People is that how we start this one we the Argonauts I feel like that's a that's a lost opportunity yeah I'm kicking myself now um come on guys this is supposed to be a good net um yeah I mean I think you know um it's funny it's the last section in the Constitution but like I mean 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 non-constitution National proposals those kind of the different categories of actions have various different sort of Pathways to going through I think it's kind of quite in line with kind of what people expect from House Dallas function I think that like in the ethereum ecosystem where people participate in a lot of dows 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 understanding um was valuable but then you get to the uh to the bottom um to the the Community Values section which I think is kind of really important is this kind of idea of like what does it mean to be arbitrary which I think we hadn't really kind of talked

about a ton in the past um 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 um a series of values that I think kind of really align the whole Community um ethereum alignment is number one there um that fundamentally kind of being being part of ethereum is sort of the whole thing um there isn't really it doesn't really make sense to kind of be be sort of a roll-up Project without that I think in my in my personal view um sustainability is a really interesting one that's kind of the

second thing listed there um the idea being that like this is so off chain Labs has been around for um since I think 2018 now that will soon look like nothing in the lifetime of the Dow um that fundamentally like this is building a structure that should survive you know decades centuries more it's hard to know but uh you know having that long-term vision is is kind of incredibly important um secure security is is fundamentally like the thing um that makes Roll-Ups matter um and so kind of maintaining that as a central focus is kind of fundamentally just critically important um socially and technically inclusive

um the kind of fair launch ethos that we started with um quite a while ago now I think has really just grown and spread in the arbitrum community um 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 um and feel at home is is kind of just in you know incredibly important and kind of core to how people think about it um and that it also goes to the last principle kind of neutral and open and then last but certainly not least user focused that like fundamentally all of this eventually comes down to the users and having arbitrim be a place where people actually want to be um and interact um and kind of live their lives live their you know digital lives online and

like though that really kind of I think sums up to me in a big way kind of what all of this is about so the arbitrim 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 eign 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 and laws and self-regulation that you guys have at offshine 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 just 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 the bird has left the Nets Nest right it's like they're you know it's set on its it's

its own course what I really like about these principles is I feel like they're the sort of thing that's kind of obvious in hindsight um that when you see it written down I 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 arbitrary ecosystem just kind of felt day to day even if they hadn't sort of like put words to it it's almost like it's it's more important for the future right like um 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 exactly I think one of the the last subjects we'll have to talk about is one of the things that arbitrary governance can actually govern over which is who validates the arbitrum chain uh and so this gets into the conversation of phases of decentralization of our Roll-Ups which I think we 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 twos are so Harry can you walk us through what today means for the overall state of decentralization for uh arbitrum and layer twos in general yeah absolutely um so kind of fundamentally like you were saying sort of roll ups the the path to decentralization for Roll-Ups

has has been one that has taken time uh 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 um and and vitalik uh some number of months ago now uh time in crypto is very hard to deal with um create a great kind of template for how we kind of think about um roll-up decentralization um and I think kind of with with this change the these sort of um the state that the chain had been in where kind of We Still and and before and after this change there's there's upgradability um but the great thing about the the kind of movement over to the Dao um is that the only sort of instant

upgrade mechanism that is left is this entity called the security Council um which is elected um is which is selected through elections every six months by the Dow um and has uh 12 members with a nine person threshold um where the members are from all sorts of organizations and all sorts of locations all over the world in order to create is kind of strong a set as possible um and that sort of decentralization is kind of key to the actual real security properties of the chain um because fundamentally in a lot of ways to 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 team so we had that one very early but the the kind of second tier of of how we control operatability or how the Dow controls upgradability now um is kind of the big change today so here you guys are at stage two of decentralizing uh the arbitrine roll-up then and refresh listeners so how many stages are there in vitalik's um model that he put together and what's kind of the end State how close are we to that yep so it's actually so we're in it started with Stage zero we're now in stage one which is the second exactly um so kind of stage one is like I

described basically the combination of having working fraud proofs and having a kind of sufficiently large um upgrade multi-sig with a kind of sufficiently decentralized and high threshold um and that's where we end up today um the last stage is basically kind of making good on sort of an even more decentralized promise um and the kind of and getting to sort of the final state with the the kind of two big tiers of which one is completely permissionless validation um where kind of today the Dow controls who can validate um and but the goal would be that power is removed from the Dow because everybody can validate so there's no

need to uh permission it at all and this second part is is to remove instant upgradeability 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 um 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 most best of both worlds as kind of things move forward and evolve okay so um can we talk about this too so we've got the

the ARB token we've got governance in place so this entire ecosystem is more decentralized we've got arbitrum one we've got arbitrum Nova um what are these things you were talking about called orbits is this related to the concept of layer three I feel like the entire concept of I mean just when crypto is getting its head wrapped around layer twos we're throwing layer threes at them and I I want you guys to help us imagine what layer threes will be like what they can do in the same way wow was it like uh a year and a half ago two years ago when you first came on and arbitrine was one of the very first layer twos 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 the layer two here's what it's going to be like and I remember being very uh excited and Blown Away by that episode are are we looking at a similar type event for for layer threes what are layer threes and our orbits related to them before we go into that I just think the amusement park uh metaphor yes that's right we had this so for bankless listeners you remember this episode God when was that I don't know 2022 destroyed me from uh yeah this episode was in 2021. this was in 2021 it was like late August or September I think um we had this analogy of a layer two is

coming and um you know the theme it was like a theme park on on ethereum and uh we we didn't have the rides open yet but Builders were gonna go build the rides and let everyone and it would be amazing this is basically what we have I mean I look at the the small brain community and the treasure ecosystem I mean these are the really we want you to give an eve right they gotta earn it all right um You Gotta earn it with those likes so um yeah what's layer three gonna be like is this like an amusement park inside of an amusement park like an underground type of experience that that we can all go and use like how's it going to be different so one way to I think describe it is like a priority Lane

that's uh you have projects that they want to 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 shared capacity with others one of the coolest things about layer threes and layer twos is arbitrim has roughly an order of magnitude so so 10 times the capacity of ethereum any layer 3 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 when I see it I can in conversation with projects so who wants this and why do they want this it's a few different types of projects they want it one is projects that are doing really really well for example um you know this is like there's been a lot of public conversation about yoga

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 priority land 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 education can customize this right so yoga Labs or someone else could say hey uh we're going to launch a chain a layer three and anyone can launch in this chain but it's sort of our ecosystem by branding or they can actually lock that in and say we're going to launch a chain and the only contracts allowed on this chain are ones that are deployed by by Yuga Labs it could still be secured by

ethereum it just wouldn't have permissionless um application uh deploying deployment on it those are the customizations that we've heard projects that I'm using eucalabs as an example because it's a public a lot of public conversation around it but those are some of the conversations you'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 or ethereum aligned and eth Will Remain the token of the public chain so Arboretum one and Arboretum Nova 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 on this channel and I think we'll see I'll see a lot of that happen as well

that's uh you know 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 uh 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 uh you know for for some projects it's it's good because also you have to think about the infrastructure right etherscan chain link uh you know um node providers like Alchemy if you're a quick node etc etc um are they going to go ahead and support a you know hundreds or thousands of other chains probably not they might support the big one so if you're sufficiently successful you might be

able to get the infrastructure 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 uh interactions that you might say hey I want to be on the Chain where unispop is like IMI protocol Taps into unit swap liquidity that's another right so it's not like a got Silver Bullet everyone wants their own chain it's better really there are some developers in some applications depending on who they want to be co-resident co-located with what their capacity is ETC 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 uh want this and you know we're putting this out there just as uh as as an option a tool for developers and the

other thing is it's good for experimentation right you know there are eips that um um you know that are proposed but not yet on ethereum sometimes controversial you can go ahead and launch an arbitrary L3 chain on mainnet and you do it in a way that um you know that EIP an experimental shame with with different changes it changes and sort of run them in a main environment as sort of a mainnet test then environment um so a lot of I think room for Innovation here and uh testing grounds as well for for changes that may make themselves into um other chains even ethereum itself 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 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 code base to deploy l3s um I I fully expect people to come up with some crazy ideas um that we couldn't possibly think of right now which I'm very excited for 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 um uniswap V3 code is 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 uh a defy app on uh the ethereum layer one volts protocol uh made a submission to uniswap Dow to loot use the unit swap V3 license to use a Unison V3 code you can swap down said yeah you can use it because in the proposal volts protocol gave uniswap one percent of their tokens and so that's what convinced the unusual data vote Yes you can use our code and uh we don't know what comes next with this arbitrim code base 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 uh will be determined by the people that have all of the responsibility which is what we are celebrating here today responsibility definitely so guys um as we 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 um this is uh distribution of responsibility this is um distribution of ownership um this is a distribution of of governance um but what is next for arbitrum after this like are you excited about eip4844 is that a thing that's interesting or coming

um is our kind of the blossoming of the the layer three is that what you're most excited about arbitrim Nova is is that a thing like what is the next thing the crypto Community should should look for from from arbitrim 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 eip4844 um I'm also very excited and hope the Dow continues to take steps and expect it out to to decentralize and get rid of that white list which we know which good she'd mentioned which is really um one of the last steps of decentral of decentralization so those to me are are

really excited um in terms why 4844 for people who aren't aware of what's going to happen there yeah so 4844 um will basically uh so Roll-Ups like arbitrum but really all rolled UPS they put a lot of data on ethereum and that's critical to the security so we don't talk a lot about the fraud proofs but in order for the fraud proofs to work and even actually for validity versus EK Roll-Ups you need the transaction data and it compressed form and put on ethereum um and it turns out that that's actually the largest cost for at least for arbitrary and optimistic Road UPS is just putting that data on ethereum and if you have you know a five transaction fee on our five cent transaction fee the majority is actually just passed through

to ethereum to put data on chain and um what what eip4844 will do will have a introduce a really targeted at Roll-Ups a cheaper path to put data on chain and uh you know lots of different um lots of different um estimates out there about you know I don't want to get into that because I'm not entirely sure myself of of what the of 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 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 feast even lower Barry how about you what excites you yeah yeah I mean I mean you know in a lot of ways like the you know certainly just like the unknown of like what 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 sorting the chain ourselves it's kind of like really a great feeling just sort of not you know not be in that position anymore um I think you know certainly like you know like Steven said 4844 is very exciting I think for me probably the thing I I would list is most exciting is basically the kind of prospect of of

kind of finding a path to hit stage two of that decentralization road map 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 a roll-up-centric future it kind of like you know I view that it's almost created a debt that like the roll-up protocol is owed to like be

worth being that future and kind of getting to stage two would be making good on that promise guys I'm I'm sad because this is the last time in this episode that anyone will have ever asked you win token and you'll never hear that again it's actually the Twitter replies so usually I can't tweet without a billion of when tokens and now uh they've all gone away or dinner what was it Stephen dinner oh um the main course the main course oh guys well congratulations for getting all the way to this point um and thank you for being Pioneer since the frontier and taking uh so many of us along with you

thank you for having us as always thanks for having a station you can go check your eligibility for the ARB token at arbitrim.foundation we'll include a link in the show notes as always written disclaimers none of this has been Financial advice eth is risky so is crypto so are layer twos like arbitrim all of D5 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 Ryan they're all asking for it man wait did we get 400 and no 248 nine likes I think we need one more like before this oh it's coming in oh they're liking it right now I don't see it they want they want given the official series not only am I

watching the YouTube chat but I'm also watching the small brains Discord how did you say it how do you say all right let's do it together one two three you eat me