How Timeboost is Shaping the Next Evolution of Arbitrum

Transcript

there's going to be debate over like what the right balance of tradeoffs are. Like I think there are some people who are really extremely on the side of like you know full decentralization um like you can't have centralized entities have any power. As you guys were developing this what was kind of like the thought process did you learn anything about me or generally how have you seen MEV? How do you guys think about flipping the script on on the narrative of L2s being extractive? And welcome back to the rollup your home for technical talks and open conversations that shape the modular future. Nothing on today's show is to be construed as financial advice. You can see our full disclosures list at therollup.co/ventures. What's going on, guys? Welcome back to the rollup. It's time boost day. We have our friend Harry

here. Harry, it's been a while. Last time we were on a spicy panel. It's good to have you in the virtual environment even though we're about two miles away from each other. Oh man. No, great to great to see you again. Great to be here. Thanks for having me. Yeah, man. I mean, you guys have been working on time boost for a while. How does it feel to be out in the wild? It's it's it's exciting. It's it's very exciting. You know, slightly, you know, that that that sort of perfect mix of of exciting and then a little scary, which which you know, you means you're you're doing something right. Um but it's been you know over I think over a year now of of of working at this from the research stage the implementation stage working with with the arbitum dowo stage like so

many kind of so many major pieces that go into build shipping something like this and having it all come together is pretty exciting. Absolutely. So to give a little bit of an overview and you know obviously Harry fill in the blanks here time boost and it's finally time for time boost is that it is a uh a a change in the way that sequencing is done on arbitum going from a first in first out mechanism to one where you guys are allowing people and users to bid for priority ordering. um the transactions are kept private. Um but people are and users are able to bid ETH uh maybe among other tokens uh for priority ordering and then the arbitum DAO ends up recouping those uh those priority fees or those bids. Um and so

you know generally this was done to sort of oust the MEV from Arbitum and make it a much more fair ordering process. Um what you know as you guys were developing this what was kind of like the thought process? Did you learn anything about MEV or generally how have you seen MEV, you know, change and adapt and now ultimately with time boost in its new form, how do you think arbitum will uh will react to this change? Oh, totally. Yeah. And just, you know, I think uh just to kind of build, you were like 90% accurate on that. So, just the the the the 10%. It's interesting. It's kind of the you can't really get more fair than than first come first serve.

Um and you can't really get more me minimization than first come first serve because first come first serve you have you eliminate sandwiching you eliminate like any of the like normal builder activities of seeing the memp pool and and kind of doing stuff with it. Um your me you have no you have no visible me. Um, time boost, the goal is to basically preserve all of those qualities. And that's kind of the the really tricky bit of time boost is that like if you look out there at the spectrum of kind of ways that chains handle me, um, basically kind of most people give up on those qualities to some degree and give bu give builders or searchers sort of more more control than we're comfortable with and kind of

introduce me essentially compared to where arbitrum is at. Um, but those are all there there's a lot of different types of me. And so kind of the the what you have no matter what you have back running. So like, hey, like somebody, you know, does a swap, throws the price of a pool way off, you need somebody to come in, arbitrage it, bring the price back, um, earn some money out of it. Like that's going to happen. That's good. You don't want to eliminate it. Um, but it's an opportunity and everybody's going to want that opportunity because it's essentially free money and you have this question of like where is that going? And and that's where time boosts kind of add this new type of fairness, which is that right now it's all about latency racing. And everybody hates latency racing. Kind of like who can get their transaction to

the sequencer fastest is just like a bad way to distribute. There's all sorts of like antisocial behavior that comes from it. Like trying to just like spam a million transactions. um trying to basically just kind of like do weird stuff at the hardware level versus time boost kind of switches that over and the goal is to switch that over to instead just paying for that opportunity and kind of doing something and again that element kind of similar to other me capture systems where there's this opportunity to earn money and we're going to and that opportunity to earn money gets sold. Um and so that's kind of the the big the big thing there I think kind of like in terms of understanding and I'm going to probably lose parts of your question so you have to remind me what parts I miss. Um, it's definitely been kind of interesting in

that like it's very hard with MEV to sort of like get full knowledge of all of the actors. Um, just because obviously there's a kind of like a lot of secrecy and secret sauce, private order flow, like all sorts of kind of like, you know, I mean the metaphor of like the dark forests, um, is a great one of kind of the ME ecosystem. And so um you know I think we can understand really well like the types of me the types of value extracted. Um some of the actors are relatively public and kind of engaged. Others you know maybe you can connect with them on some weird Discord server but they're probably not going to want to talk to you much. Um which is why kind of time boost was designed sort of in a way where like about what we

have what kind of what we tried to do is basically create the thing that is the best thing that we could figure out in this sort of like there's this gap between theory and practice. Um, and it's going to be really cool to see and kind of there's a ton of data monitoring and analytics set up to like see kind of and monitor in real time any effect um that that's going to have on the actual um on the actual ecosystem. Um and it's and kind of you know and also in the proposal kind of various powers like off-chain like the offchain labs the ability to to mess with certain parameters and kind of ways that the Dow is allocated in order to try to sort of make any changes if necessary and kind of that live reaction and kind of observance and evolution of the system

is going to be so key. Yeah, definitely. I mean I think that one one push back from the community around L2 is probably whether first come first serve or imp implementing as arbitrum one is doing in this more priority fee operation has been uh the result of the fees generated from the sequencer and then essentially like where they go and so um you know with an arbitrance model those go to to the DAO um and we have been seeing some talks and some initiatives be put forth um you know from from AJ around this kind of arbitum as this like nation state or as this kind of global uh entity. We we've been seeing ideas from other chains as

well around best practices to use that use those sequencer fees. How do you guys think about flipping the script on on the narrative of L2s being extractive and kind of holding this idle ETH into uh multi-igs or Dow treasuries into something more productive for arbitum and Ethereum as as a whole. Oh, totally. Yeah. And it's it's really to me kind of like the the general immaturity of of Dows that this is even like a a question like yeah, you don't just have value sitting there doing nothing. Um because like obviously sort of like that's not that's not good for anybody. Um and and kind of the sort of the you know the the needed sort of

ecosystem maturity. And to be clear, there's a lot of people in the DAO who are interested in this who are talking about this. It's just sort of and this is kind of goes to um go and and there's some great sort of existing efforts in this like step being kind of one of the most exciting ones where hey both the DAO has invested money and is earning like real income on it. Um and also onboarding all of these really exciting RWA providers to the ecosystem. Um, and it's kind of a great example of that sort of nation state model. Um, where you can kind of both capture value and grow the pie at the same time. Um, which is like obviously huge and kind of if

you're talking about, hey, my money can either be sitting here doing nothing. Um, or it can be simultaneously capturing value and growing the market. it's pretty clear which of those you want to see and and kind of figuring out like how to actually pull that off successfully and kind of what the right ways to do it are for both kind of Arbitum and Ethereum are the tricky bits and and kind of like that's where you get into and and kind of definitely sort of watching with interest the Arbitum Foundation's um Arbitum aligned entities proposal that went live um I think end of last week maybe um and kind of sort of trying to sort out sort of like the the kind of operational capacity and sort of organizational capacity to sort

of like really kind of take on these these sort of strategic challenges which are just so hard to solve in a way that can really drive progress. Yeah. So there's been some some interesting let's just say lack of consensus on those proposals or on those ideas many people for some against um notable people in the community. Maybe you could break down uh what what the importance of those are for arbitragemen and why you feel that that uh um you know why there is this lack of consensus.

Yeah, I mean it's it's kind of interesting and I I mean I feel like the starting point in terms of talking about this is just the the like arbitrum DAO is actually controlled by token holders which there's a pretty limited number of Dows that you can say that about. Um, and the this proposal wouldn't change that at all. And like the fact that that is the case is why this proposal like like in my mind like what this is proposing is like what every like a better form of what everybody else is like everybody else is already doing way you know is it already has way less power and and kind of delegation into into Dows in a in a really kind of sad way from the state of like what we're

what you know Dows are trying to achieve. Um the Arbitum Dow when it launched two years ago went in kind of like the exact extreme opposite direction of like full decentralization. Um the Arbitum Foundation having kind of like a very restrained role in the ecosystem. um kind of creating you know getting like huge engagement like leading to like all sorts of you know awesome teams being involved like um like and you know starting up like uh like Entropy Adviserss who's been an awesome addition to the to the ecosystem. Um, and kind of now it feels as though there's this kind of goal of finding kind of whatever this like reasonable middle point is where you can

kind of have some of the operational advantages of having a bit more structure while also like not losing that kind of core of the thing which is most important um, which is decentralization. Um, and kind of, you know, there's going to be debate over like what the right balance of trade-offs are. Like I think there are some people who are really extremely on the side of like, you know, full decentralization. Um, like you can't have centralized entities have any power. Like you just need to have like fully decentralized everything. Um my personal view on this is that that's kind of like fairly extreme and there's a kind of mental model split between like who has the actual power um and sort of who's doing things and like my

favorite example of this is kind of actually draw you know pulling it back to slightly towards time boost like with the sequencer like there is a sequencer um for arbitrum um if that sequencer ever did anything that the arbitrum dow didn't like they could just vote to kick out the sequencer and replace them with a new sequencer. Um, and like that level of of sort of, you know, that's where the real power is is the thing that kind of like to me is the reason why like these systems are are worth thinking about and kind of like a nice balance where, you know, unlike some other ecosystems where you might have like, hey, there's a foundation like they control, you know, almost all the token supply. The DAO sort of can like advise them and ask them to do things, but like also if the foundation says we're going

to ignore you, DAO, the DAO has no power. um like couldn't be further from Arbitrum. Yeah. Yeah. I think there's a I mean I think that there's been a huge performance and UX shift in the last I mean really year or so where where I think the market has been telling us that that they value these two things over over uh decentralization or or at least some are willing to accept some trade-offs uh for better or for worse. Um, but there's definitely been some some of those criticisms towards time boost that I think are worth kind of debunking. Namely, that that it introduces more me, which I think the the the answer is actually that it's uh,

as we spoke about in the beginning, it actually kind of repositions where um, and how that me is generated and that also that it's it can be potentially more unfair to the users in that same vein. Um, yeah. What what are your thoughts around the the the criticism that you guys received about time boost? And what are some of the core ones that you'd like to debunk? Innovating finance global institutional and onchain deep liquidity to drive capital efficiency. Now maximize yields on institutionalgrade liquid staking with me. Unlock trillion dollars of capital via Fitbitcoin.

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yieldbearing stable coin by Fracks, coming soon to a chain near you. Redstone is DeFi's modular oracle. Supporting over 100 clients on over 50 chains and offering 1,000 assets. Redstone is the leader for Bitcoin staking and yieldbearing assets. They offer the most robust customizable price feeds available in any model. Join the Redstone exhibition today. [Music] Yeah, absolutely. And it's kind of interesting and like there's there's I would say there's two different categories of of criticism. There's like

the criticism in my mind that just sort of like doesn't really fully understand the time boost model. Um because time boost is just so different than most existing ME systems. like people try to people look at time boost and they like think about it the same way that like kind of like the Ethereum um PBS like based um me ecosystem works and it's different enough that kind of most of those most of those analogies don't make sense and so kind of like you know on the on the fairness side yeah the the kind of that that's sort of you know the um um that's the thing where basically kind of the um it's sorry my brain skipped for a

On the fairness side, that's the thing where it's kind of most prioritized. Um, and keeping that sort of first come first-s serve experience is so important. Um, there is around a 200 millisecond latency increase to users and that's kind of like the one big UX sacrifice that time boost makes. Um, kind of I think the thought process there is essentially that it's worth it because most users are not really going to notice 200 milliseconds compared to the advantages of time boost in terms of kind of what it's going to do to the MEB ecosystem. Um, and then you have kind of and then you think about like the actual distribution and fairness in the MEB ecosystem. Um, and there's general alignment around this idea that kind of, hey, being able to bid for value, um, is a lot more fair than kind of latency racing because latency racing gets into

all sorts of sort of structural advantages like, hey, can I actually build out my tooling as near can I figure out where the sequencer is and try to build my tooling as close as possible to this actual physical box? It's like well hey maybe you're based in some you know other country and you don't have the right to you know deploy your equipment near the sequencer like and you can't participate in the ecosystem. Um whereas with time boost um all you need and that 200 millisecond advantage is enough to basically make it not matter on the latency side um and and kind of do that. So that's one side of things. The other side of things is kind of the criticism around sort of like well what effect will time boost have on the ecosystem like what effect will it have on DeFi? What effect will

it have? And like there kind of you're in the interesting position of like there's a lot of good theories. Um there's a I think there's like a fair amount of confidence on our side that like hey this is this is going to be reasonable. This shouldn't have any significant you know any major negative effects. our research team is engaged, you know, deeply with with a lot of, you know, with a lot of people about this. Um, there's definitely concerns. I don't think those concerns are totally unreasonable. It's also why, um, there's been a lot of work that's gone into basically monitoring. There are a lot of kind of controls and protections um, if there were anything that were to cause like, you know, significant issues. and kind of you know there's a very sort of there's a goal of a very balanced approach because when you're doing

something that's totally novel and you're messing with an area as confusing and complicated as me um it's always really hard to know what's actually going to happen um sort of in in you know other than that sort of like you know the theoretical models are great and we believe in them and kind of like applying that sort of heavily researched and kind of formal study is so important but also you it's always you know it's also always important to how the solution how the situation you know evolves in practice. Yeah. Okay. So getting into some of the details here about about exactly how this is going to work based on on on that on that core idea which you've just laid out for us. We have quite a bit of

controls here by governance things like the like the minimum reserve price. Yeah. um as well as kind of who is able who is able to be like the the uh autonomous auctioneer. Yeah. So how is that being solved right now and and what is the process that governance is undertaking to uh make these choices? Yeah, absolutely. I mean and this was kind of uh um offchain labs we worked closely with the arbitrum foundation around kind of crafting the proposal for time boosts and and kind of we worked on and kind of had an initial slate of sort of like here's sort of our proposal for kind of a reasonable set of you know if

you want to think about kind of progressive decentralization sort of like eventually maybe you want to have kind of like none of these things can be adjusted u but also a lot of them are are fairly safe to adjust and don't create much risk to adjust and being able to adjust them relatively quickly um if the need arises because the thing about the governance process is it's slow um it's very bad at responding quickly to anything. So if you were locked into um well something happened, we need to pivot um okay just wait you know a month um it's not a practical solution and so kind of you know there's initial and then there's a lot of feedback from delegates. There's back and forth over kind of like hey what are properties that you know the minimum reserve price is a great example of

something where it's kind of like you can you know it's not particularly scary to delegate authority to change that. What's the minimum reserve price? the minimum reserve price is the minimum price that you're going to sell a minute of express lane ownership for. Um and if it doesn't get sold then the system just runs first come first serve. Um and so basically um the risk is just like hey maybe the express lane isn't sold and worst case if it's not sold um the system functions the same as it does today which is kind of a very reasonable sort of you know a very reasonable trade-off um to to make and and and I think kind of that that hopefully that generally answers that question.

Yeah, I think uh I mean these these decisions are are are often like arbitrary um but can make an impact on on on kind of how the protocol seems to obviously operate and and the efficiency. Yeah. And you want to be able to fine-tune, you want to be able to like, you know, there's a there's a there's a hundred parameters. Mav is is complicated and evolving. Um I would hope that a year from now the list of things that kind of can be easily changed is a lot smaller. Um and that like as time boost gains experience and you know stands the test of time. Um there's kind of a level of comfort developed which is like hey we're okay with if this takes 30 days to change um and and kind of that that balance is

just this like incredibly fundamental thing for Dows of sort of being able to move quickly um and and being able to move in a decentralized way. you know, basically the exact same thing we were talking about before in the other setting about the the arbitrum alliance entities proposal. Definitely. Um, so as we kind of come to a a wrap here, as you're looking forward uh in in a posttime boost world, what does this mean for the DAO for offchain labs uh for users of arbitrum one? Um, you know, is there going to be any material changes to the experience or for any of the applications? Um what is what is the you know what is the future of of arbitrum one in this post time

boost environment? Absolutely. Yeah. I mean and kind of the beautiful thing is that like if if time boost goes really well which you know I'm I'm I'm I'm here to say I'm I'm feeling pretty pretty damn good. Um that uh the user experience will barely change. There's an extra 200 millisecond latency but users aren't really going to notice that. Um the amount of sort of back running junk, latency racing, blind back running, like all of this kind of antisocial behavior that fills up block space should be massively should be hopefully be like very reduced. And so you know more block space to actually go to um good user transactions which is like a you know effectively will help you know scale the capacity of the chain

um and um new re new source to the Dow and and kind of treasury diversification um getting kind of you know getting getting more ETH being able to hopefully do you know cool things like you know stake in the future um and and kind of generally build out sort of a long-term uh a long-term kind of financial world where the Dow is able to you build and expand and and acrew value. Looking forward to it, Harry. I appreciate your time. I know it's been a long work uh or a long journey w with a lot of work. So excited to see this roll out and um yeah, big day today. Oh man, thanks for having me on. A lot of fun.

Thanks sir.