Bessie Liu

Offchain Labs, the research and development team behind Ethereum scaling protocol Arbitrum, has had a busy few months.



Recent milestones include the launch of tools for developers to launch their own Abitrum chains through <a href="https://blockworks.co/news/arbitrum-validation-protocol-permissionless">Arbitrum Orbit</a>, the introduction of a <a href="https://blockworks.co/news/arbitrum-validation-protocol-permissionless">permissionless validation protocol</a> and the release of programming environment <a href="https://blockworks.co/news/arbitrum-stylus-testnet">Abitrum Stylus</a>.



Today, Arbitrum is one of the largest Ethereum scaling platforms. It holds a market share of almost <a href="https://l2beat.com/scaling/summary">55%</a> and has a total value locked of $5.82 billion, <a href="https://l2beat.com/scaling/summary">according</a> to L2beat.



Most recently, the team <a href="https://blockworks.co/news/ethereum-espresso-systems-offchain-labs-transaction-ordering">partnered</a> with Espresso Systems, a decentralized sequencing layer, to further develop Timeboost — a transaction ordering technology optimized for improving first-come-first-serve tendencies in capturing maximum extractable value (MEV).



In an interview with Blockworks at Permissionless II, <a href="https://blockworks.co/tag/offchain-labs">Offchain Labs</a> co-founder Steven Goldfeder said that the decision to work with Espresso Systems was made so that credible, neutral third parties could help drive the scalability of Ethereum.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Blockworks: Tell me about Timeboost and the decision behind partnering with Espresso Systems to bring the tech to life.



Goldfeder: Timeboost was a proposal that we at Offchain Labs had put out in a few iterations on Arbitrum research forums and elsewhere. The idea comes down to MEV ordering. Historically, there are different schools of thought about how to order transactions. On Arbitrum today, there’s “first come, first serve” ordering, but others say everything should be auctioned — this is the other end of the extreme — which is that you completely pay for ordering transactions in a mempool. Timeboost is sort of an in-between of these two camps, which basically says there are intervals that allow you to bid for placement and have the privacy of transactions built in.&nbsp;



We’re partnering with Espresso. We’re going to provide key research, and they’re going to actually build it out in a way that is compatible with the Espresso sequencer. The reason why we’re not building this out ourselves is because we have to understand the realities of what we build, and how that’s perceived, and the biases that are associated with that. We need something that is more neutral.



When it comes to interoperability, if every different rollup stack is building its own megachain, you don’t really accomplish much. Whether we open source it or not, other chains will not use something we built. I think if you really want to get interoperability, it is by building an Ethereum super chain. The way to do that is to empower credibly neutral third parties, putting our biases down for a second, and I think that’s actually best for the Ethereum community.&nbsp;



Blockworks: There’s a lot of MEV discussion around time-sensitive transactions versus non-time-sensitive transactions. So, with Timeboost’s guaranteed inclusion, how do you determine what transaction should be included? It seems like it would be pretty difficult to choose a good middle ground.



Goldfeder: So even today, before we get Timeboost, there’s this concept of forced inclusion on Abritrum chains. The forced inclusion on Arbitrum chains today is 24 hours, what that means is you can’t censor indefinitely but the sequencer can real-time censor or delay. I think the parameters about transaction inclusion will be up to the different chains that choose to adopt this [technology]. If the Arbitrum DAO adopts it, it can choose to set these parameters.&nbsp;



If you ask me what I think about Timeboost, the parameters we think about are more in the realm of a few seconds. The idea is that what we have today — the chain forcing the sequencer to do something — is very different from Timeboost where a distributed party, the sequencer, has logically agreed to do something. I think that lends itself to much shorter intervals of guarantees.&nbsp;



In a, let&#8217;s say, two-second interval, you can bid for timing, but every user will guarantee that its transactions are being processed quickly. If the Timeboost committee is behaving according to its principles, then that transaction will be included. If this whole time this committee colludes against you, you still can go on-chain and get this other guaranteed inclusion from on-chain.&nbsp;



Blockworks: Do you think shared sequencing is a more pressing issue than permissionless fraud-proof systems?



Goldfeder: No, not really. A lot of people don’t really know what decentralized sequencing means. Say for example with Abirtrum the sequencer has very limited power because there are fraud proofs. Sequencers can’t do anything security-critical. It can’t actually go ahead and steal your money or take it and put it back in a transaction — that’s validators. Validators will challenge one another if they do the wrong thing. Sequencers give you fast confirmations, but those don’t hold any weight on-chain.



In a validation system that doesn’t have any fraud proofs of validators, then the sequencer is basically the dictator. It can submit whatever fraud or whatever state routes it wants In some ecosystems, that is true, but it’s really more about the progress of the sequencer. I think the most important thing here is that decentralizing the security of the system — which Arbitrum does today — among about a dozen different institutions submitting fraud proofs or having the ability to challenge different fraud proofs if necessary. I think that is number one. When we launched Arbitrum, having fraud proofs was non-negotiable.



So, going back to what can a sequencer do? It can’t do anything like include a bad transaction. It can order transactions, but it can’t censor a transaction. It can delay a transaction, but it can’t, as we discussed before, censor indefinitely because there are paths to guarantee a transaction on-chain — and that’s where the decentralizing sequencers come in. 



I think that it’s an important problem, but I think that having live security proofs is more important, and that’s why we prioritize building the security proofs before the decentralization of ordering.&nbsp;



This interview has been edited for brevity and clarity.



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Arbitrum

Offchain Labs’ Goldfeder talks Timeboost, transaction ordering and more

Blockchain scalability is no longer the biggest barrier for public blockchain adoption, says Offchain Labs’ Steven Goldfeder.



Goldfeder, Offchain Labs’ chief executive, said during the Real World Asset Summit held in New York City on Tuesday that the biggest challenges faced by ecosystems today center around the creation of tools with better user interfaces and regulatory compliance.&nbsp;



“Scalability is very much a solved problem today,” Goldfeder said. He went on to note that scaling is a never-ending process that blockchain infrastructures today are equipped to handle.



“That’s not the problem that ecosystems are working on today. It’s about user interface and compliance,” he said.



Read more: <a href="https://blockworks.co/news/scaling-blockchain-technology-future">What we need to scale blockchain technology into the future</a>



Resolving such issues would ease the path for larger institutions, including banks, according to Provenance Blockchain CEO Anthony Moro.&nbsp;



That sentiment was shared by Charlie You, co-founder of RWA.xyz, who said that existing institutions and users aren’t interested in the tech behind blockchain protocols. Rather, they care whether they’re&nbsp; safe and legal to use.



You went on to say that developers should consider different kinds of users when building.



“A lot of existing <a href="https://blockworks.co/tag/real-world-assets">RWA</a> users are not crypto users; there are a lot of people who are using these products, but they are not the same people who are using Uniswap,” You said.&nbsp;



Sergey Gorbunov, the co-founder of Axelar, added: “It’s important to make it easy for people to have easy flow to on-ramp into these structures.”



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Offchain Labs

Blockchain scalability is a ‘solved problem’ says Offchain Labs CEO

Ethereum scaling solution Offchain Labs is partnering with blockchain infrastructure company Espresso Systems to bring Timeboost — a transaction ordering technology — to life.&nbsp;



The teams will also work on integrating both Timeboost and the <a href="https://blockworks.co/news/espresso-systems-decentralized-sequencer-testnet">Espresso Sequencer</a> with the Arbitrum technology stack.&nbsp;



The Espresso Sequencer is a decentralized sequencing layer that layer-2s can choose to opt into, Ben Fisch co-founder and CEO of Espresso Systems told Blockworks.



“Having Offchain Labs’ support of this vision is a strong signal to us and to the <a href="https://blockworks.co/tag/ethereum">Ethereum</a> community that even teams with strong technology affiliations of their own will continue to prioritize permissionless approaches to coordination and technology,” Fisch said.



What is Timeboost?



Timeboost is intended to improve existing first-come-first-serve (FCFS) tendencies and <a href="https://blockworks.co/news/draft-mev-dydx-chorus-one">become more optimized for maximum extractable value</a>, or MEV.



Existing <a href="https://blockworks.co/tag/arbitrum">Arbitrum</a> chains do not earn any value from MEV, Timeboost is designed so that these chains can internalize the value of ethical MEV whilst simultaneously preventing harmful behaviors such as front-running.&nbsp;



This means that rollup solutions that want to capture value from ethical <a href="https://blockworks.co/tag/mev">MEV</a> practices like arbitrage, Ed Felten co-founder and chief scientist of Offchain Labs told Blockworks.&nbsp;



“It does this by using a special type of sealed-bid auction so that transactions can bid for position within a block. Because the auction is sealed-bid, users cannot front-run others’ transactions,” Felten said.



Timeboost collects fees generated by the chain so that it can identify and manage revenue disposition, Felten explains.&nbsp;



“Transactions submitted to the chain can optionally carry a bid, which is a premium that the transaction is agreeing to pay for each unit of layer-2 gas it uses, above the regular layer-2 gas price,” he said.&nbsp;



Within a block, bids are sorted from highest to lowest, and higher transaction bids will be placed in an earlier sequencer block.



The team at Offchain Labs has been looking into Timeboost transaction ordering for over six months and has <a href="https://arxiv.org/pdf/2306.02179.pdf#:~:text=TimeBoost%20is%20transaction%2Ddata%2Dindependent,created%20by%20an%20FCFS%20policy.">published</a> technical papers on their progress.&nbsp;



“We are now working alongside Offchain Labs on further research around Timeboost and undertaking implementation and integration of the module,” Fisch said.



Fisch added: “The final version of Timeboost will likely be a modification of the protocol described in the paper, favoring a discretized approach to ordering rather than continuous.”



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Espresso Systems

Offchain Labs, Espresso Systems link up on transaction ordering tech

Offchain Labs, the team behind Ethereum layer-2 scaling network Arbitrum, has launched the testnet for Arbitrum Stylus, a new programming environment that enables developers to write smart contracts in Rust, C, and C++.



The primary coding language for Ethereum smart contracts today is Solidity.&nbsp;



With Arbitrum Stylus, developers can now use familiar programming languages to build on Arbitrum, Rachel Bousfield, tech lead at Offchain Labs, told Blockworks.



“If someone out there is working in Rust, or C or C++, instead of having to learn a new programming language like Solidity or Vyper, they can just use technologies they are already familiar with and write their applications and make their products in those,” Bousfield said.



If the Arbitrum DAO chooses to adopt Stylus, the tool will be available for developers on Arbitrum One, Arbitrum Nova and Arbitrum Orbit. A date for a vote has not been set, and indications are that the plan is to gather testnet feedback before submitting a proposal.&nbsp;



According to a Statista <a href="https://www.statista.com/statistics/793628/worldwide-developer-survey-most-used-languages/">report</a>, which surveyed 87,585 software developers, only 1.33% of respondents said they used Solidity. By comparison, 19.34% and 22.42% of respondents used C and C++, respectively, and 13.05% used Rust.&nbsp;&nbsp;



The Stylus’ developer-friendly technology is enabled through <a href="https://blockworks.co/news/arbitrum-upgrades-to-nitro-ahead-of-ethereum-merge">Arbitrum Nitro,</a> a significant tech stack upgrade to Arbitrum One that occurred in 2022.&nbsp;



All fraud proofs on Arbitrum Nitro currently use the third-party open sourced software WebAssembly (Wasm), which can prove the incorrectness of arbitrary programs, Bousfield said. Wasm is today supported by nearly all web browsers, as well as programming languages, that underpin the internet. 



“What we’ve done is made it such that arbitrary programs that are untrusted can now be proven as well,” she said. “So, using that same Wasm fraud prover, with some minor modifications that don’t change the actual trust or safety of <a href="https://blockworks.co/tag/arbitrum">Arbitrum</a>, we’re able to add new kinds of Wasms which include people writing their programs in Rust, C or C++.”



<h2 class="wp-block-heading">Interoperable coding languages</h2>



To ensure optimal performance, coding languages on Stylus will be completely interoperable, Bousfield said.&nbsp;



To accomplish that, different coding languages will work in tandem. For example, if a developer is programming in Rust, they are able to import a Solidity interface or vice versa.



This is possible because Solidity contracts have a way to call each other.&nbsp;



“Since everything expects to be called and call each other in the same way, it doesn’t matter what the implementation details are of the contract you’re interfacing with,” Bousfield said.&nbsp;



Existing Solidity <a href="https://blockworks.co/tag/dex">DEXes</a> will be able to list — without any modifications — ERC-20 tokens written in Rust, for example, and those programs may call out to C programs to do cryptography.



“We don’t have to go to all these different <a href="https://blockworks.co/tag/dex">DEXs</a> and say, ‘Please update your code so they can have Rust tokens, the Rust tokens’ — from their perspective —&nbsp; just looks like Solidity tokens, so the DEXs won’t know the difference,” Bousfield said.



<h2 class="wp-block-heading">Slashing fees</h2>



Beyond lowering barriers of entry, Stylus will also reduce fees.&nbsp;



“For the same amount of cost it takes to do an ADD instruction in Solidity, you can execute 150 ADD instructions in Stylus,” Bousfield said. “For compute intensive work, Stylus probably cuts costs somewhere between 10, 50 or 100x, just depends very greatly on what you’re doing.”



This is because, rather than having one virtual machine, Stylus will have two virtual machines. One will be the unmodified <a href="https://blockworks.co/tag/evm">Ethereum Virtual Machine</a> for developers who write using a Solidity contract, then a separate Wasm virtual machine.



<img loading="lazy" decoding="async" src="https://lh4.googleusercontent.com/unhQ2FobqVkADjr0MOXOBtTup7pozilsg0wqaZh6FQtF9fFnF_6_BCojCgVvcg1KqCsnDoqhdCtmlwBwBXiiafmDNZKkI3DX7zXq2qte1H1lIqAhAzIJjW911jzVPflhz3PYh9ElkkyLjI9mC_BxpyQ" width="575" height="324">



Source: Offchain Labs



Wasm is a standard for many companies like Google, Apple or Microsoft.&nbsp;



“Web browsers use [Wasm] to generate pages. It needs to be fast, and due to all the industry support, the runtimes that actually perform Wasm execution are just way faster than that of the Ethereum virtual machine,” Bousfield said.



Another reason why Stylus will be cheaper: Developers will be able to use standard tooling for C, C++ and Rust, which produce better bytecodes than Solidity.



“They use techniques like LLVM, which have been worked on for over 50 years, there’s decades of work that has been put into making C, and now you get to inherit all of that research, development and optimizations in your code,”&nbsp; Bousfield said.&nbsp;



<h2 class="wp-block-heading">Next steps</h2>



Audits for Arbitrum Stylus testnet is underway, and the team at Offchain Labs is looking to hear back from community members following its testnet launch.



The team is also looking to add more programming languages to Stylus, and further finding ways to reduce fees.



“It&#8217;s a constant race to improving the performance of layer-2, and this is just one step in that,” Bousfield said.



Updated Aug 31, 2023 at 9:45 am ET: Added additional context.



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Arbitrum Stylus could cut costs 100x with two virtual machines

Offchain Labs now offers an alternative to rollups for developers looking to launch on the Arbitrum network through Arbitrum Orbit.



Earlier this year, Arbitrum introduced Arbitrum Orbit, its own layer-3 development tool that enabled developers to launch their own chains on top of Arbitrum One, Arbitrum Nova and Arbitrum Goreli.&nbsp;



At the time, <a href="https://blockworks.co/news/arbitrum-arb-token-airdrop">users in March could only launch Optimistic Rollups</a> through Arbitrum Orbit.&nbsp;



Arbitrum Orbit rollup solutions post call data onto Ethereum through Arbitrum One, meaning that it receives security properties directly from the layer-1 solution itself. And multiple parties can participate in validating the rollup chain — making them entirely trustless and permissionless.&nbsp;



AnyTrust chains introduce an extra trust assumption in exchange for lower fees and faster withdrawals.



The extra trust assumption at work is a Data Availability Committee (DAC), or a permissioned group of member nodes that stores call data for a period of time, according to Matt Pearring, <a href="https://blockworks.co/tag/offchain-labs">Offchain Labs</a> product management lead.



“It’s significantly cheaper to do transaction on the network, we’re talking several orders of magnitude — if you have an example transaction on Arbitrum One that might be five to 20 cents, on an AnyTrust chain like Arbitrum Nova, these transactions are fractions of a cent,” Pearring told Blockworks.



Launching an Arbitrum Orbit AnyTrust chain means paying only Arbiturm fees, Lee Bousfield, tech lead at Offchain Labs, told Blockworks.&nbsp;



This means that data is posted onto the DAC, which issues a signature noting they have received the data only to the <a href="https://blockworks.co/tag/arbitrum">Arbitrum</a> chain.



“The signature is a fixed size, and is much smaller than the full data itself, and just the signature is posted to Arbitrum, that’s why it saves so much cost,” Bousfield said. “Instead of posting all that data to Arbitrum, and then Arbitrum has to post all that data to <a href="https://blockworks.co/tag/ethereum">Etheruem</a>, an Arbitrum Orbit AnyTrust chain only has to post that small signature to Arbitrum.”&nbsp;



If a quorum on an AnyTrust chain cannot be reached, then it will operate as a regular rollup on Arbitrum Orbit.



<h2 class="wp-block-heading">Assembling your DAC</h2>



Arbitrum Nova currently has its own public DAC, Pearring said, but Orbit chains that want to launch an AnyTrust chain will have a few options for assembling their own “independently. “



Infrastructure providers, such as Caldera, have been working with teams to assemble a committee of DAC members.



“Teams have the flexibility to choose, and it depends where they want to pull those folks from,” Pearring said.&nbsp;



Arbitrum Orbit chains will be highly interoperable as the DAC is already trusted to store data, Bousfield said.



“If a quorum of them signs off on a message sent between chains, that would also be assumed to be correct because they’re already being trusted to store the data,” Bousfield said.&nbsp;



The data availability service, as such, can sign off on an assertion and skip the normal challenge period.



“If there’s a disagreement between the data availability members, then it will still go through the normal challenge process, but in most cases you’d expect messages to flow very quickly between Arbitrum Orbit chains and other Arbitrum chains,” he said.&nbsp;



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Offchain Labs now gives you the option to launch low-fee chains on Arbitrum networks

Offchain Labs, the research and development team that supports layer-2 Ethereum scaling solution Arbitrum, has introduced permissionless validation protocol Bounded Liquidity Delay (BoLD).



Arbitrum is designed to leverage Ethereum’s security as much as possible. Currently, Arbitrum uses Ethereum to confirm that its <a href="https://blockworks.co/news/layer-2-secured-by-ethereum">state is accurate</a>.&nbsp;



An Arbitrum validating bridge sends information from its network to Ethereum. Once the transfer is complete — even if Arbitrum itself stopped processing transactions temporarily — users could still withdraw funds from the <a href="https://blockworks.co/tag/ethereum">Ethereum</a> blockchain.&nbsp;



To prevent validators from committing fraud when sending information between <a href="https://blockworks.co/tag/arbitrum">Arbitrum</a> and Ethereum, the process has a built-in delay, typically lasting about seven days. Over that period, other whitelisted actors can challenge claims they deem fraudulent.&nbsp;



As this process is permissioned, users are at the mercy of a limited set of whitelisted validators and must trust those validators are above board.&nbsp;



The problem, however, is that placing your trust in humans, who may be self-serving, does not always end well. A common concern is <a href="https://offchain.medium.com/solutions-to-delay-attacks-on-rollups-434f9d05a07a">delay attacks</a>.&nbsp;



A delay attack is when a malicious actor uses funds to prevent transactions from accurate confirmations — meaning a user who wishes to withdraw from layer-2 to layer-1 may never be able to do so.



Ed Felten, the co-founder and chief scientist of <a href="https://blockworks.co/tag/offchain-labs">Offchain Labs</a>, told Blockworks that <a href="https://github.com/OffchainLabs/bold/blob/main/docs/research-specs/BOLDChallengeProtocol.pdf">BoLD</a> will be the first-ever protocol for resolving rollup disputes that allow anyone to be a validator without risking delay attacks.&nbsp;



“The key attribute of BoLD for avoiding delay attacks is that BoLD can resolve all disputes in a single procedure, no matter how many conflicting claims are being made or how many parties are making them,” Felten said.&nbsp;



<h2 class="wp-block-heading">Reaching resolution</h2>



Previously, protocols worked “tournament style,” engaging in individual contests before reaching a resolution, Felten said.&nbsp;



Introducing BoLD will also mean that users will have a guaranteed upper bound of seven days to ensure their funds are accurately reflected on Ethereum layer-1 as long as there is one honest validator.



“In our opinion, this will make it safe for Arbitrum-technology chains to open up permissionless validation,” Felten said.&nbsp;



Over the coming weeks and months, Felten notes that Offchain Labs will release instructions for running a Nitro developer testnet with BoLD, then a testnet.&nbsp;



“We expect that the Arbitrum DAO will then consider whether to deploy BoLD on Arbitrum One and Nova,” he said. “Developers of Orbit chains will have the option of using BoLD as soon as it&#8217;s stable on testnet.”



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Offchain Labs makes BoLD moves with new permissionless validation protocol

The Arbitrum ARB governance token airdrop is one day away and will mark the beginning of its transition into decentralization.



Prior to its token launch, the Ethereum layer-2 network had been governed by New York startup <a href="https://blockworks.co/tag/offchain-labs" target="_blank" rel="noreferrer noopener">Offchain Labs</a> — the developer behind the protocol. 



Arbitrum is an <a href="https://ethereum.org/en/developers/docs/scaling/optimistic-rollups/" target="_blank" rel="noreferrer noopener">optimistic</a> rollup scaling solution on Ethereum. Scaling solutions are designed to ease congestion and prices of gas fees on the Ethereum network.



Rather than executing a transaction on Ethereum, the transaction is instead sent to Arbitrum, whose throughput capacity is seven to <a href="https://blockworks.co/news/arbitrum-optimism-exceed-ethereum">10 times greater than that of Ethereum</a>.&nbsp;



Following Arbitrum’s <a href="https://blockworks.co/news/arbitrum-upgrades-to-nitro-ahead-of-ethereum-merge">Nitro upgrade</a>, there has been an <a href="https://dune.com/blockworks_research/l2-comparison-dashboard" target="_blank" rel="noreferrer noopener">uptick</a> in transactions on-chain, recently <a href="https://dune.com/queries/1873519/3083010" target="_blank" rel="noreferrer noopener">overtaking Ethereum</a> in daily transactions.



There’s currently $2 billion locked inside Arbitrum-powered protocols compared to Optimism’s $1 billion, per <a href="https://defillama.com/chain/Arbitrum" target="_blank" rel="noreferrer noopener">DeFiLlama</a>. Decentralized derivatives platform GMX and exchange Uniswap command the most value. Ethereum native dapps Aave and Curve have also launched on the network, among others. 



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="760" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/03/unnamed-1.png?w=1024&amp;h=1024" alt="" class="wp-image-49814" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/03/unnamed-1.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/unnamed-1.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/unnamed-1.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/unnamed-1.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/unnamed-1.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/unnamed-1.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/unnamed-1.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/unnamed-1.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/unnamed-1.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



Rising usage only amplifies the need for decentralization. According to <a href="https://www.blockworksresearch.com/" target="_blank" rel="noreferrer noopener">Blockworks Research</a>, ARB will allow for decentralized governance over the Arbitrum protocol, similar to Optimism’s OP token. 



ARB holders will vote on all aspects of the protocol including upgrades, inflation adjustments, as well as capital allocations (including grants).&nbsp;



Almost 12% of the total airdrop supply will be distributed to Arbitrum users and a tad over 1% of will be given to <a href="https://docs.google.com/spreadsheets/d/e/2PACX-1vSSAzkIIJqw4WGKCF9gXFUkQojTt6weQTExZYmp3YRIR2TUjir9N8nh8xg7gQ2wuPA8mJKL2neL--to/pubhtml#" target="_blank" rel="noreferrer noopener">DAOs</a> building on top of the network.



<ul class="wp-block-list">
<li>43% to the Arbitrum DAO treasury overseen by the protocol’s community governance.&nbsp;</li>



<li>27% to the Offchain Labs team and future advisers.</li>



<li>17.5% to Offchain Labs investors.</li>
</ul>



A security council will also be established to make swift decisions when a normal governance process may be too slow.&nbsp;



“The security council, while removing some element of decentralization, is meant as a backstop in case of emergencies,” Blockworks Research said. “Since Arbitrum, and rollups in general, are still in their infancy it&#8217;s not enough to say they are truly 100% secure especially as new upgrades get added.”



Token holders will elect two groups of six security council members (totaling 12) every six months, each who will have private keys to a multsig that will control the protocol’s primary smart contract.



An eligible candidate for the council must be a member of the DAO and receive support from 0.2% of votable tokens. Chosen members will receive a $5,000 stipend in the form of ARB tokens.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="819" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-6.png?w=1024&amp;h=1024" alt="" class="wp-image-49810" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-6.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-6.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-6.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-6.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-6.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-6.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-6.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-6.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-6.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



<h2 class="wp-block-heading">How much trust is baked into Arbitrum?</h2>



Main trust <a href="https://l2beat.com/scaling/projects/arbitrum" target="_blank" rel="noreferrer noopener">concerns</a> around Arbitrum are in its state validation and upgradability. Arbitrum did not respond to Blockworks’ request for comment.



State validation refers to the proofs used or how the network decides which transactions (network state) are valid.



“In Arbitrum&#8217;s case, they have fraud proofs enabled, but only by whitelisted validators and used interactive proofs which take many transactions to solve,” Blockworks Research said.



Although enabling fraud proofs is much better than having none at all — as in the case of Arbitrum’s competitor Optimism — it would be more ideal to have permissionless proofs. 



Another risk is the upgradability of Arbiturm’s smart contract, as seen with Jump Crypto’s <a href="https://blockworks.co/news/jump-crypto-wormhole-hack-recovery">counter-exploit of the Wormhole hacker</a> last month. A smart contract is considered to be most secure if it can not be upgraded, which is not the case for both Arbitrum and Optimism.



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airdrop

Arbitrum Airdrop: What You Need To Know About This Ethereum Layer-2

<div id="highlights-block_63472370b561b" class="highlights">
 <ul>
 <li>The financial terms of the acquisition have not been disclosed</li>
 <li>Scaling will be a primary focus for the team moving forward</li>
 </ul>
 
</div>



Ethereum smart contract scaling solution developer Offchain Labs has acquired Prysmatic Labs, a core force behind the architecture of <a href="https://cms.blockworks.co/ethereum-switches-to-proof-of-stake-after-7-years-of-work/" target="_blank" rel="noreferrer noopener">the Merge</a>.



Offchain Labs — the leading Ethereum consensus client now powering the blockchain’s proof-of-stake validation system — is also behind Arbitrum One, a market-leading layer-2 secure scaling solution for decentralized application development on Ethereum. The company was co-founded by Princeton professor Ed Felten and Ph.D. students Steven Goldfeder and Harry Kalodner.



Goldfeder told Blockworks acquisition talks began about a year ago but only gathered steam in recent months. The purchase would bring the Offchain Labs team to roughly 60 employees.



“From a values perspective but also from our fascination with the technical problems here and our desire to solve these problems, it just felt like a very natural decision,” Goldfeder said. “We’re just increasing our capacity by joining forces.”



The companies declined to comment on the terms.



<h3 class="wp-block-heading">Joining forces to scale Ethereum</h3>



Last month, Ethereum founder Vitalik Buterin said post-Merge, the top priority of the second largest cryptocurrency would be to <a href="https://cms.blockworks.co/whats-next-for-ethereum-in-a-post-merge-world/" target="_blank" rel="noreferrer noopener">improve its ability to scale</a>.&nbsp;



This next step in the Ethereum roadmap is dubbed “the Surge” — a series of events intended to eventually speed up the blockchain while making transactions more affordable.



“Our goal is to deliver scale to users — which means a large volume of transactions at a low cost — we want to continue to increase the volume of transactions at that low price point while doing so securely,” Goldfeder said.



Arbitrum is Ethereum’s leading roll-up solution with a total value locked (TVL) of <a href="https://defillama.com/chain/Arbitrum" target="_blank" rel="noreferrer noopener">$965.5 million</a>. Its acquisition of Prysmatic Labs, the developer of Prysm — the most <a href="https://clientdiversity.org/" target="_blank" rel="noreferrer noopener">widely used</a> software to run Ethereum&#8217;s consensus — is said to allow for better communication between teams developing Ethereum’s layer-1 consensus and data availability technology, as well as layer-2 execution and scalability mechanisms.



There is, however, a slight conflict of interest. Prysmatic Labs will need to ensure no layer-2 applications are getting special treatment as it continues to grow Ethereum, even if the layer-2 will be bearing the bulk of its expenses. Aware of potential issues, Goldfeder said both parties are “committed to continuing to develop Prysm as a neutral client.”



“A lot of it comes down to the commitment to the values of developing Ethereum — serious values that we share as an open and decentralized platform that favors the ecosystem at large,” he said. “A lot of ethics also comes down to the integrity of the people — and the Prysm team have shown themselves over the past few years — from the top leadership down the line, to be people with high integrity.”



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Ethereum

Offchain Labs Acquires Ethereum Consensus Client Prysmatic Labs

Ben Strack

<div id="highlights-block_62ffae8d558d3" class="highlights">
 <ul>
 <li>A former Bakkt and Coinbase executive leaves for alternative asset manager</li>
 <li>Ex-Bank of America electronic foreign exchange sales head joins B2C2</li>
 </ul>
 
</div>



Yuga Labs named <a href="https://www.linkedin.com/in/chris-r-fortier/" target="_blank" rel="noreferrer noopener">Chris Fortier</a> its new vice president of product and will support the team broadly across Web3, metaverse, NFT and product initiatives. 



Fortier previously worked at <a href="https://rally.io/" target="_blank" rel="noreferrer noopener">Rally.io</a> where he oversaw its social token and NFT (non-fungible token) capabilities while also leading its strategic direction and user experience. Fortier also led the development of creator-centric products for Twitch.



“In my new role I’ll be helping build the next wave of digital experiences — not just for our Apes, Punks, Meebits, Voyagers, and Mutants, but for the entire web3 industry, which is an incredible opportunity,” Fortier said in a statement.



The Fortier appointment comes about a week after Yuga Labs hired <a href="https://www.linkedin.com/in/dannygreene82/" target="_blank" rel="noreferrer noopener">Danny Greene</a> to fill its newly created role of brand lead for <a href="https://meebits.app/" target="_blank" rel="noreferrer noopener">Meebits</a> after Greene spent the last eight months as general manager of the MeebitsDAO.



Offchain Labs hired Andrew Saunders as its first chief marketing officer as the company seeks to expand its reach with Ethereum scaling solutions.



Saunders joins from Amazon&#8217;s global brand marketing team, where he helped build its first entertainment and culture marketing practice. Before that, he was global head of brand strategy and marketing for media company Tastemade.



Offchain Labs is developing Arbitrum, a so-called optimistic rollup scaling solution for Ethereum. The hire comes after the company launched Arbitrum Nova, a blockchain for games and social applications development.&nbsp;



“Arbitrum has become a premier destination for Web3 builders around the world and we&#8217;re looking forward to bringing Andrew into the fold to expand on that global reach and rapid adoption to date,&#8221; Offchain Labs CEO Steven Goldfeder said in a statement.



<a href="https://www.linkedin.com/in/marcboiron/" target="_blank" rel="noreferrer noopener">Marc Boiron</a>, the former chief legal officer at dYdX, has left the company to take the same role with Ethereum scaling platforms developer Polygon. 



In addition to his experience at dYdX, Boiron worked at law firm Manatt, Phelps &amp; Phillips, where he advised companies on blockchain technology-related issues and developing approaches to addressing regulatory issues adopted across the Web3 ecosystem.&nbsp;



“With regulatory pressure increasing worldwide, it’s integral to have an in-house legal counsel to help navigate and embrace web3’s ever-evolving regulatory landscape,” Polygon co-founder Sandeep Nailwal said in a statement.



UK-based crypto firm B2C2 lured <a href="https://www.linkedin.com/in/zeke-vince-a458a64/" target="_blank" rel="noreferrer noopener">Zeke Vince</a> from the traditional finance world to lead its US sales efforts.  



Vince was formerly the global head of electronic foreign exchange sales at Bank of America Securities. He joined Bank of America in 2017 from JPMorgan, where he spent six years as a part of the electronic foreign exchange sales team. Prior to JPMorgan, Zeke worked in the same unit at Credit Suisse.



Crypto exchange Unizen appointed Michael Healy, a co-founder of the <a href="https://www.unit.network/home" target="_blank" rel="noreferrer noopener">Unit Network</a>, as chief strategy officer. 



Healy worked for Wikileaks and helped build its Android application in 2010. After donations via Visa and Mastercard were disabled, he brought bitcoin payments to the organization.



He has also previously worked at London-based venture capital firm Wellington Partners, investing in companies such as Spotify during his tenure.&nbsp;



The hire comes after Unizen received $200 million from Global Emerging Markets in June to accelerate the development of its trade aggregation system.



Alternative asset manager Blackstone hired <a href="https://www.linkedin.com/in/adamlwhite/" target="_blank" rel="noreferrer noopener">Adam White</a>, a former Bakkt and Coinbase executive, as a senior adviser.



He will focus on advising within the company’s growth equity investing platform as Blackstone seeks to invest in services and infrastructure supporting the digital asset ecosystem. Blackstone participated in <a href="https://www.prnewswire.com/news-releases/chainalysis-raises-100-million-at-a-4-2-billion-valuation-to-execute-vision-as-the-blockchain-data-platform-301319274.html" target="_blank" rel="noreferrer noopener">a $100 million funding round</a> last year for Chainalysis, which provides blockchain data and compliance software.



White joins Blackstone after working as president and chief operating officer at Bakkt since 2018. Before that, he was a vice president and general manager at Coinbase.



Crypto.com named <a href="https://www.linkedin.com/in/chintahang/" target="_blank" rel="noreferrer noopener">Chin Tah Ang</a> as general manager for Singapore after the company received in-principle approval from the Monetary Authority of Singapore for its Major Payment Institution License. 



Ang most recently served as the executive director of Digital Industry Singapore. Before that, he worked for the Singapore Economic Development Board.



The hire comes after <a href="https://decrypt.co/107509/second-layoff-round-at-crypto-com-worse-than-june-cuts-sources" target="_blank" rel="noreferrer noopener">sources told Decrypt</a> that Crypto.com is set to lay off more employees after <a href="https://cms.blockworks.co/crypto-com-cutting-5-of-workforce-amid-digital-asset-downturn/" target="_blank" rel="noreferrer noopener">cutting 260 staff members in June</a>. 



A spokesperson for the company declined to comment.



Meanwhile, crypto social trading network BingX revealed Friday that it is looking to fill about 200 positions globally, including public relations managers, as well as product development and customer service professionals.&nbsp;



“This so-called crypto winter presents a rare chance for us to tap on some of the industry&#8217;s best talents and we will leverage on that,” BingX Communications Director Elvisco Carrington said in a statement.&nbsp;



<h3 class="wp-block-heading">In case you missed it</h3>



Singapore-based cryptocurrency lender Hodlnaut decided to slash its headcount by 80%, or about 40 employees. The retained team is required to carry out key functions, it said.



The firm said in an <a href="https://www.hodlnaut.com/press/an-update-on-our-ijm-process" target="_blank" rel="noreferrer noopener">update</a> on Friday that it is handling inquiries from the Singapore attorney general and the police force but did not offer further details.



Crypto broker <a href="https://cms.blockworks.co/leadership-reshuffle-at-genesis-includes-ceo-michael-moro/" target="_blank" rel="noreferrer noopener">Genesis named a swath of new leaders</a> as CEO Michael Moro is set to step down. The Digital Currency Group subsidiary appointed Chief Operating Officer Derar Islim, who joined Genesis in 2020, to be its interim CEO while the company searches for a full-time chief executive. 



The crypto brokerage also <a href="https://www.bloomberg.com/news/articles/2022-08-17/genesis-ceo-steps-down-as-crypto-broker-slashes-its-workforce?srnd=premium#xj4y7vzkg" target="_blank" rel="noreferrer noopener">revealed to Bloomberg</a> that it is cutting 20% of its 260-person workforce.



<a href="https://cms.blockworks.co/citi-nabs-crypto-leaders-for-treasury-and-trade-solutions-unit/" target="_blank" rel="noreferrer noopener">Citi added two crypto-focused leaders</a> to its Treasury and Trade Solutions unit. 



<a href="https://www.linkedin.com/in/ryanrugg/" target="_blank" rel="noreferrer noopener">Ryan Rugg</a>, who has experience at Lehman Brothers, Morgan Stanley, JPMorgan and IBM, joined as the division’s global head of digital assets. <a href="https://www.linkedin.com/in/davidcunninghamireland/details/experience/" target="_blank" rel="noreferrer noopener">David Cunningham</a>, previously the chief commercial officer at LexTego, is now Citi’s director of strategic partnerships for digital assets. 



21Shares hired <a href="https://www.linkedin.com/in/sherif-el-haddad-94a02647/" target="_blank" rel="noreferrer noopener">Sherif El-Haddad</a>, previously the head of asset management at Al Mal Capital, to lead <a href="https://cms.blockworks.co/21shares-adds-execs-as-part-of-global-expansion/" target="_blank" rel="noreferrer noopener">the firm’s expansion in the Middle East</a>. 



The world’s largest crypto exchange-traded product (ETP) issuer also revealed Wednesday that former Barclays executive <a href="https://www.linkedin.com/in/marina-baud%C3%A9an/" target="_blank" rel="noreferrer noopener">Marina Baudéan</a> joined the company as its head of France, Belgium and Luxembourg. Additionally, <a href="https://www.linkedin.com/in/oliver-sch%C3%A4fer-33235775/?originalSubdomain=de" target="_blank" rel="noreferrer noopener">Oliver Schäfer</a>, who previously worked at JPMorgan Asset Management for 15 years, is the company’s new head of Germany.



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crypto hiring

Latest in Crypto Hiring: Yuga Labs, Offchain Labs Add Execs

Morgan Chittum

<div id="highlights-block_612e5b56905f8" class="highlights">
 <ul>
 <li>OffChain Labs, a developer for Ethereum scaling solutions, opened its mainnet Arbitrum One to the public on Tuesday</li>
 <li>Stock brokerage platform Alpaca announced plans to offer crypto trading for customers in the future</li>
 </ul>
 
</div>



Alpaca and Offchain Labs secured a combined $170 million in Series B funding, signaling a growing appetite in investor interest for digital asset-based startups.



<a href="https://offchainlabs.com">Offchain Labs</a>, an Ethereum scaling solutions developer, raised $120 million in a Series B funding round, the company <a href="https://www.salamancapress.com/news/state/offchain-labs-rolls-out-arbitrum-one-ethereum-scaling-solution-to-the-public-and-announces-120m/article_e73ff0a1-85b4-56be-923b-ad15aa6b8ccb.html">announced</a> Tuesday.&nbsp;



Alongside the funding news, Offchain rolled out its mainnet, referred to as Arbitrum One, to the public. Arbitrum, the technology behind the new product, scales apps to reduce costs and increase capacity. The company will use the funding to expand staff and further develop Arbitrum One through scaling solutions and R&amp;D investments.



Led by Lightspeed Venture Partners, other participants in the round include Alameda Research, Pantera Capital, Polychain Capital, Ribbit Capital, Redpoint Ventures, Mark Cuban and others. Lightspeed’s Ravi Mhatre has joined the company&#8217;s board with the fundraising round.



&#8220;We are excited to partner with our investors who understand the importance of scaling Ethereum and bringing the Ethereum ecosystem to the masses,&#8221; said Steven Goldfeder, co-founder and CEO, of Offchain Labs. &#8220;The tremendous support we&#8217;ve seen from developers across the globe validates our mission to be the first to marry the world of FinTech and Defi.&#8221;



Offchain is now valued at $1.2 billion after the Princeton-founded company raised $20 million in Series A funding in April then later closed their Series B round this month.



<h3 class="wp-block-heading">Alpaca expands into crypto</h3>



Elsewhere, stock brokerage platform <a href="https://alpaca.markets/" target="_blank" rel="noreferrer noopener">Alpaca</a> announced plans to offer crypto trading to customers, the company <a href="https://alpaca.markets/blog/alpaca-raises-50-million-series-b-announces-crypto/" target="_blank" rel="noreferrer noopener">announced</a> on Monday. In addition, Alpaca scored $50 million in a Series B funding round, led by Tribe Capital.



“Our modern financial system runs on antiquated rails. Alpaca has established itself as the go-to developer-first API for investing by providing an easier, cleaner, and more scalable alternative to what exists today,” said Arjun Sethi, Co-Founder and Partner at Tribe Capital. “Its crypto launch is just the first of many product iterations that will allow global investors to access U.S. markets.”



Alpaca, which currently offers an application programming interface (API) for fintech apps to trade US stocks, said their new crypto product will allow customers to buy, sell, and trade their digital assets through their developer-first APIs. The soon-to-be product will be available to both B2B partners and retail investors.&nbsp;



Other participants in the Series B round include <a href="https://www.eldridge.com/" target="_blank" rel="noreferrer noopener">Eldridge</a>, <a href="https://horizonsventures.com/" target="_blank" rel="noreferrer noopener">Horizons Ventures</a>, <a href="https://www.positivesumvc.com/" target="_blank" rel="noreferrer noopener">Positive Sum</a>, <a href="https://portagevc.com/" target="_blank" rel="noreferrer noopener">Portage Ventures</a>, <a href="https://www.sparkcapital.com/" target="_blank" rel="noreferrer noopener">Spark Capital</a>, and <a href="https://www.socialleverage.com/" target="_blank" rel="noreferrer noopener">Social Leverage</a>. Prior to their most recent fundraising, Alpaca raised $10 million in Series A capital and $6 million in seed funding.



Offchain Labs and Alpaca did not immediately return Blockworks&#8217; request for comment.&nbsp;



<h3 class="wp-block-heading">Continued investments in crypto</h3>



Money continues to pour into the digital asset space with venture funding reporting at all-time highs, Blockworks <a href="https://cms.blockworks.co/crypto-venture-funding-is-at-an-all-time-high-this-is-where-the-money-is-going/" target="_blank" rel="noreferrer noopener">reported</a>.



$17 billion has been invested into crypto projects this year as of mid-June, according to market data firm <a href="https://pitchbook.com/data" target="_blank" rel="noreferrer noopener">PitchBook</a>. The previous yearly record was $7.4 billion in 2018.



“We have many data points that show that institutional interest in this space is large and growing still, and venture funding is one really obvious one,” said Alex Thorn, head of firmwide research at Galaxy Digital in a previous <a href="https://cms.blockworks.co/crypto-venture-funding-is-at-an-all-time-high-this-is-where-the-money-is-going/" target="_blank" rel="noreferrer noopener">interview</a> with Blockworks. “We’ve seen enormous funds raised.”



Want more investor-focused content on digital assets?&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/" rel="noreferrer noopener">Join us</a>&nbsp;September 13th and 14th for the Digital Asset Summit (DAS) in NYC. Use code ARTICLE for $75 off your ticket.&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/" rel="noreferrer noopener">Buy it now</a>.

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