The State of Arbitrum - TOKEN2049 Singapore 2023

good morning everybody thank you for coming out early to hear about arbitrim I want to give you my perspective on where we are in uh in arbitrum and uh I hope more importantly where we're going I'll talk about some of the things that are in the pipeline and coming soon that I'm excited about but let me start by talking about the present State of Affairs in arbitrim just to kind of review how far we've come from that day back in the research lab at Princeton University where it was just three people in a room right now arbitrim is the largest most successful and most decentralized of the ethereum l2s but don't you don't have to take my word for it if we're talking about security or decentralization the go-to source is l2beat and here you see the L2 beats security ratings for the top four uh Universal Roll-Ups um and you see arbitrum one there at the top and the thing to focus on is the pot is the sort of pie chart on the upper left in which l2b evaluates roll ups on five different categories and in each category rates that that system as um uh as either green yellow or red and what you see um is that arbitrum one is clearly ahead in this area right arbitrum one is the only one that's in vitalik stage one of these major Roll-Ups and also it's the only one that doesn't have um any red boxes so just looking at this visually you can see that arbitrim is ahead the reason it's on the top of this list is because it has the largest TDL but the reason that it's green and yellow is a better degree of security and decentralization uh just to go with some numbers in terms of the history of arbitrum one uh it's processed over 360 million transactions in over 130 million blocks uh it has uh over uh 12.3 million unique addresses so far continuing all those numbers continuing to grow and depending on how you count between 6 billion and about 13 billion dollars of value on chain um in in terms of total um in terms of daily defy trading arbitrum one is clearly number one among the l2s but the biggest asset that arbitrim uh the arbitrary ecosystem has is the community arbitrum has a really welcoming and um and Vibrant Community a community of developers community of users um and that has been one of the keys to the success of arbitrim people want to be a member of this community Okay so we've come a long way an arbitrim is in a very strong position among the evm l2s that's where we are now but I want to talk in most of my time about what comes next that is what is it that we can expect to be rolling out onto major arbitrim chains over the next three to six months um one of the big changes uh that has happened is the addition in addition to the two Dow government chains arbitrum one which is a full roll-up and arbitrum Nova which has an external data availability service and therefore offers lower fees um besides those two uh chains which are governed by the arbitrim Dow uh we now we now have the arrival of what we call orbit chains these are application chains they can be launched by anybody permissionlessly as a layer three um and um and we're seeing uh we're seeing an increasing number of announcements of orbit chains rolling out we think that this app chain ecosystem is going to be really important going forward now one of the core principles of governance both in the Dow government chains and the orbit chain is pretty simple each chain decides for itself what its policies are going to be which upgrades it will do and so on that means that for the Dow government chains the arbitrum Dow will decide and for an orbit chain that's launched by someone then whoever that someone is whoever launched or runs or owns that orbit chain will decide there is no top-down uh governance or law that um that anyone is trying to impose on the people who want to run first class chains within this system you get to make your own decisions on your own chain and I think that's really important now in terms of upgrades to arbitrim that are in the pipeline I want to talk about four major ones and I'll take these one at a time I'll talk about stylus which brings the evm plus model the ability to run uh smart contracts written in any programming language that run much faster than evm without breaking compatibility I'll talk about bold which is the uh the next version of the arbitrum fraud proof and challenge protocol I'll talk about time to time boost which allows ethical capture by a chain of the Mev value on that chain and then I'll talk about decentralized sequencing and the steps that are being taken toward that first stylus this I think is the coolest thing we've done in a long time on the team and we really you can really kind of start in motivating this with the question everyone's asking these days how can we onboard the next billion users well if we want to onboard the next billion users we first have to ask how can we onboard the next million Developers and the way I think to onboard the next million developers is to make web 3 development much more accessible to developers so that there's less of a learning curve uh people don't need to learn all kind of specialized tools and so that people can use battle tested the same kind of battle tested uh development tools and Tool chains that they can use in the web 3 and Legacy Computing world so you don't have to build so you sort of specialized experimental things and that leads to a model that we call evm Plus which we deliver in arbitrum stylus and the idea of evm plus you can see here is that we give you the ability to run uh to run different kinds of uh smart contracts developed using different tool chains using solidity compiled into evm byte code or using rust C or C plus plus compiled into wasm run them on a single virtual machine so rather than taking anything away from evm compatibility we're adding new capabilities and new things that you can you can bring along all of it perfectly interoperable and perfectly composable in just the way you would hope if you're a developer um Stylus is one of those tools that I think you really have to try to fully appreciate it how smooth it is and how good the developer experience is so why are we doing this well where are the developers in the world um solidity of developers they're maybe 20 000 uh rust developers 150 times more around three three million C plus plus developers around 12 million we want to be able to reach those 3 million and 12 million allow them to program in web 3 without having to live in a separate world and we wanted them to be able to use the tools that are associated with those languages so for too long we've had sort of a divided house when it comes to web3 development you can be in the evm world and have all the advantages of ethereum and ethereum compatibility um but then you have to program in stylus and Viper and Associated uh sort of Custom Tool chains or you could be over in the other world on other chains like Solana and near where you can program in standard languages rust CC plus plus and then compile to uh to faster and more standardized virtual machines like Berkeley packet filter or webassembly but what stylist gives you is the best of both and importantly this is not two separate Chains It's not two separate silos on the same chain it's uh these contracts running together interoperable and composable so that a user doesn't even need to know which one they're uh interacting with and indeed these contracts can call each other and you can even upgrade from one a contract from one language into another if you're using the the standard proxy upgrade pattern the level of compatibility that happens here in full composability uh evm calls wasm wasm calls evm Etc it works the way you hope it would so what is the status of this the code has been published there's a public devnet and as of yesterday uh it had about 550 000 transactions in the first 12 days about 195 000 wallets this is the fastest uptake we've seen from any test net on arbitrim ever and I think there's a lot of excitement around stylus this is in the pipeline to be deployed on uh the Dow government chains should the Dow vote to do so and uh available for orbit chains um uh as soon as uh it's been through uh the upcoming security audit which I believe starts on Monday all right so Stylus is one major upgrade that is in the pipeline and uh and and uh probably within months of being available on all arbitrim chains the SEC the second thing I want to talk about is the Bold protocol the Bold protocol is the new version of The arbitrim Challenge protocol which is which resolves disagreements among arbitrary validators about what is the correct evolution of the chain and what bold does uh um is it makes possible permissionless validation um arbitrum already provides the guarantee that as long as any one validator of the chain is behaving honestly yeah you get a guarantee that the outcome will be correct and that you have a guarantee of progress currently there's a permission list of validators which includes a bunch of very large and well-known companies in the space so unless you believe that all of them will conspire against you together to steal the arbitrim chain you're safe but with permissionless validation the guarantee we can give to every retail user is you alone with your laptop can force the correct execution of the arbitrim chain that's what permission unless validation brings and this is something that will I think is really exciting and something that other l2s are unable to deliver because they either don't have fraud proofs at all or they require a a complex and expensive ZK proof to be done so what is the status of bold the code for bold is published the security audit by trailer bits is published that's all available a public devnet is coming soon and this also is in the pipeline to I hope be available on um on all of the arbitrum chains uh within the coming months so the next thing I want to talk about is time boost and I'm going to shift gears a little bit to talk about transaction ordering and Mev this is a complex issue it's an issue that many chains have have struggled with it's an issue that ethereum is working through as you go with a lot of complexity around proposer Builder separation and inclusion lists and all of those things um the l2s have an opportunity to do things differently to have a larger and wider design space from which to choose in designing how Mev and transaction ordering is going to work so the current transaction ordering policy on arbitrum on all of the arbitrim chains is first come first served that is whichever transaction shows up first arrives first at the sequencer that will be first uh the first to execute and first come first served has a lot of advantages it's very simple and easy to understand it's easy to implement it has the lowest latency the fastest response time of any possible algorithm because as soon as something shows up boom it's in the sequence and that's part of what gives arbitrim the very fast response time that users love so first come first serve has a lot to recommend it it also has the advantage that it prevents front running because parties don't get to see others the transactions of others until those are already in the sequence so but the disadvantage of first come first served is that it doesn't capture the value of Mev or transaction ordering for the chain instead what we see in practice is AES uh a sort of wasteful technical arms race among parties who are all trying to get slightly shorter turnaround time to get their transaction into that sequencer a little faster than everybody else but what we'd like to do is in an ethical way capture the Mev that is available on the Chain so what do I mean by ethical what I mean is that you don't want to allow the harmful and extractive types of Mev captures such as front running or sandwiching types that exploit users but you do want to find a way to monetize the more benign types of Mev such as Arbitrage and back running so um that is the challenge how can we capture Mev in an ethical way and a practical way without spoiling the things that people already love about arbitrim sequencing policy such as the fast response time so here's the trends basically the the goals we have in transaction ordering you want fast response time you want obviously low cost you want to prevent front running by providing some kind of secret mempool type of mechanism so that users can't see the mempool that contains other users transactions because if users can see the mempool and then insert their own transactions into it they can try to front run other people's transactions you want to capture the ethical Mev value for the chain instead of having it that value dissipated in a wasteful technical arms race uh people giving that money to um to try to get slightly faster network connections uh and slightly faster code you like to capture that value for the chain as chain revenue and then finally you want a mechanism that will support decentralization so that we're able to decentralize the sequencing function without this Mev capture strategy getting in the way and further you want it to be the case that when you decentralize the Mev capture mechanism does not become a re-centralizing dynamic like you see in some other systems where even though in principle everyone can participate in practice you see a sort of closed and small group of people participating in a protocol we don't want to do that okay so the mechanism that that we've been talking about for this and the mechanism that that we're building to to offer to arbitrum chains in today's world of centralized sequencing we call time boost and what it is is you can sum it up in three uh three phrases first fast sealed bid priority gas auction fast speaks for itself it's a sealed bid auction for position within a sequencer block the sequencer will make blocks very frequently say two per second um and when a party submits a transaction they can attach a bid to it and that bid is a priority fee in the ethereum sense that means that your bid is a premium that you are agreeing to pay for each unit of gas that your transaction uses um and then the sequencer simply takes all of those transactions that arrive within the time period for some sequencer block it sorts them into decreasing order by by bid so the high bidder gets to go first so in that way you can auction off the position in the position in the block but do it without inviting front running because you still have the sealed mempool so that is time boost and that it that also is coming soon as an upgrade that will be available for all arbitrum chains and we think that this while maintaining an ethical Mev capture strategy will be able to capture a significant amount of value for uh for all arbitrim chains the last piece I want to talk about is decentralized sequencing so I talked about sequencing currently as you may know arbitrum has a centralized sequencer people like some things about that especially that it's fast but of course decentralizing that function uh provides a stronger a guarantee against a misbehaving sequencer and so um in in designing and developing the time boost mechanism we thought very carefully about how to come up with a mechanism that was compatible with decentralization and um on the 11th in at permissionless in Austin we announced jointly with espresso systems a research partnership with them to design and then build a decentralized implementation of time boost that will be compatible with the espresso systems uh uh decentralized sequencing infrastructure so that will be available as an option for arbitrum chains that choose to adopt it again each chain will make its own decisions the uh the flagship chains uh on the flagship chains those decisions will be made by the arbitrim Dow but this will be available to all arbitrum chains and we're working with espresso systems we're really happy to announce that we're working with that very strong team into in developing this decentralized time boost mechanism it's a decentralized Time Booth is the fourth fourth piece that I want to talk about now I want to sum all this up by uh by just sort of going back to the beginning I talked in the beginning I gave facts and figures um charts about how arbitrim is the leading L2 in the ethereum space and it's for a reason it's both because of our amazing community and frankly I think it's because we've been leaders in developing the uh the technical support to solve the problems of users and developers so I've just given you four examples of the things that are in the pipeline that are going to continue to build that lead not lead in technology for its own sake but lead in technology that solves the problems of users and developers that's a pragmatic approach we've always taken in building arbitrum and we're very happy to continue to work with our community as we do this the road ahead is open there are many options available to uh to the arbitrim community and we look forward to partnering partnering with that Community let's build arbitrim together thank you [Applause]