DeFi by Design EP#69: Leading The Ethereum Scaling Race with Arbitrum

Transcript

welcome to d5 by design where we talk all things blockchain and cryptocurrency while striving to educate empower and enrich it's your boy andy and welcome back to the defy slate youtube channel smash the like button on this video that really helps us out and sit back and enjoy the content thank you very much what's going on guys welcome back to the d5 by design podcast episode 69 here today we are talking about all things layer two definitely excited to see uh the world come to the layer two mindset the the east narrative is absolutely blooming right now we've got the merge we've got the the growth of layer twos and we've just seen it all really just to come to fruition so i know a lot of eth maxes are happy in their seats right

now and we're excited to scale ethereum over here as well that's kind of how we started so excited to dive deep into some of the applications on arbitrome um the difference in in between some layer twos and just kind of what's going on over in this world and how you guys can get involved as part of our community as always here today with rob rob how are we doing what's going on yeah doing well uh i mean we're pumping it's march 28th everything's up like 10 percent uh hunter hasn't checked prices in you know months because uh it's it's gob we were in goblin town uh but other than that yeah we're we're back and it's we're

looking good and the building really never stopped so i'm psyched to talk to uh hunter and peter and get after it here and uh yeah i'll uh pass it over to the labs and let them introduce themselves as well as arbitrary um what i can do i'm the um hunter uh the community manager over at arbitrary so i mainly just deal with uh yeah anything related to the socials like discord uh twitter um as well as any uh on-chain activities i usually just define that as like on-chain d-gen activities it's been a lot harder to do as of late but it's still very very fun to do right on and i'm peter senior partnerships manager at off chain labs primarily focused on d5 but also on accelerators and other initiatives that

we have and uh really just helping to grow the arbitrary ecosystem and work here with hunter on that mission sweet sweet all right so for those who aren't aware of what arbitrary is which i would imagine is probably a smaller kind of part of the folk who are listening to this would love to just hear a brief overview of what an optimistic roll-up is why it's important and kind of like how it ties into ethereum so we can really get a good you know understanding uh for this conversation of layer two sure um i'll take this one so arbitrarily's an optimistic roll-up which means it's a layer two on ethereum and the most important thing to think about with that is that uh uh handles the execution um and the

information like on the arbitrary chain but it posted back to the main ethereum chain and what this means is that it it's able to get the security of ethereum but still you know handle things on the arbitrary chain and keep things at a very low cost and um the nice thing about that is that you know arbitrary is very aligned as far as being a roll-up centric uh road map uh you know that vitalik and other people have talked about and you know this has helped us to attract you know a lot of ethereum teams building on on top of arbitram because we're you know very aligned with ethereum's roadmap towards a rollup centric uh ethereum um so this is what arbitrom is i don't know hunter if you want to add anything there uh no yeah like pretty much exactly what

peter said optimistic roll-up uh instant pretty much in instant transactions uh 10 to 10 to 20 x decrease in ethereum fees in terms of actual cost um and all the good old security that ethereum provides um so yeah the second best choice to ethereum if you don't want the high gas feeds so you basically batch all the transactions up that happen on arbitram into a roll up so you kind of roll all these transactions up and how many is in each block is it is it just dependent on you know how many transactions are are in that block or is it like a set amount uh that that like the network tries to get into each rollup or into each like ethereum block if you will i think it's just time dependent like it's just however many transactions are

occurring the sequencer batches them and puts them in there so we don't have anything like a mempool which is like what ethereum has we just have a sequencer that batches those and post them but the cool thing about arbitrarum is like let's say if arbitrary goes down you could still replay those transactions back on ethereum um and this is what gives you that you know ethereum grade security that people are looking for you know as opposed to a side chain or some other alternative layer one yeah so you batch all the transactions all together sorry rob and basically you sequence them into one block on ethereum as effectively one transaction on ethereum but on arbitrary there could have been 100 transactions but it posts onto ethereum and you pay

that one gas fee which is you know however much um you know on ethereum but you split that amongst all the transactions that happened on arbitrary is that the kind of like like the right like the right outlook for how this works [Music] i think that's uh more or less right um that also implies that as arbitram gets a lot of transactions on it we actually end up being one of the biggest um contracts that post data on ethereum and uses the most transactions and so if you've probably seen if you use ether scanning you look at you know who's using the most uh you know volume on ethereum you'll see arbitrary is actually now showing up there at the top

just because we're having so many users and so much you know volumes going through our return in general which is pretty cool yeah and then of course with eip 1559 that contributes to burning ethereum making it deflationary and kind of the domino effect from there which is is super cool and and as arbitrary scales it's gonna continue to ramp up more and more volume um yeah that that kind of batching technique is how we've seen like uh users get almost the best of both worlds or kind of like take their pick and move about on the the scalability trilemma like someone can

choose you know they don't really have to choose anymore with with that trilemma they can kind of get uh ethereum security coupled with arbitrom's convenience and and speed exactly yeah oh my god we were solving the trilemma that's actually a great pitch better saying that now uh yeah good point we'll see it on the website tomorrow yeah so that i mean that's super cool like that of course enables like all these new applications and innovations what are some of the ones you guys are most excited about yeah so i i you know don't want to you know play favorites or anything because i think there's a lot you know a lot of great teams in the ecosystem i think you know what we tend to see is that there's uh two types of teams one is like

arbitrary exclusive teams and then the other would be like teams that want to go multi-chain but some that you know i've thought about off the top my head is like where arbitrary exclusive teams would be like vesta finance which is like the liquidy for arbitrum or like tracer dow or like cap finance um and then some of the other multi-chain teams that i think are pretty cool would be like gmx dopex premia a lot of these like options or perpetual based uh products are really cool and uh i think the trend that we're starting to see too with arbitrary is that teams are just choosing to deploy on like a layer two uh rather and just skipping mainnet all together and this is because you know the gas cost on ethereum is just too high for some of these teams and they're like hey we need to you know

go somewhere where it's more affordable and the cool thing about arbitram is we already have almost every single d5 project building on top of arbitram so if you're looking at different types of dependencies you're trying to solve whether that's for stable coins or chain link oracles or gnosis safe or whatever you know we already have it um so we could be very helpful and supportive of those teams when they're building on arbitrary yeah and i think the actual to even add on to that um like it's just like for some reason it seems like a lot of like like leverage and perpetual protocols uh seem to be like like really really popular on l2 especially on arbitrage um and not only that but even like um like one thing you've seen actually grown a ton especially this year um is like nft and gaming on

arbitrage uh trash are obviously kind of leading that uh that um that initiative uh but there are like tons of more kind of uh like editing entities like gaming platforms like kind of sprouting from not only the treasure ecosystem but from the community it made on arbitrage um and that's something that we've really really tried we're really trying to cater to um you know as time goes on because nft is obviously is how the masses are going to get on board it's i mean the pitch for for for um you know developing anything on our benchmarks it's fairly easy as as rob was kind of highlighting earlier um you know it's it's it's a matter of getting those those teams and those pro those protocols that have like huge amounts of deep liquidity on

each layer one like curve and yearn and those kind of like ogd fives and getting them into these layered twos um you know they they call it like the layer 222 or something or you know but um you know that's in our twitter right now as well i'm kind of curious what you guys think uh as as far as what have been some of the key drivers of liquidity over um you know and and what you know what do what have have users wanted to use the most you know what have been some of the key drivers as far as arbitrary usage so one thing i want to say is that i think the strategy that the team took was very smart and this like predates me so i just want to like kind of give a shout out to my team for doing this

strategy but what they did was it wasn't just from the technical point of view it was like how do we work with teams and so the way they approached it was they said hey we're going to have this period where all developers can build um and then eventually we'll go live on maynet and and what this did is it it solved for dependencies and so you know from what i heard from aj it you know initially this started with teams like i want to say it was bancor uh that originally showed interest but then we had just quite a few others kind of snowball into saying hey we want to build on arbitrary we want to build on arbitrary so just kind of led to a snowball effect of more teams coming on board um and and now like we're at a point where we're we

have such critical mass that we're just trying to support teams and hire more people on our team to like handle the load on the on the bt side but also on the engineering side just because we have so many teams there yeah and and even i got on to that as well i mean it's like peter was saying like like a dependency is not only on the infrastructure side but also like on the d5 side having like the like like you know like the big protocols like you mentioned earlier like curve unis the sushis of the world um they're really important like kind of any except any growing ecosystem any even today i think sushi is technically the biggest app on our return with like roughly 600 something million tbl which it means a lot for you know a lot of the um protocols that aren't you know

like those big ones i mean i think especially the biggest thing that we've seen in recently in terms of liquidity but also even like in terms of like a transaction volume um is like bridge world and like the different gaming that uh that treasure kind of brought so like you're gonna hear us mention treasure a couple times here so shout outs to those guys all the way baby that community is insane um i mean yeah that's how he met hunter yeah i can definitely just mention that yeah like we were literally at east denver and andy like comes comes up to the booth screaming at me that magic's hitting all-time highs [Laughter] because i heard that all the arbitrary team was in early i was like of course they already these mofos were in early um so kind of kind of now that we've got the

foundation of arbitrary kind of applications being built and we've seen that we can scale these applications and define nfts through arbitrom um it kind of falls in line with the trend that we've been seeing in d5 and but you know in these layer ones and in these layer twos and in these different layers now with even with this stargate protocol this like layer zero kind of concept we're starting to see the idea of modular block chains come to life where you could make the argument that now because of layered twos eth is almost a modular block chain where there is where the execution and the settlement happen on different uh chains effectively or different layers because of these layer twos what are your thoughts uh with regards to the development of modular blockchains and

you know can you call ethereum a modular blockchain or or do we still have stuff to build i mean so we definitely you know still have stuff to build i'd say you know ethereum 2.0 or ethereum itself is making its you know way it's not called 2.0 anymore but it's making its way to progress towards the merge but there's a lot of exciting stuff on on the horizon there so if you're following along there's a great uh website that liam uh from optimism actually put together called erp4844 and this talks about proto-dink sharding which is the next version of sharding that's coming out and this will be specifically geared towards roll-ups and the cool thing about is that it'll separate the transactions out so if anybody executes something on the evm

that doesn't affect what's happening with rollups so rollups will be able to decrease their cost and that's their data availability through sharding but of course i would also agree that like ethereum's definitely headed towards this modular type of uh road map and paulina i think on twitter is doing an excellent job of like putting this narrative out there um and so as we you know make more progress with rollups as like arbitrary you know progresses towards its uh you know upgrade with nitro and ethereum works on getting sharding out post-merge i think we're definitely going to get closer to that vision of a modular you know ethereum that makes me super bullish on like

self-custody kind of inevitably down the line as the the trend of modular chains and and kind of the one blockchain to rule them all thesis uh kind of splits up and breaks out into all these different modular components um self-custody which you know was kind of originating with bitcoin um seems to be the the end state of that um and and it's kind of starting with like the centralized islands um first as communities well as chains and communities and then those are breaking you know more and more apart um and then and then they're able to kind

of roll roll back up and execute transactions and and interact with the same applications um yeah so so kind of on that on that vein of like onboarding uh d5 natives and then gradually kind of bringing uh uh more and more of the population that wasn't you know d5 or crypto native um you mentioned treasure and like andy andy you know saw that one right away what is it about like some of these applications or or like play to earn metaverse games that um are it you know could attract um and and probably will attract um non-crypto and d5 natives

i mean it's i think it's definitely just uh i think a great kind of like uh case study for that and just kind of start off with this like axia infinity and what they've been able to do on you know on their own kind of uh ronin sidechain i think is what it is um it's just like it's like that like the amount of value that these like games can have and i say games like like you know like very like you know with air quotes uh because um i think currently right now like like these aren't like like you know like first person shooter games triple a games you'd expect to see like you know like nintendo coming out with but these are games where it's like you can almost like fund yourself depending on the country that you're in and um and in a

way it provides a lot more value than like any of your like average game i would say right you know even though the people literally in the philippines like making livings off playing for example you know axiomfinity of course but then also you have the ability you know just kind of like you know for most of us uh the ability to kind of like use our end of tees um as you know whether it be collateral whether it be like as like tools and defy um or even like you know just kind of like this like it's like it's a runescape-esque universe that we're kind of building now um and giving use like all these different applications that um you know we're going to see soon because i mean you know like we like i mean even d5 is still more or less in its infancy it could it

only it only really came around like like like unit swap was a thing like back like two years ago or something like so we're still like in in all all this all of its infancy frankly but um especially nfcs and gaming i mean just like the the amount of uh like like the i think enemies in gaming for sure will be like one of one of the biggest industries um that's like tied to crypto uh by far um and average obviously you know like um i i would argue like leading the charge in that currently and and one thing i want to add there is i think it's like also still relatively early with nfts like some stuff i've been experimenting with recently is like the music nft side like with royal and like decent and some of the royalty nft stuff that they have there and i think

like that's really cool um just different ways of like getting people to understand what ownership is and and like actually owning these nfts is is really exciting and i think they'll you know these use cases will play out on arbitrary as well it's just a matter of time yeah i mean it makes me think of um like a lot of these app specific chains too like the um avalanche has um their subnets coming out and i think a lot of the ibc stuff with cosmos is a lot of app specific chains um you know to me arbitrarily and layer twos are almost like a in everything chain for all apps uh to be able to use and scale on um you know but there's definitely gonna be some some of these applications that

want to have uh you know their own chain how how do you think that um you'll you'll kind of shape up against some of these applications that want their own change for their own uh game or something like you know kind of what are some key things to to highlight that are different and important about say using a layer two uh you know like arbitrary for a game versus you know say creating your own chain on you know a different network kind of what are your thoughts on that whole um you know environment i think uh you know application specific blockchains whether they're with cosmos or polkadot is like always going to be there and like there will always be those use cases for teams that want to create those blockchains i think when

you look at the layer two landscape it's like um most of the developers are still in ethereum most of them are building still building with solidity most of the development is um still in that realm and and so i think it's more like you know we there's probably nothing we can do uh any you know aside from like any trust chains which is another product that we have coming out uh later um that will like even further lower the cost get rid of the seven day withdrawal period and and so i think um you know just continuing to do what we're we're doing just we'll create a compelling environment for them because we will have access to all these d5 teams or all these nft teams which may not be present necessarily on like a cosmos or a polka dot um yeah and

more liquidity and and more users and i mean the bridging infrastructure is there um yeah i i never got on to that too i think um i mean i would say for me it's like two things uh it's like you know app specific trains i think like the perfect example is dydx right like you know um like let me roll i'm pretty sure the trading experience on dyvx is great i haven't used it personally but i'm sure it's like it's much better um like on their platform than it could be on any generalized uh chain whether it be arbitrage ethereum or whatever it is the the problem though that you'll quickly find out is that there is no composability at all you know like you can't you can't all of a sudden now um integrate you know um nfts or even any other type of application

with you know your your chain specific one because all of a sudden you're interacting with different changes you're going cross chain um i think that's like one of the biggest things that projects need to think about before they you know think about either going to do something on their own chain and you know having to sustain that as well as their you know whatever application they want um versus just kind of building on an already you know built out you know uh you could say chain um and you know interact with projects already on there and you know that's what we've seen do really really good at arbitration so far and you know being the community manager like i can see all the different projects um like collaborating with each other and frankly you know no pun intended but it's like magic literally yeah not you know

not a chill or anything the evm almost serves to serves as that composability between between uh different chains if um you know someone is building on well yeah like it i i hear you about the nfts right you can't like cross-chain an nft otherwise it's not it just it goes against the definition of fungible but kind of leveraging evm as uh i don't it's almost like a hub and spoke at this point now that we have like the the hub as that security layer the settlement layer and then some of the executioner environments around it and with applications running on layer twos

they have composability with other uh evm compatible chains for you know let's say triggering an action in a smart contract if someone stakes an nft and in arbitrarium it could trigger a mint over on avalanche and the kind of main chain data availability i guess kind of plays a role in that um and then also the settlement layer on the on the main chain um so that those transactions end up on a on i guess kind of a consistent ledger is a potential like uh you know use case here and just like i don't know it maybe there's new applications or or uh

developments that that arise from kind of that cross-chain element of of nfts it sounds like layer zero man it sounds like stargate man it sounds like let's let's have funs on ethereum and then let's borrow against your funds on ethereum on arbitrom pay back your loan on arbitrary and your funds are released on ethereum you know yeah cross chain is enabled through through layer zero yeah yeah well i think layers here is a great team and like they have a really cool product with stark stargate vitalik also has a really good blog post out there where he talks about the risk between um doing this cross chain stuff between roll-ups as opposed to doing cross-chain stuff outside to another blockchain like an

avalanche or something else where it introduces more risk complexity there the other thing to keep in mind too with like application specific blockchains is that you also have to be able to like run your own chain with your own validator set it requires a bigger team it's more of like um you know it's a bigger effort to like get a team that can actually you know run in a calla pair chain or something like that so um i think that's why teams also just find it easy to deploy an arbitrary because it's the same you know ethereum kind of experience as opposed to to doing that yeah let's dive into that real quick here about uh you muted yourself mandy oh let's dive into the roll up and like like the roll up to roll up communication versus like

the roll up to uh evm compatible um you know uh proof of stake change so first of all what is the current roll-up to roll-up infrastructure look like um you know obviously there's bridges but kind of like how how can roll-ups communicate with each other yeah so so there are bridges today most of the bridges are just doing token transfers and so they're they're just moving as assets from you know one to another um the way that they do that is is many different ways so there it just depends on how the bridge is set up but in short if you're on an optimistic roll-up like arbitrarum you still have to wait for that seven-day withdrawal period that's why a lot of the fast bridges what they do is they check the chain to make sure that

you know what's going on on arbetrom is legit they move the funds over and then after seven days they claim your funds so that's how they do the fast bridge um side of things uh for the for the you know doing a smart contract call in a different chain that's all that's a whole nother endeavor and i i don't claim to be a bridge expert um so that that's what i could say what we're doing yeah and i can't even throw in that like you know um there are also people trying uh developing energy and nft bridges it's some it's actually some research that we're doing on our team as well um but like composable finance for example i know i'm helped with bridging some of the legions over uh earlier on um and you know i'm not sure exactly how they did that i'm sure they have stuff in the

back end but um like finding out how to actually uh make it so that you can bridge enough tees because it's gonna happen at some point i'm sure there's gonna be a generalized bridge that you know hopefully a generalized standard that everyone uses um and kind of you know making sure how that's hand like how that how the base nft is handled how the one that's actually bridged is handled um and all that stuff is going to be very important as well as royalties too that's all it's going to be a big thing now if you have roles you set up an open c you bridge it over to arbitrary and you start to use it on trove or stratos or whatever other marketplace you're using um then all of a sudden like what happens if you saw it there like you know it's a whole bunch of questions that

still need to be answered and frankly you know i'm sure i'm sure we'll probably see something uh you know this year for sure yeah and it comes down to the user then in two three years somebody who's never used d5 before to just be able to go and just seamlessly do all the things that we're talking about right now which two years ago when we were having these conversations was like only on ethereum and only if you select applications now it's like we're going to be able to do all of this and we have to figure out also how to have the user basically feel like they're not even doing any of this and that it's all just kind of happening in the back end um you know that's that's going to be a very exciting moment when there's a mobile app that

you can have where you're just on on all sorts of changes with the stuff and and it just truly feels like you're just you know you you almost don't even know that you're you know using these different chains or using d5 um yeah and and i i would 100 agree with you i would also say that some teams are even uh progressing a bit further in this case where they're integrating things like hop or some of these fast bridges just natively into their page so users can just do the action rather than like going on a completely separate website because i think now what people realize is like making the user do a whole bunch of extra steps probably not a good idea so probably you want to reduce those steps to make it simple for

them and like you know a great example of that is uni swap like uni swap you just click like the button a few times and then you do a trade it's very very simple compared to like an order book based deck so um yeah the totally bullish unseen more of those uh you know instances coming forward so what do you guys think about the um current liquidity kind of fragmentation amongst layer twos and do you guys have any um i mean like the upgrades that you're coming out would love to hear about that um you know as a means to incentivize more liquidity and if you have any other plans uh um you know yeah i'd love to hear about it yeah so one thing i would say is of course uh

you know we we don't have a token and we don't have any token incentives right now but uh what i can say is that it is totally true that there is uh liquidity fragmentation going on right now um though you know we tend to believe that it is a battle for liquidity going forward you know the the layer twos that have the most liquidity are gonna be the ones that win and so you know we try to be very thoughtful in working with teams how can we have different teams partner with each other how can we be helpful in you know driving more liquidity the best that we can on arbitrum and like i don't know if you saw this but there was a tweet that came out earlier from ave where it was showing you know what's the volume that's on ave uh

you know the new instance that just came out and i think arbitrary was like number two we don't even have a token we don't have any token incentives and so i think that's pretty amazing um but yes it will be a battle for liquidity i don't have a great answer there i know the starkware team has their damn product where they're trying to you know handle this liquidity between all the different instances on starkwear but uh you know that's just not our core focus at the moment it's just like how do we get more liquidity how do we add more centralized exchange integrations how do we add more fiat on and off ramps those types of things and i think actually peter like you said it right there i mean i mean like like the current currently like like a great way of just doing that is getting more

on and off range getting more exchanges on board which by the way we have a ton already finance ftx will be crypto.com just just to mention a few but like also even just like incentivizing protocols to have their own liquidity protocol liquidity olympus pro being one of them that you can actually leverage on arbitration already um so you know i i think that's it's definitely one thing that like um i think it's kind of overlooked a little bit that you know a people aren't coming to arbitrage necessarily just for arbitrage for the tech people are coming because of the protocol they're on arbitrage you know like i mean again like we've obviously you've had a huge a ton of move over because of treasure gmx dope x uh some some of those like like looking like the big players the bigger players

on our bench um and because of a ton of other different apps i mean avi as peter mentioned just deployed as well so that's another driver of liquidity um the more adapts that deploy like in a way you could say i guess you could say is that there is technically more liquidity fragmentation because you see when adaptive deploys that comes with another token but in a way that also brings more users for the most part especially when a bigger dap deploys uh so um i've definitely seen like liquidity fragmentation become less of an issue over time but you know the hope is that we just kind of uh you know the partnership team obviously is amazing shout out to peter he's one of them he's like he's like um and i'm i i have no i have no doubt in my mind that we're that we're gonna

get like you know the rest of the like you know huge exchanges uh so the masses can really onboard themselves on arbitration you know with a click of a button i think you're meeting by the way yep yep and you guys are there's at least one if not two upgrades one is the nitro upgrade which is gonna drastically lower fees i i presume so kind of walk us through uh honestly walk us through kind of some of the past upgrades as well what they've done to our trim and kind of what you've seen and then yeah what's uh what's up with nitro or um at least you know what's coming with nitro um in terms of you know the scalability and whatnot sure so i mean i i joined in october so i i did i watched arbitram one go live

but i wasn't yet working for off chain laps um but uh i know with uh nitro the team um has finished audits and is working towards a test net and so that's going to be really exciting that's going to help to improve execution speed it's also going to help to you know reduce gas costs a bit more and it's also just you know native with geth and so it's just going to be easier for developers it's going to be more evm compatible so we're really excited about that upgrade um i would also say that you know the other thing that we're working on is like decentralizing our validator set and so and instead of us just being the only ones who run it uh we're also gonna have others that will participate as well and so um that's exciting that will

be coming and then after that we'll also be working on decentralizing the sequencer so we kind of have like three core things that we're working on and right now it's just like all hands on deck with nitro and like getting nitro out the door and and also to even add there um so before nitro it's funny because like hey so we're definitely one of those team that just like that's consistently building and i guess doesn't have enough time to announce it every time we do um but we've shipped actually like multiple different like you know like i want to say upgrades of multiple like i guess you could say improvements to the system i sent you one live back in august and that's why like if you look at l2 fees that info uh like to date i would still say like were they like the

cheapest roll up on average or cheapest optimistic i should say um on average um in general um because you know we're constantly like delivering different improvements on the system even even though with nitro coming up um as peter mentioned you kind of mentioned like you know the different things that comes along with nitro uh but yeah people just like cheap fees and you know doing the things that they want to do on arbitrage yeah maybe one other thing i want to share is like if you look across the board with all these like multi-chain dapps arbitrum is definitely like leading it with like volume you know so you guys mentioned earlier that we have the most tvl but like if you go to like uni swap analytics today you could see that we're just we're doing you know a bit more volume than some

other uh teams and maybe we're not you know there with polygon but polygon has a token and token incentives and other things going on and so i think we're doing a a phenomenal job and so if you're a founder you're building on arbitrum you know you're going to have that liquidity you also know that if you're going to be deploying an nft as you could see hunter talks about it all the time like there's just incredible demand for like free nfts on arbitrage i'm getting on those white lists and whatnot so i think as like a founder you're just going to have like a great experience you know building with arbitrage in general do you guys find yourselves speaking with like large players ever in terms of like partnerships with bringing on like like um you know say for example

um like you know any of the large vcs in in crypto or even outside of crypto um that can really see the art like the vision of layer twos and of ethereum and you know it you know how does that go you know what kind of contact do you kind of have in that world as kind of a chain you know without a token uh just basically a a neutral place for people to use ethereum products kind of how does that how does that communication tend to go kind of with that world of of crypto well i i know in the vc world like you know pantera capital was a pretty early investor in off chain labs so you know joey crew and those guys you know identified off chain labs pretty early

and so uh hats off to them i would say like as far as like bigger teams or whatnot we've had conversations with larger uh players like in the gaming space and and we're excited to progress there i think our just our core focus today is more on like the crypto native teams how do we win most of these like really talented aetherium teams over and if we can do that i think we can be really successful i also got to set out a size chad on a team that dude that dude somehow happens to get like like you like i mean oh and so i don't see acquisitions but he happens to have like like so many connections that'll like blow my mind every time he mentions it um peter as well definitely like size is just like a whole different all different guy

that's awesome he's special nice yeah it's it's it's always just good to see people willing to commit uh to building out like you know the ethereum the the ethereum vision um you know and just growing that growing that space i mean this year this year really is going to be like the layer two growth like i imagine that we see uh tbl on layer two is kind of scale up past a lot of these alternative layer ones as we kind of see just the liquidity just drive um you know and uh you know it might take might take something like one of these alternative layer ones that you know i would never wish it but you know kind of see some security issues or something or perhaps it's 2.0 or the merge which really gets um the attention you know

do you guys think the merge is going to happen in june is it going to happen this time i hope so yeah yeah hard to say exactly but but we hope it's uh going to happen yeah i think so how would that affect roll ups or arbitrary or kind of you know like does it affect you know what's kind of the because for those who don't honestly if you want to just explain kind of what the merge is that would be fantastic i i you know i can share my best and then we can go into like how the switching of chains kind of affects rollups going sure uh so i i to break it down ethereum's doing like three major upgrades the first one was the launch of

the beacon chain um i you know i'm also running some validators for that so i think that went really well and that's the first launch of the proof of stake chain but there's nothing else really going on there except you know the validators running transactions and and then being compensated for doing that um what's happening in june hopefully is the merge where ethereum's moving from proof of work to proof of stake and so that's a huge huge upgrade a huge endeavor because it requires a lot of coordination across all the different client teams and and so forth to make that actually work and make it be a success and it's been many many years in the making and so that's really exciting but and then the third upgrade that's coming is sharding so sharding is data availability um specifically for rollups so i mentioned

proto dank sharding earlier and that is going to just help to lower fees and and for it to be a lot faster and cheaper um so i think as far as for arbitrary itself i don't believe the the merge would really impact us a whole lot um but i think that we will be heavily involved in a lot of conversations as far as like bls signatures go or like you know some of the sharding stuff down the line at felton's involved in that um so that's where we you know we would be taking place in those conversations so no like no abrupt changes it should be it should be able to be a smooth transition uh even with the switching of changes yeah yeah and i didn't throw that in there too

you know i think something people some people forget a lot is that layered twos is literally part of the scaling road map like this is how it gets scaled from an execution standpoint and it's it's it's funny that like um i've been going to a lot of conferences a lot recently obviously you know with with some of some people from our team and like a lot of people doing a lot of real life transactions ethereum as we speak so like the first part like the first as peter mentioned has already happened you know and then this invisible part that people seem to forget layer two part it's already

happening this week and it's only gonna get better as the theorem completes the rest of the uh you know the steps that are necessary that's emergent sharding yeah and there's there's all this uh this kind of like momentum right that's like building up and building up and uh i think it it's kind of like falling short in the past with like merge you know not happening and but it's kind of it's been higher lows to use like a you know ta kind of thing right like it just continues to to level up and like it we've gotten to the point where now like there's uh like development almost given like that people want to build on on ethereum um so when it when it comes to kind of

the the coordination of it all like this has been a massive undertaking on the main chain to gear up for the merge and ultimately for it to take place how do you guys um coordinate kind of you know so that's that kind of look to learn from mistakes that happened uh leading up to the merge and kind of all of that coordination how do you guys um take lessons away and what are some of the things you can do i think to implement over on arbor trump uh uh okay i i think from what i've seen from my own personal experiences people are running uh test

nets or like incentivized test nets and you know this started more or less when i was at tendermint wazaki you know running incentivized test nets for cosmos but i think you know for ethereum you've seen the krillin test net that they're running uh with the merge and so i think we're doing the same thing with nitro we're going to be running it with you know a lot of other teams going to be testing nitro making sure that we find all the bugs and everything on that end and then eventually we'll go live in production so i think that's the general process nice and what's kind of the timeline for the that improvement or upgrade the nitro um i i believe that the that we finish audits and so we're very close to releasing the test net and then

after a couple months of doing that then we'll go live in production but the nice thing about it for developers is like they won't have to do anything on their end so they'll just be able to use the same code and get the same upgrade without you know changing anything on their end so it's a relatively like seamless experience for them i should say we never release states unless we know they're going to be out by that date same thing we did for mainnet and that before that so you're never going to see a date for us to have a push back so that's why you probably have not seen like a confirmed date out there yet um you know we'll definitely give you like you know like like a couple of months timeline nice yeah that that helps right like like you're saying kind of a couple of

months timeline and then and then when it's when it's known like that that's when it's almost published and then like also like any any like human coordination lessons uh that you have implemented on on arbitrom that you know are a result of kind of the the massive network that ethereum's built let's say i mean that's it i mean i would say uh let's say from an ecosystem standpoint it's just making sure that we have time to in time and i should say capacity of capacity like manpower i guess better work um to like make sure that we're talking to every team and making sure that all their needs are being met from us um that's one thing that i think a lot of a lot of

uh i think uh maybe maybe not even just layered shoes but just um chains in general um we'll have to deal with is you know not only bringing people to your ecosystem but also making sure that they're happy being there uh so that's introducing introducing them to other players in the ecosystem um and just making sure their means are not or their needs are met because it's definitely not easy sustaining an ecosystem full of like literally hundreds of dabs definitely not definitely 25 people by the way i should mention 25 people on the team so yeah sheesh so where is the the coordination when the coordination with youth was small is is easy um when it becomes more modular it it's difficult and you guys are

solving that by talking to you know every team and get getting their uh getting their input so now that people have stayed on for 40 dollars we can give them the real juice you know these are the real loyal listeners right here where where is the best uh yield on stable coins and the best yield on um on arbitrage and would love to hear the juice about gmx and kind of your thoughts on those uh but first the stable and e fields so i'm familiar uh since you guys mentioned layer 0 earlier i i know that layer 0 their stargate products they have a i want to say a farming that's going on right now so you can earn i think 20

percent uh yield and stg if you stake with usdc so that's really good yield i've also been told from my teammates 100 finance is pretty good hunter was telling me earlier today ave's yields are pretty high so those are some areas you can look at definitely want to give a little shout out to our tour uh friends over at spreex as well i think they they have their own um a stable stable token as well um but it builds up meals there pretty good as well i should also mention this is both me and peter uh none of this is financial advice so you know keep that in mind please um but uh yeah i mean um definitely all those different platforms for uh for usdc and um all the other different stables um as

for eth so i mean listen at the end of the day the best the best details you're gonna get is probably using leverage so please be careful that's the gmx that's the cash that's all the different leveraged products um but actually even i mean honestly even like options products i mean that options products are actually really good especially if you know how to use them and i guess that's with anything really really but um like i know dopex has like their single-sided vaults uh so like those are pretty good if you're not really too sure about how options work um but in general i mean there are a ton of different options you can use frankly yeah yeah spare actually super cool that's super low-key and um yeah uh yeah i've been i've been messing around there

for some time now definitely some of the best deals that i've seen obviously you have to deal with like this like the synthetic dollars which is always like a it's always like uh you know you you never kind of know situation but um yeah yeah that's solid real solid and um yeah my buddies keep telling me about glp something about there's this gmx product called glp that is really good yield and just to check it out so i gotta check that out but i i haven't done too much tv but um yeah so far my experiences have seen that like just kind of being there being early have just has just been you know good good in terms of yield and um and opportunity and i don't know i just never feel like worried about arbitrary i don't really feel worried about like avalanche or

phantom or you know any of these other chains but i just know that like i'm good like i'm chilling on arbitrary no stress like you know funds ain't going anywhere chilling you know exactly who to go after you know what i mean is that why no no no yeah no listen i'm i'm telling you like i i think i think i was talking to our cto yesterday because we were at the harvard blockchain conference um we uh we've gone there in person i think we've agreed that last 60 percent of the team's engineers 40 apparently is um like non-engineering essentially uh and that's only a recent thing like pretty much like for the past couple of months our team has been mainly like literally mainly just engineers um and and mind you a lot of them don't even probably

probably don't even use like you know arbor trim or like even crypto in general so that's how you know the legit they're not degen they're actual engineers i'm the teacher of the team so is peter [Laughter] so um yes you can definitely have faith uh you know in the protocol itself but it is in beta so yeah nice yeah yeah so definitely excited to see just liquidity grow i mean that's going to be the big thing like let's get let's get whales in there lp on the on the major dexes and then we can really really really scale um definitely excited for that um yeah i mean as we kind of wrap up here if you guys had to pitch arbitrarium to a celebrity and not stop them in the face like will

smith did last night to uh that's a whole that's a whole other ballgame there who who would it be and why would you pitch it to this person that's a good question uh i i guess i'll say uh chris rock um and uh the pitch i would give him is and much faster speed that's arbitrary in a nutshell i think he would like to i think he would look at me and peter and be like

huh all right yeah i pitched it to ashton kutcher so you can i was telling them to go ahead and bridge the stoner cats over to all two so you can gamify them and actually and have people actually use them for once [Laughter] there you go you love to see it man you love to see yeah guys thanks a lot for hopping on it's pleasure you're excited to see our harvard from scale and support it and uh definitely picked up some good info here cheers cheers awesome thanks guys