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

it is a big day for the bankless nation we've got a special episode for you to celebrate the news arbitrum is dropping a token the ARB token we're going to talk about that and many of the announcements from today David who do we have on uh we have two of the co-founders of arbitrum Stephen goldfedter and Harry kalodner if you are familiar with the arbitrum ecosystem these men need no introductions they have been with arbitrum since day one uh and the day has finally arrived I think today is unofficially going to go down

in ethereum history as arbitrum day or at least arbitrum token day uh March 16th every March 16th we'll remember today well it is a big day because I mean of course we all like to talk about Tokens The Tokens are a very big deal people love to talk about tokens more than that it's not the only announcement that Arboretum is bringing to the table today there are other things that we must discuss uh so there is the arbitrum Constitution there is these cool things called arbitrum orbits and these things all are what the arbitrum token governs

over remember these are responsibility tokens and now there are things to be responsible over and there is a way for people to express that responsibility which is the token that we all know and love the a are B token and that is what's happening today well I can't wait to accept my responsibility and I can't wait to dive into this episode guys we will be right back into the episode with Stephen and Harry but before we do we want to thank the sponsors that made this possible including Kraken our number one recommended exchange The

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ability and is continuing to accelerate the web 3 landscape hundreds of projects have already deployed on arbitrum 1 producing flourishing defy and nft ecosystems with a recent addition of arbitrim Nova gaming and social dapps like Reddit are also now calling Arboretum home both arbitrim1 and Nova leverage the security and decentralization of ethereum and provide a builder experience that's intuitive familiar and fully evm compatible on arbitrum both Builders and users will experience faster transaction speeds with significantly lower gas fees with

the arboretum's recent migration to orbital Nitro it's also now 10 times faster than before visit arboretum.io where you can join the community dive into the developer docs Bridge your assets and start building your first app with arbitrum experience web 3 development the way it was meant to be secure fast cheap and friction free heavy ankles Nation we have Harry and Steven on this arbitrim day happy ARB day guys it is great to have you back on Bank list we've heard you got a few things to announce so super excited to have you on how's it going

it's good happy ARB day thanks for having us on here all right so um every time you come on we ask the exact same question at some point during the conversation usually let me save it to the end today I'm going to bring it to the very front of this episode when token token March 23rd do you guys not see the news tell us about it congratulations guys yeah congrats yeah I'm sure this has been a long time coming of course uh so

uh Stephen Harry we were on a Twitter space today so people that were tuning into that tour space as well they might hear a rendition of these same questions uh so when was it known that a token would exist and then so that's the first question second question when did you know that it was going to be launched uh in March 23rd yeah so we it's funny because if you look back like a bunch of years back we were vehemently against a token I'd love to post this like little snippet of Ed

um I think it's on maybe 2020 or so where Ed said there are no plans to launch a token and Discord and that was the truth at that time uh for us you know the it was really a technical decision that drove us we realized as as these you know if you went back in history like the whole vision of what Arboretum was was different you know they were like if they read the arbitrary paper there was like every chain was an app chain so as the vision emerged and there was like one public chain um for many for many applications for many projects it became clear that decentralized governance was the only way

um you know to to actually have a secure decentralized layer too again in the app chain World everyone could just control their own their own environment but in the shared environment you know it was clear to us that a token plays in a very important role to decentralization so I think it was a gradual process over time but probably sometime I would say maybe uh probably in the year and a half two years ago is when we call asked and realize that um at some point in the right time when the technology is ready to be decentralized um this is an important step towards decentralization

when did we know was March 23rd we've been targeting this vicinity for for a while um but um it was was only uh in the last you know week or two that we actually honed in on on this day um and you know part of it is you know there was a lot of turmoil earlier on we don't have to make sure that there wasn't uh the world wasn't failing on the day we did it as well so um but uh you know probably in the last week and a half two weeks is when we really honed it on on this day and plan for this day

beautiful and yeah go ahead Harry this is the the other thing there being I think you know there are a lot of projects out there that kind of um that I don't mean in the LTS I just mean in general where they kind of announce announce token plans and then there was kind of like a a long long journey to actually sort of like execute on those plans whereas I think kind of from the beginning we felt as though like if we're if we're gonna do the thing we're gonna do the thing um and sort of like you know take it seriously and like come at it with kind

of you know fully prepared which was kind of you know I think critically important for us I remember uh just talking to people out in the Twitter sphere and in various discords that y'all waited long enough that some people had like given up hope that Arboretum would ever issue a token and that's what I said that's the moment that they will issue a token when all when all hope scenes lost is when the token will arrive and it seems to be that that today is is the day um Stephen Harry I'm wondering if you can kind of just like Place Us in history for

arbitrum right there's like and also ethereum history right and so it's it's 2023 in in ethereum uh we have 4844 ish around the corner we have understood ethereum to have this roll-up Centric road map then in arbitrum history we have you know Nitro is launched we have arbitrum Nova there's other future things in arbitrum uh on the Arboretum road map why why is now the right time for arbitrum like of all of all times of all Milestones the arbitrum could achieve why is this the right milestone

for the arbitrum token to to arrive right why now uh yeah so it really falls into the right place in the uh technical road map so you mentioned Nitro um Nitro was a critical upgrade and a very important upgrade an upgrade that gave us better compression but for users better throughput and lower fees and really allowed us allowed arbitrum to handle the capacity that's that's come to it yesterday uh anecdotally um we had arbitrary one had about 40 TPS

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

chain and then included uh companies like unit 410 via coinbase ethereum Foundation Google Cloud really really strong validator set which was a very important step in the decentralizations they were added to the white list for the validators and they are providing security to the chain so naturally the next step for us was okay so there are independent validators there's a fraud proof mechanism that actually gives the chain the connection to ethereum now is the time to give up chain ownership and we had off-chain Labs don't want to have control over the chain uh we want to

give this chain to the Dow and to the community and it was a natural progression now there is this mature technology that is you know validated by roughly a dozen independent parties and it made sense to remove the the most glaring remaining point of centralization was the ownership of the chain and some people might ask like well why don't you just get rid of the ownership of the chain like you don't need an owner the chain works yeah it has and the answer of that is upgradability and upgradability can be for new features of a dow should choose

to uh choose to uh Deploy on the Chain but also it's for you know emergency situations where there's uh hopefully not but a security incident and um the chain needs to be upgraded away from that so you have these two things that are sort of in uh you know in Conflict a little bit on the one hand you want someone to be able to upgrade the chain on the other hand we don't want there to be any centralized entities to have that power and the natural solution is don't have a centralized entity but give that power to the down the community and this was

the largest point of central of centralization remaining of the chain and naturally it was a it was the one to tackle now beautiful beautiful I want to get into some of the details of the actual arbitrum uh token the actual airdrop distribution and airdrop criteria so I'm going to share my screen here and pull up this uh this pie chart and I'm wondering Stephen if you could just walk us through this pie chart right uh so we got a various a various set of participants here investors team and future team plus advisors uh Dows and

arbitrum ecosystem individual Wallace and endowed treasuries uh so let's start with individual wallets because that is you know quote unquote the airdrop uh can we can we start there and and we'll walk through this pie chart and then we'll go into how people became eligible for the airdrop absolutely so individual wallets like you said is the typical airdrop those are the uh tokens that will go to user wallets right these are arbitrum users and we can uh I'll explain soon or uh you know uh we can get into what the criteria is how they're eligible but fundamentally look

at different types of usage in the chain and try to find try to find the real users and eliminate some of the sybils or the airdrop form members to get to you know because they deal you know remember the point is to give governance power to the user to the community you want to really get the actual users that are invested in the protocol uh to to be represented um I'll go clockwise I guess uh-huh the Dow treasury is next that's also a community portion um it goes to the community fundamentally but it goes to the Dow treasury

um it's not given out in the airdrop that will be used to fund the Dow over time given to the community via Grant programs uh part of that will also be a discretionary budget to the foundation uh which will be proposed in aip1 which is already proposed to give 750 million dollars in a million tokens sorry 750 million ARB tokens to the um to the foundation and the foundation will be able to uh do discretionary Grant programs as well again all approved by the Dow but uh you know should it be approved by the dally ip1

um but it gives the foundation an operating budget as well to uh execute on the uh will thou hire people Etc to do that um the next bucket is team and future team and advisors and this is basically um current and future uh people that are affiliated with off-chain Labs which is the initial company that build that build arbitrum and um and also future employees of off-chain labs there's you know we'll we'll also be eligible for for upside there so there's a bucket reserve for

them too and that that's um that's uh 20 26.94 and then investors these are the arbitrary investors and maybe um sorry the off-chain labs investors we raise three funding rounds uh to date a series uh a seed round the series A and A series B and um all those investors decides for their equity which they'll keep uh we'll also get token um token tokens um and it's a 17.53 of what they get it's important though for these two I just want to clarify whereas the airdrop

which we discussed that will be available March 23rd users will be able to claim it transferred to a wrong with it the investors and the team portion uh have some more restrictions attached to them and number one is they are locked up it's a four year lock up with a one-year Cliff so what that means is um for the first year the tokens will remain locked and no one will no one will get any we'll get any of them come to first the first anniversary they will get one quarter of their tokens and then they'll gradually every month

um of the remainder will vest for the next three years so four years first year nothing then there's sort of a large amount which is a for everything they would have gotten monthly over the first year give it them at the end of the first year and then monthly from them on then on that's true for investors and that's true for the uh team and future team bucket as well the second restriction uh on the team is we've instructed everyone at off-chain Labs not to vote directly with their tokens but to really empower the

community and increase the community Say by going through the delegation process and this will be part of the claiming process will be the ability to delegate tokens to community members so the team will not be allowed to vote the tokens themselves but they will be encouraged to delegate them to delegate them to community members that uh apply them for themselves as delegates uh the next uh last slice I guess is the Dow airdrop and this is a really interesting um part of the airdropic you know we consider it part of the airdrop as well

but it doesn't go to individual users instead it goes to Dows in the Arboretum ecosystem uh so arbitrum ecosystem projects that have Dows that have their own communities and the idea is the individual you know we can talk about eligibility criteria but the individual uh wallets you know will you can be perfect and uh we at Option Labs together with uh the Arboretum Foundation as well as nanson worked very hard over the course of many months trying to build criteria that sort of optimize for getting a large number of users but also giving them something meaningful and these things are in

Conflict right you can you can try to give every user every touch to the chain and then everyone gets something very little or you can try to focus on um a you know a smaller but still significant set of users and try to give them something more significant um but of course there will always be people that are missed for example someone that recently started using arbitrim might only have a transaction or two and they might not be eligible for your job but for the individual airdrop and it's hard to discern for them sometimes from an air from an airdrop farmer and so this gets a little bit difficult so one thing uh that we've done is the Dow air drop which gives the

tokens to these Dows and they can decide how they distribute and use those tokens and how ultimately their Community gets the benefit of those tokens so another distribution Channel um but but ultimately from communities that know their users much more intimately than those designing the airdrop for the entirety of the chain does uh do so much more targeted airdrop as well together those two buckets make up the air drop so if you look at the pie chart though um that little one and the two next to

it those are the community portion the portion of the of the uh of the uh out of the distribution and the left side is the um sort of what they call Insider which is investors team future team advisors and you can see that the majority of the tokens um roughly 56 percent will go to the community 12.75 initially and then over time um more via the Dow Treasury yeah and this uh Dows in the arbitrum

ecosystem airdrop I think is actually particularly interesting because I don't think we've particularly seen that before and this is actually a prediction that I made so I'm going to go ahead and give myself a small pat on the back here that uh arbitrim was sufficiently um uh as a community as an ecosystem as its own uh ecosystem is large enough that there were actually now Dows inside of Arboretum that have their own native communities uh and so I think really what this is meant to do is uh giving certain power over to the Dallas to decide from themselves who and how they

should distribute the last of the ARB tokens uh and so here I'm glad you went counter uh glad you went clockwise from the individual walls because we could end up there and I also just wanted to just double tap on the the Dow treasury the the 43 which I think is yeah the largest uh part of that Supply here this is really just about empowering the community with future uh tokens to do future things right and so to me I see the the individual wallets and the dowels and the argumentum ecosystem as rewarding past behavior and then the Dow

treasury is like all right well this is for future growth of the ecosystem future uh allocations towards whatever the community decides and the Dow treasury will be up to the community right and is it the right uh idea here absolutely yeah the doubt treasury will be fully up to the community to to allocate and you know that that's it it belongs to the community it's given to the community and the community will have to say where it goes um over time and um yeah that's uh yeah we expect the community to uh

you know do very interesting things and build the arbitrary ecosystem and enact the best interest of the arbitrary ecosystem uh with its tokens so this is a governance token which also uh brings the question of what exactly in the arbitrim ecosystem does this token govern over and so I think you were saying earlier Stephen that upgrades is a key feature right if you want to have some sort of human-driven upgrade then there requires some sort of governance decision and that governance can have

degrees of centralization or decentralization this makes it more decentralized but what exactly are they governing over what what are they kind of sovereign over is it the arbitrum one chain is it arbitrum Nova is it anything else beyond that um yeah so it's arbitrary one and arbitrino Nova so actually an interesting detail the actual governance of voting will happen in Arboretum one but it will govern both rb1 and Robertson Nova and he sort of wanted the building to be in one place because imagine that there is stuff going on in one Anova you don't want users to have

to move over their tokens so all the you know all the all those users that want to take place and either of the governance will have an arbitrum one but fundamentally it will govern both of those chains and it could be that the Dow will adopt a new chain to govern over time you mentioned before earlier and I'm sure we'll get into later that um part of this announcement was making it easy for people to launch their own layer threes permissionlessly that doesn't mean that that will govern them if you actually want the Dow to say hey take ownership and own this chain that would obviously require um the Dow to uh agree to that um but the other thing that they the other two big items that it governs is

um the arbitrary you know the the direction of the arbitrary ecosystem via it's technology so the upgrades but also vlb spending and aligning right so it can foster the ecosystem by giving grants or trying to to align with other projects and other developers you know today we off-chain Labs what is our role we're a service provider to the Dow if the Dow asks us to build a feature and we know how to build that we'll build it you know we um but fundamentally we're servicing the doubt I imagine over time that will become a more competitive space but in a good sense right there

will be others as well that want to build technology for the Arboretum ecosystem you know we don't have a privileged role there um and those tokens will be able to uh align with other service providers as well and the last one which I touched on which I think is really interesting is the ability the Dow will have the ability to license additional layer 2 Chains so this is a bit of a Nuance there are two parts of arbitrumorbit one is layer three chains and layer three chains these are these are like these are Roll-Ups or in each class chains it

could be either one of our technologies that settle onto a different arbitrine chain that's approved by the Dow so like arbitrary one Arbiter Nova those are permissionless open you can without going to the Dow without asking anyone by nature of the license that exists today uh go ahead and launch your own layer 3 chain uh you can modify the code you can customize the chain to do really whatever you want um but it may be a time where someone says I don't want to leave a food chain I want a layer two chain and the Dow might say you know one might say hey does it make sense for the Dow to share

an arbitrum has Best in Class technology does it make sense for the doubt to share this with a different layer two chain is that competitive is that a good idea and different people have different uses D philosophy argument and you know many people have different opinions on this but fundamentally our our thought was it shouldn't be our opinion on this it's a it's a controversial topic it should be the community's opinion so the community via the Dow governance will have the ability to launch to license other L2 chains and ethereum one of the principles of the Dow though that is ethereum aligned in the Constitution there's a series of values listed and

one of them is ethereum alignment so it will um it will by nature of that of that constitutional uh um value look to approve layer twos that are on ethereum but whether or not it approves that is fully and grants that license is fully in the discretion of the doubt so just to make sure I can repeat back what I heard and understand so if if I want to learn three then that is completely permissionless I can just go do that on top of arbitrary one or arbitrum Nitro

if I want is that correct so far yes Armature one or Nova yes or Nova excuse me and if I want to um if I want to launch my own chain using arbitrim technology then it goes to ARB Dao vote basically it goes to kind of token vote for this so yeah your own layer two chain yeah exactly you're a narrow two chain that settles directly to ethereum um that's basically equivalent to Arboretum one in terms of where it sits that would have to uh be

proposed to the Dow and they would go up to down to decide whether it wants to grant that license or not is the ARP token being used as a you know to pay for gas fees or anything else as as that changed or is the arbitrum ecosystem still using eth as its uh unit of account and exchange here that has not changed and that's you know enshrined one of the eth alignment values and trying and trying to the Constitution is that that won't change um eth is the gas token of the chains and uh the r token will not uh be used

for that um uh as in trying to the Constitution by the way just just to kind of quickly Circle back to that first category just because it to expand slightly and you know protocol upgrades and kind of protocol controls because I think it's useful to sort of unpack it a little um since it sounds relatively dry but I think there's a lot of stuff in there that's pretty interesting so that includes kind of permissioning over um who who is validating the chain and adding validators it can it includes control over who actually runs the sequencer

um potentially kind of you know control over over sort of alterations to kind of how how kind of the sequencer handles things like like strategy around Mev um it controls certainly kind of protocol upgrades and sort of to what degree sort of new eips are adopted um so there's kind of a huge amount of kind of pretty pretty important control there where where the Dow will will be kind of fundamentally in the driver's seat it's because I want to get into a little bit of the eligibility for how people

got their tokens and uh one thing we we didn't talk about on the Twitter space this morning was how difficult it was to prune away all of the farmers uh but I'm going to load up the this website here this brand new 50 website arbitrome doubt Foundation which is where you go to check your eligibility so I'm going to go ahead and hit this button and I've got a wallet loaded up here and I've got 3125 tokens uh and I think these are all the categories here and each one of these categories has different teams and uh Steven if you don't mind us walking

through you can speedrun this pretty quickly but just like sort of the uh the strategy here for how these these tiers were selected and and then uh some of the strategy also pruning away all the farmers can you just talk about the strategy for eligibility here yeah so um you know bridging funds is obviously one of the key key metrics uh that we use um which is do you have funds on the network and you'll see also these these top ones are for Arbitron one um so transactions over time so what that means is

um you know uh how this is another way to see real real sustained users from users that um um May uh come and go like some users sometimes do their transactions over a day and they come in and that you know that might be typical of an airbag Farmer they come they transact once and they never come back but users that you know transact in over two months or even more that that's just some sustained usage of the chain and it's reasons you know to to believe that this is a more aligned user um transaction um you know frequency and interaction

that says uh how many transactions or how many smart contracts if you know in a single transaction they want to interact with which again goes to um the a metric of how deep was the use of the chain was it a single interaction was it a much more complex interaction there are different levels of that transaction value is exactly what it sounds like um and the idea being that it's not the only category because we don't want to over you know over emphasize or there are ways to get larger drops by by using lower value but one one input is how much value was transacting it and more

points are given for for more assets breaching one just how much how much did one did one bridge and then uh the same thing those are for arbit room one arbitrary Nova and the reason why the wave of Armature Nova is not that it's a less important chain it's just it's a chain that had a much uh smaller light life cycle it's only been around since August so it has a sort of uh minimized uh criteria which is um you know a single a single point system that sort of mashes in whether or not one interacted an arbitranova all these are added up to a point system and

we have it in our docs the conversion and um there are also ways that people can can lose points right right or those are sort of the positive ways but if people um do certain things like create you know patterns that look very much like symbols and farming they can lose points as well and so uh again the idea being looking to align to the real users not those that were uh not those that were give to give the governance power to the real users not those that were just trying to farm the airdrop and all those go ahead and go into about criteria there's a set of points and the nice

thing is so I mentioned that option Labs worked with the arbitrine foundation and Nancy with this nanson is actually putting out I think a large blog post on this their process have worked very closely together and we're also publishing we actually have already published all the data around this so it's not like this opaque box like these are the criteria these are the categories they're pretty Broad and any user that's so inclined and so technically inclined can go ahead and actually do the analysis themselves and re you know repurpose the repeat the analysis and say okay this is actually correct

um this is the amount of points that I have and this is the This was done correctly and fairly I always think it's funny we've come on off a long way since the the uniswap airdrop haven't we which is yeah did you did you use uniswap okay you're getting tokens okay uh now that would be game that would be farm that would be impossible to do and so we're much more complicated and uh it sounds like the criteria you guys put forth was just um necessarily complicated to kind of we clean out all of the the farmers and the mercenaries and get to the actual users

in in the community real easy but but I almost wonder is like um you know so this is obviously open source this is posted right guess what happens they they they adapt they adopt for the next one I mean a year or two later the next uh air drops are gonna have to get even more complicated still uh that just definitely seems to be the trend but but well done on the on the work to kind of weed out and focus on the the good users here the one thing I like though which I think you know to

counter that which might be helpful is so we didn't only give positive points for things that look good we actually took away points and this might be a deterrent in the future as test line you could have you know if you just didn't do the farming you'd actually get more points and more tokens so by Nature it's good these additional activities you lose so maybe I hope for additional you know uh air jobs you know people might think twice and said I actually made not only not be helping myself I actually may be active hurting myself by doing this so that's um you know we can only hope that that might have some effect