Massive Arbitrum Acquisition!! with Steven Goldfeder & Preston Van Loon

Hey Bankless Nation, welcome to another State of the Nation episode. We've got a really interesting topic for you to cover. This is the first, I think, in crypto history, maybe Ethereum history. The acquisition of Prismatic Labs by Off Chain Labs. This is Arbitrum, a layer two acquiring an Ethereum core development team, a core client team. That's what we're here to talk about. David, what are we getting into today?

Yeah, I didn't know that this was possible. Uh I don't think anybody would r realize, like, oh yeah, you could acquire uh a client. Um and so this is what we're going to be talking about today. Uh why exactly did Arbitrum acquire a client, a layer one client? What does that do for Arbitrum? Uh what does that do for Prismatic Labs and Prism? Uh what is the future of Prism? Is Prism staying the same? Is it changing? Uh what's the future of Arbitrum? Is that staying the same? Is that changing? Uh and there's also some broader questions as well. Uh I I remember, Ryan, during the depths of the bear market 2018 to 2020, the Ethereum world was plagued by how do we fund our open source software teams, our open source layer ones? Uh, does Arbitrum with the acquisition of Prismatic Labs bring an answer to that table? Uh do we like that answer? Are there costs and trade-offs with that answer of a commercial entity acquiring a client, a layer one client team? Uh so there's a discussion here. Uh, there's uh many, many other things to discuss is like what does this do to the Arbitrum tech stack? Uh, and overall, what is the win win between Prismatic Labs and off chain labs? Uh, so these are the things we are all going to explore here on the State of the Nation today.

Yeah, I think it's really interesting. I think maybe the answer to the question is uh layer two will help fund the development of layer one. That seems to be what's going on today. Uh full disclosure as we get in, we do these disclosures at the beginning of every episode. I invested in Arbitrum. I don't think David did. So uh David, you could play the role of uh Bad Cop. Bad cop, I guess. Um Arbitrum is also currently a bankless sponsor. Um Preston and David are super good friends and hang out a lot. David, did you write that in the agenda?

Yeah, that is my disclaimer.

Chris and I are friends. Okay. I guess that's a disclaimer. Maybe we should have a friend's disclosure page. But um David would have to basically put everyone in crypto because he loves everyone. Uh anyway, you can always find access to our disclosures in the show notes. We'll try to mention them at the top of every episode, but they're always published bankless.comslash disclosures. Also, before we get in, want to tell you about our friends and sponsors. Why are we talking about this today, David? What is the overall significance and what should listeners pay attention to as we talk to Steven from Arbitrum and Off Chain Labs and Preston from Prismatic?

Yeah, overall, it's it's kind of what I said in the intro. There is uh it we perhaps have found an answer to perpetual layer one client development. Uh there are synergies between a layer two who needs tech and needs software that's similar to layer one. Uh and so there's actually some sort of like elegance behind the acquisition of a layer one client team by a layer two. Uh, how sustainable is this? Can other people copy this model? Are we actually incentivizing more client teams to be built if we can like kind of show them that there might be a payday at the end of this? And how good is that? Uh, all of these are things are important questions. I actually, Ryan, in my time at Defcon, asked uh Vitalik Buterin this question in a little micro interview that is currently in the hands of the bankless editors. Uh so Vitalik's take will slow uh shortly be up on the bankless YouTube as soon as we can get

Tell us.

Uh no, no, I'm not gonna say it. Yeah, I'm just using it. Uh uh 'cause uh I was so chaotic that week that I can't remember what his answer was. Uh so

Well, I've inappropriately teased, sir, because uh I I don't recall you mentioning it to me either. Guys, we'll be right back this episode with uh Steven and Preston talking about Arbitrum's acquisition of Prismatic. But before we do, we want to thank the sponsors that made this episode possible. We are back, guys. A layer two team has bought a layer one client development team on Ethereum. We're here to talk about it. This, of course, is the off-chain labs, aka Arbitrum acquisition of Prism. I think the main, the top Ethereum uh two, used to be called Ethereum 2. Beacon Chain Consensus Client. I should say we have the two folks that know the most about what has just happened. We've had them both on the podcast. The previously they've been on different teams and now they're on the same team, part of the same family. Of course, we're all the Ethereum family, I guess, but it's great to have you back. Uh Steven Goldfetter. Steven is, of course, the co-founder CEO of Off Chain Labs, the team that's building Arbitrum, and Preston Van Loon is the co-founder of Prismatic Labs, a leading Ethereum L1 client, one of the first organizations to start actually writing code for ETH2.0. And boy, I remember it well when you guys stepped up to the plate and volunteered for that. It was awesome. Uh, first of all, I just want to say congratulations on this arrangement, on this acquisition. It seems like a pretty good match.

Thank you. Thank you so much. Yes, uh, I definitely agree. It seems like a great match, and we're super excited about it.

Well we're gonna get into it. Um and um also I wanna ask too, because I know you're both at DevCon and uh that was just was that just last week, David?

I was talking to Steven before you came on. Steven was actually not at Defcon, so actually it was just me

Oh you weren't, okay.

and Preston at Defcon.

So the guy who wasn't at DevCon is is saying you were both at DevCon and he doesn't know anything about so why David, why don't you ask the DevCon question? Yeah, present.

Oh, it was amazing. You guys should have been there.

Well played. Um Well wh why don't we start talking about um Arbitrum and Prismatic then? So um Steven, like w how did this come about, first of all, and uh what do you see as the as the big win for both the organizations here?

Yeah. So the way it came about is we got to know the Prismatic team uh pretty well over the course of the past uh several months or many months at this point.

And um, the more time we spent together,

starting virtually, then we actually had in person sessions,

uh, the more it just made sense and we realized that we thought about a lot of things uh in the same way.

Um

In terms of our vision, our vision is to scale Ethereum in its roll-up centric roadmap. And that requires obviously layer one components and layer two components. And we had a lot of the same shared goals

and even personal interest, the things that got us excited, the conversations, the whiteboarding sessions, the

you might say the nerd out sessions, you know, we did a lot of those.

And it was uh super, super exciting. And,

you know, we um really um just

meshed together and and it felt right. And

as those conversations, uh, as those conversations move forward, we basically

Um, you know, said, hey, we we can accomplish a lot by by joining forces and by uh working on solving this problem together. And you know, the thing that we

in a no in a very broad way, the thing that we accomplish is we're really

very much, you know, working towards the same goal from different angles, of course, working on different parts of this puzzle and different parts of this problem.

We have lots of shared experiences and lots of different experiences that we can apply and uh to one another's domain.

And it just felt right and felt like we really were

values wise aligned, and everything else just sort of fell into place.

I'm sure there's a a great dating metaphor here, so I'll I'll lean into this a little bit more. So now that you guys are together, uh what was the dating process like from your side of things, Preston? What was it like to begin these conversations? And overall, like uh why why how did these conversations get triggered in the first place? Like uh I think everyone when we heard the announcement was like, oh, uh you can acquire a layer one client team? Uh who had this idea and how did these conversations progress?

Why did you just wipe right?

You know, well, with with the merge finally happening, we were wondering so what is what is the next, you know, highest impact work that Prismatic Labs can do?

And our our mission since the beginning has been scaling. Um, so we s we started looking at the roadmap, taking a look and saying, what is the like

longer term vision for

for Prismatic and and how do we further our impact and and really be uh help you know make a theory be a thing that goes fast, it's cheap.

So we started thinking about the

Rollop centric roadmap, the sort of the direction that we're all going.

And with that, we reached out to the off-chain labs team and said, you know,

hey, we have some ideas for collaboration.

What do you guys think about this? We got EIP uh 4844 for data sharding coming out.

And it it it it makes sense to have a closer relationship. And like Steven was saying, the the more I guess dates we went on, the the the better we all felt about it. And and uh

Uh towards the end, we're like, wow, this is a really cool idea and a really cool relationship that's forming. And

we are so aligned on the same uh uh vision of scaling Ethereum that that it really makes sense to,

you know, not only have a close relationship because of the role of Centric Future, but also to,

you know, be working together because

there are things that that we think we do well, and we know there are a lot of amazing things that

uh of chain labs this well, and having that kind of synergy and and

And sharing knowledge and talent, it it just,

you know, it it's for the greater good. So we're really excited to to um to be joining forces with off chain.

So what are the big wins on the Prismatic Labs side of things? Like Preston, what what do you and Raul and all the members of the Prismatic Labs? What what's the big W here for you guys?

Well, the the the the big win that we have is that uh the support from off chain is is is massive, right? We have some resources there, a much bigger organization um that can help us

sort of offload a lot of the tasks that that aren't core development. Uh

I think the big thing that Raul and I learned over the the last like five years is that uh

There's a lot of work that needs to be done, a lot of unfund work that comes with, I guess, running a business. Prismatic Labs is a business, and