Steven Goldfeder, CEO of Offchain Labs, on Arbitrum and The Future of Layer 2s | Ep. 392

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December 10, 2024

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Steven Goldfeder, CEO of Offchain Labs and co-creator of Arbitrum, joined the Cryptonews Spotlight podcast to share insights into Layer-2 solutions, the evolution of blockchain, and Arbitrum’s unique position in the ecosystem. Watch the interview or read the highlights below.

The Birth of Arbitrum

Steven Goldfeder reflected on Arbitrum’s journey from a Princeton academic project to a powerhouse in blockchain. The project began as an innovative attempt to address scalability issues in Ethereum.

“We believed in the power of the technology. The surprising thing was that everyone else got to believe in this as quickly as they did,” Goldfeder mentioned.

Despite starting as theories on paper, Arbitrum’s adoption exceeded expectations, growing into the leading Ethereum Layer-2 solution, surpassed only by Coinbase’s Base. Currently, Arbitrum’s total value locked (TVL) is circa $3.2 billion.

Arbitrum TVL compared to the market | Source: Coingecko

Goldfeder credits Arbitrum’s success to its core mission: creating decentralized, permissionless systems that innovate without compromising blockchain’s ethos.

Keys to Building a Leading Layer-2 Solution

For entrepreneurs in the blockchain space, Goldfeder emphasizes the importance of aligning with your mission. Arbitrum avoided shortcuts and centralized compromises, ensuring a fair and permissionless infrastructure.

“Keep true to your values and the reasons why you’re here. If we’re just replacing one centralized system with another, certain individuals might benefit, but the world won’t.”

He illustrates this with Arbitrum’s theme park analogy: rides (applications) had to be ready before users entered.

This ethos allowed smaller players to compete alongside giants like Uniswap, fostering an ecosystem driven by innovation and meritocracy.

The Name Behind Arbitrum

Arbitrum’s name reflects its role as an arbitrator in optimistic rollups, resolving disputes between validators. While some associate the name with arbitrage, its origins are rooted in blockchain’s consensus mechanisms.

“It comes from the word arbitration… The blockchain is the referee that arbitrates between validators and tells you what the truth is.”

Goldfeder humorously recalls how early academic researchers thought the name was too established to change—long before Arbitrum gained mainstream traction.

The Current State and Future of Layer-2 Solutions

Layer-2 solutions like Arbitrum enable Ethereum to scale without sacrificing security or decentralization. Goldfeder praises the modular approach for driving scalability and innovation. Arbitrum Orbit allows teams to launch their own Layer-2 and Layer-3 chains, creating a diverse ecosystem of over 100 chains secured by Ethereum.

This modularity ensures that advancements like Ethereum’s proof-of-stake transition seamlessly extend to Layer-2 solutions without additional complexity.

“If you think about modular systems, defining modular pieces and allowing them to innovate independently is the most scalable and sustainable way to grow,” believes Goldfeder.

Arbitrum Stylus: A Tool for Developers

“To onboard the next billion users, we first need to onboard the next million developers,” says the CEO.

Arbitrum Stylus expands the developer toolkit by supporting Rust, C, and C++ for smart contract development alongside Solidity. This flexibility empowers Web2 developers to bring their existing knowledge and codebases into a blockchain, accelerating innovation and adoption.

Stylus also enhances computational efficiency, offering 10x more gas efficiency, making advanced use cases like cryptography and AI integration viable on-chain.

Arbitrum in Gaming: Breaking Barriers

Gaming is Arbitrum’s rapidly growing vertical, attracting AAA studios like Ubisoft. Arbitrum’s fast confirmation times (250 milliseconds) and low costs eliminate UX barriers for gamers unfamiliar with blockchain.

Goldfeder highlights the importance of maintaining Web2-like speed while offering blockchain’s unique benefits, such as asset ownership and interoperability.

“If you want to grow beyond our community, the user experience must feel as good as every other game,” he adds.

DeFi and Beyond: Bridging TradFi and Blockchain

Arbitrum continues to lead in DeFi, partnering with major players like Robinhood and Paxos. Goldfeder envisions a future where DeFi and traditional finance (TradFi) merge seamlessly, creating unified financial systems without the need for qualifiers.

“DeFi is becoming more and more an integral part of mainstream finance,” he opines.

Institutional adoption is accelerating as companies like Franklin Templeton integrate blockchain into their offerings, validating Arbitrum’s role as the home of DeFi innovation.

Final Thoughts and What’s Next

Looking ahead, Arbitrum aims to drive adoption by enabling developers to explore advanced applications, including AI and cryptographic solutions, through tools like Stylus. The ecosystem’s focus remains on fostering innovation while maintaining its core principles of decentralization and fairness.

“Stylus gives developers the ability to use their existing toolset and bring innovative new things on-chain,” says Goldfeder.