Inside Arbitrum’s Staggered Mainnet Launch

Despite community anticipation, Arbitrum’s “beta mainnet” may take time to develop.

Aug 31, 2021 at 9:07 p.m. UTC
Updated Sep 4, 2021 at 12:29 a.m. UTC

As gas costs soar on Ethereum and non-fungible token (NFT) drops routinely burn thousands of ETH, yield farmers and traders have been eagerly anticipating the arrival of Arbitrum’s rollup technology.

Despite the pent-up demand, however, signs are pointing to the layer 2 scaling solution’s launch being more of a process rather than an event.

In an interview with CoinDesk, Offchain Labs co-founder Steven Goldfeder emphasized that while the launch is a step in the right direction, there’s plenty more work to do before the network can handle a significant portion of Ethereum’s transaction load.

“We’re very excited, very humbled by the support we’ve gotten,” said Goldfeder. “Today’s the day we can finally provide scaling for the Ethereum user. But as exciting as that is, we’re rolling up our sleeves because there’s still work to be done. It’s still a mainnet beta, and there’s still steps to take to full decentralization.”

Early days

Arbitrum’s official Twitter account, usually quiet aside from the occasional technical update, has seen a flurry of activity today once the team announced a $120 million Series B raise at a $1.2 billion valuation, a $1 million bug bounty program with Immunefi and an announcement that Balancer will be live after the official launch tentatively scheduled for “late afternoon EST,” said Goldfeder.

However, the team is quick to note that not all of the reported 400 teams that are planning to launch on the network will be available on day 1.

“We’re still tied to developer timelines for each of those teams,” Offchain Labs Director of Partnerships A.J. Warner said in an interview with CoinDesk. “A number plan on going live or ASAP, and I don’t want to spoil the announcements from those teams, but there are a number of large, layer 1 projects everyone knows that should be going live today or tomorrow.”

The delay is caused in part due to the DeFi ecosystem’s network of interdependencies.

“In many ways it’s a game of Lego blocks,” said Warner. “When you speak to specific teams they have three or four dependencies they need before they can go live, so it’s about stacking.”

He pointed to Chainlink, an oracle service necessary for lending services like Aave, whose yields are, in turn, necessary for farming services like Yearn.Finance. Chainlink currently has “a number” of price feeds up and running on Arbitrum, with more planned to launch. Likewise, The Graph, another key tool for organizing blockchain data, is currently live as well.

Ultimately, all of the projects that have announced planned implementations on Arbitrum are eager to launch as soon as possible, but the permissionless, interconnected nature of decentralized finance (DeFi) is creating a temporary bottleneck.

“All of the teams listed on the portal have indicated they intend to go live in the near future, once all dependencies are live, tested and stable,” said Warner.

Gradual decentralization

In addition to the ecosystem migrating at a slower pace than some Ethereum users would like, Warner says that the network will be operating with some centralized permissions in the early days, as well as with some network throttling until a track record of stability has been established.

“We’ve talked about it in the past – it’s still mainnet beta. We’re going to be maintaining certain centralized controls for fast upgradeability and ensuring the stability of the protocol early on,” he told CoinDesk. “We don’t like to say this is the finish line, in many ways this is the start line. We’re going to be ramping up, but we’re gonna have some rate limiting early on.”

Goldfeder said Arbitrum will use gas limit throttling to start the network with roughly the same transactions per second (TPS) as Ethereum. The team will increase traffic throughput as demand ramps up.

“We’re going to ease into things. We’re going to start off today with roughly Ethereum’s capacity, and we’ll increase that limit over time as traffic increases,” he said.

Additionally, Goldfeder said that centralized controls will allow “fast upgrades in the coming weeks to months,” but after further “security diligence” and an established track record of stability, those controls will be phased out.

Token?

In addition to the launch, traders have been eager to hear more details about a possible Arbitrum token, especially as valuations for layer 2s like Polygon soar and multiple platforms launch incentive programs with eye-watering price tags.

Goldfeder told CoinDesk the team would be eschewing a token just for the sake of incentive programs. The team is confident they can compete without one.

“We’re excited about all of the organic excitement that we’ve seen, and we believe that’s an extension of Ethereum’s organic community. We also expect several projects to launch application-level incentives on Arbitrum,” he said.

Goldfeder specified that “there will be no token” in the immediate term, and noted that the $120 million raise was purely equity financing.

Currently, the team’s revenue model is a transaction fee routed to Arbitrum as part of the core fee structure, and Goldefeder told CoinDesk that the team is confident that the fee structure is “very viable.”

However, he did leave the door open to a token down the road, saying the end goal is a fully decentralized system in the hands of the community. While that vision “doesn’t include plans for a token” at the moment, a DAO may decide to tokenize at a future date.

Getting to the end goal of a fully decentralized system, however, means measured and at times cautious steps.

“My main focus is to get rid of those controls, but only in a responsible way. We’re calling this our ‘mainnet beta,’ and we believe it’s the most responsible way to launch.”

UPDATE (Sept. 1, 13:30 UTC): Corrects spelling of Steven Goldfeder’s name.

DISCLOSURE

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Andrew Thurman is a tech reporter at CoinDesk with a focus on DeFi.

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