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    Arbitrum's BOLD New Bet with Ed Felten & Raul Jordan

    Wed Aug 09 2023
    ArbitrumLayer 2DecentralizationPermissionless ValidationSecurityFraud ProofsSequencingSmart Contracts

    Description

    Arbitrum, a layer 2 solution, is making significant progress in decentralization and security. With the introduction of bold protocol, Arbitrum aims to achieve fully permissionless validation. It has already achieved green slices for data availability, proposal failure, and sequencer failure. The upcoming upgradeability and state validation features will further enhance its decentralization. The bold protocol ensures safe permissionless validation by eliminating false claims. Running local nodes and challenging incorrect claims are crucial for securing the chain. Decentralized sequencing and shared sequencing are being explored as alternatives to having a single party as the sequencer. The bold code is licensed under a business source license, allowing other layer twos to incorporate it. Staking is not required in the design of the Arbitrum protocol, but it can be introduced by the Arbitrum DAO. The recent innovations in dispute resolution and smart contract development make Arbitrum a leader among layer 2 solutions.

    Insights

    Arbitrum's Decentralization

    Arbitrum is leading in terms of decentralization among layer twos according to Layer2Beat.

    Bold Protocol for Permissionless Validation

    The bold protocol enables fully permissionless validation on Arbitrum, making it more secure.

    Securing the Chain with Fraud Proofs

    Arbitrum Nitro software allows users to secure the chain with fraud proofs, ensuring correctness.

    Decentralized Sequencing for Security

    Decentralized sequencing reduces vulnerability to front-running and malicious MEV extraction.

    Benefits of the Bold Protocol

    The bold protocol deters potential attackers and ensures the security of layer twos built on Ethereum.

    Staking and Sequencing in Arbitrum

    Staking is not required for validation in Arbitrum, and the decision to decentralize sequencers lies with the DAO.

    Arbitrum's Smart Contract Innovations

    Arbitrum's third generation dispute resolution and fraud proof protocol make it a leader among layer twos.

    Chapters

    1. Arbatrum's Decentralization and Influence in Layer 2
    2. Arbitrum's Progress in Decentralization
    3. Reducing Costs and Achieving Green Slices with 4844
    4. Securing the Chain with Fraud Proofs and Validators
    5. Running Nodes and Challenging Incorrect Claims
    6. Decentralized Sequencing and Security Measures
    7. The Bold Protocol for Safe Permissionless Validation
    8. Benefits and Security Assumptions of the Bold Protocol
    9. Staking, Sequencing, and the Future of Layer 2
    10. Arbitrum's Third Generation Dispute Resolution and Smart Contract Innovations
    Summary
    Transcript

    Arbatrum's Decentralization and Influence in Layer 2

    00:05 - 06:59

    • Arbatrum has released, marking a bold step towards the decentralization of layer 2.
    • Arbatrum is the first layer 2 to receive a green slice on Layer2Beat, indicating its critical component status.
    • The podcast will discuss the risk vectors and other slices that need to turn green for Arbatrum.
    • The episode will also explore the concept of staking Arb tokens and the growing influence of the layer 2 ecosystem.
    • The hosts claim that the incoming bull market is layer 2-led, with Arbatrum being one of the key players pushing this frontier.
    • Arbitrum has its own SDK called Orbits and an additional innovation called Stylus.
    • The podcast features Ed Felton from Off-Chain Labs and Raul Jordan from Prismatic Labs, discussing recent developments in the Arbitrum ecosystem.

    Arbitrum's Progress in Decentralization

    06:33 - 13:50

    • Arbitrum is making progress in layer two decentralization with the introduction of bold, which allows chains to have fully permissionless validation.
    • Bold enables any participant in the protocol to force the correct outcome of the arbitrary chain, even if everyone else is against them.
    • Currently, Arbitrum has about a dozen validators, but with bold, it will become permissionless and anyone can force correctness.
    • Layer2beat.com provides an objective measure of decentralization for layer twos, and Arbitrum is leading in terms of decentralization according to this measure.
    • Arbitrum has achieved green slices for data availability, proposal failure, and sequencer failure.
    • Other layer twos are still in stage zero of achieving these slices.
    • The upcoming upgradeability and state validation features will turn yellow slices into green ones for Arbitrum.

    Reducing Costs and Achieving Green Slices with 4844

    13:25 - 21:14

    • All data is a big cost to the Abrutram layer two, and 4844 makes that cheaper.
    • Abrutram already has the green slice, and that green slice is about to become cheaper with 4844.
    • Most rollups will have this slice green because they mostly do put their data on Ethereum.
    • Proposal failure: Arbitrum is designed in a way that it's not subject to proposer-related problems.
    • Sequencer failure: The sequencer in Arbitrum can't censor transactions or forge them.
    • The relationship between proposal and sequencer depends on the chain. In Arbitrum, both roles are played by the Arbitrum sequencer.
    • Arbitram earned its green slices by designing the protocol so that the sequencer is trusted only for receiving and ordering transactions, not handling money or asserting transaction results.
    • There's a backup method in Arbitrum to include transactions even if the sequencer refuses them, ensuring no censorship by any party including the sequencer.
    • The yellow slice represents state validation which currently uses fraud proofs with a permission set of validators. It will turn green when participation becomes permissionless through bold protocol adoption.
    • The purpose of bold protocol is to make permissionless validation safe so that state validation can turn green.
    • A blog post and code for bold protocol are available. Dev nets using bold will be released soon followed by a special test net using arbitrary nitro stack with bold. Then a proposal can be made to adopt bold in the DAO.
    • The upgradeability slice is yellow because upgrades in Arbitrum have a delay after approval by the DAO. Assets and positions can be fully withdrawn before changes take effect.

    Securing the Chain with Fraud Proofs and Validators

    20:45 - 27:48

    • Upgrades in the DAO can happen through a vote with a delay for asset withdrawal
    • Arbitrum has a security council of 12 people elected by the DAO
    • The security council can take emergency action if necessary
    • The existence of the security council is why Arbitrum is yellow, not green
    • The Security Council acts as a stopgap in case of a security emergency
    • BOLD is permissionless validation on layer twos
    • It leverages Ethereum's decentralization and security to reduce trust assumptions
    • L2s are valuable because assets can be bridged from Ethereum to L2 and back
    • Getting assets back from L2 to Ethereum involves trust assumptions
    • Fraud proofs in BOLD aim to reduce trust by guaranteeing asset retrieval on Ethereum
    • With BOLD, anyone can secure the chain with fraud proofs using Arbitrum Nitro software

    Running Nodes and Challenging Incorrect Claims

    27:19 - 33:58

    • Arbitrum Nitro software allows users to secure the chain with fraud proofs
    • Running a local node is the best way to ensure the history of the chain
    • The Node Software constantly scans and challenges any incorrect claims about Arbitrum on Ethereum
    • Challenging and winning against bad behavior is done by running software
    • Transactions are posted to Ethereum from Arbitrum via back post or batch post
    • After seven days, transactions can be confirmed as valid on Ethereum and anyone can challenge them
    • During settlement, the node affects what Ethereum sees as the correct Arbitrum state, not the state of the node itself
    • If there's a disagreement, validators can post their own claim and the bold protocol will identify and prune off bad branches of a fork
    • Being a validator costs almost nothing if you're already running a node
    • Validators may have some skin in the game or be paid by the arbitrum Dow to act as validators
    • One honest participant sounding the alarm is enough for security in Arbitrum
    • Other honest nodes can take over if one goes offline or stops participating

    Decentralized Sequencing and Security Measures

    33:29 - 40:08

    • Arbitrum is not tied to a particular state or participant, anyone who's honest can help defend the honest state
    • Cryptography is like magic when it works in these situations
    • Shared sequencing allows other participants to take on the role of sequencer in Arbitrum
    • The current sequencer in Arbitrum is run by off-chain labs but could be assigned to someone else by the DAO
    • The sequencer's role is to notarize transactions and determine their order
    • Decentralized sequencing has been researched as an alternative to having a single party as the sequencer

    The Bold Protocol for Safe Permissionless Validation

    39:45 - 47:16

    • Decentralized sequencing is a way to reduce vulnerability to front-running and malicious MEV extraction.
    • Arbitrum and the ecosystem are considering moving towards shared sequencing.
    • The technology for decentralized sequencing is being developed by Offchain Labs, but deployment on Arbitrum One is up to the Dow.
    • Permissionless validation in Arbitrum is not a trivial problem due to denial of service attacks.
    • The Bold protocol allows for elimination of all false claims in a constant amount of time, making permissionless validation safe.
    • Bold protocol uses an 'all against all' fight instead of a tournament style to resolve competing claims.

    Benefits and Security Assumptions of the Bold Protocol

    47:01 - 54:22

    • The bold protocol allows for an all-against-all fight in the same amount of time, regardless of the number of combatants.
    • Participating in the bold protocol discourages evil parties from joining because they will always lose against honest participants.
    • The mere threat of the bold protocol deters potential attackers from targeting Arbitrum.
    • The bold code is licensed under a business source license, allowing other layer twos to incorporate it.
    • To determine if assets and activity on a layer two are as secure as Ethereum mainnet, certain assumptions need to be made.
    • Assuming Ethereum is secure, layer twos built on top of it should also be secure.
    • For Arbitrum, at least one honest validator is needed for non-censorship and correct outcomes.
    • Bugs in the additional software operating the layer two can pose security risks.
    • Staking tokens on Arbitrum is not necessary for validation unless someone stakes falsely.

    Staking, Sequencing, and the Future of Layer 2

    53:54 - 1:00:38

    • Staking is not required in the design of the Arbitrum protocol, but it can be introduced by the Arbitrum DAO.
    • Layer two networks like Arbitrum only require one honest actor to power the network, not a consensus of 33% or 66%.
    • The current model on Arbitrum 1 is that fee revenue goes into the DAO treasury.
    • Decentralizing sequencers on Arbitrum is a decision for the DAO to make.
    • Research is being done on committee-based sequencing for layer two networks.
    • There's a trade-off between latency and having thousands of sequencers on a chain.
    • Sequencers help lower costs and provide fast response times for users of layer two networks.
    • The recent endeavors of Orbit, Stylus, and Bold are frontiers that contribute to making Arbitrum the best chain it can be.

    Arbitrum's Third Generation Dispute Resolution and Smart Contract Innovations

    1:00:14 - 1:06:32

    • Arbitrum is a leader among L2s with its third generation dispute resolution protocol and fraud proof protocol.
    • Stylus allows writing smart contracts in any programming language and running them alongside EVM's solidity contracts.
    • Stylus enables the use of legacy code and offers better performance than EVM.
    • Orbit technology allows customization of chains on Arbitrum 1 and Arbitrum Nova.
    • Ethereum's scalability roadmap has made significant progress with multiple teams and stable software.
    • The upcoming upgrade will make rollups cheaper and cement Ethereum as a premier censorship-resistant chain.
    • Ethereum is finding its identity with the advent of these upgrades.
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