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title: Arbitrum day slides

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### Just a smol coredev living in an L2 World
### arbitrum day 2023

<img src="https://hackmd.io/_uploads/SJnP3ZVK3.png" width="300" />

#### *Terence Tsao*
#### Core developer @ Offchain Labs

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## Agenda
- My journey from L1 -> L2
- L1 and L2 tradeoffs
    - Ethereum
    - Arbitrum
- L1 supercharges L2
- Common fallacy in thinking about L2
- L2 forward-looking

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## My little journey
![](https://hackmd.io/_uploads/H1F8VsrF2.png)

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## My time spent
```mermaid
pie title
    "L1" : 60
    "L2" : 20
    "MEV": 20
```

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## L1 versus L2

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## L1 Consensus Actors
- Validators
    - 700k active, 50k pending
    - 32eth / validator
    - ~20% of the ETH is staked
- Nodes
    - CL + EL clients
    - 5000 nodes
    - free to run

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## L1 Consensus in a nutshell
- LMD-GHOST
    - Favors liveness
    - New block every 12s
    - 50% online -> liveness
- FFG
    - Favors safety
    - New finalization every 6.4mins
    - 66% online -> safety
- One validator, one vote, every epoch
    - 1800 msgs/sec (overhead!)

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## L1 in action
![](https://hackmd.io/_uploads/rJlhFpSYh.png)

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## Decentralization has a cost
- 6 consensus clients
- 6 execution clients
- Rough governance
- 1-2 big EIPs, 5-10 small EIPs / year

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## Staking distribution
![](https://hackmd.io/_uploads/ryqzWR5t2.png)
[beaconcha.in](https://beaconcha.in/pools#distribution)

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## L2 Consensus Actors
- Sequencer
    - Order txs and emit a feed
    - Cannot steal
    - Centralized, decentralize later
- Proposer / Validators
    - Propose L2 block using feed
    - Can steal
    - Permissioned, permissionless later
    - Challenge game: honest party can **always** win, users can **always** safely exit to L1

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## Arbitrum in action
![](https://hackmd.io/_uploads/Hk5JDSidn.png)
[diagram](https://developer.arbitrum.io/inside-arbitrum-nitro/#sequencing-followed-by-deterministic-execution)

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## L2 Consensus in a nutshell
- Sequencer
    - Ordering policy: 
        - FCFS
        - Time-boost (soon)
    - Centralized
        - Participant count: 1
        - Liveness assumption: 100%
    - Encryption/decryption committee
        - Participant count: 1-20
        - Liveness assumption 33%-50%
- Validators
    - Fraud prove
    - Safety threshold: 1 out of N

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## Decentralize where it matters

|      | L1 validators | L2 sequencer | L2 validator |
| ---- | -------- | --- | -------- |
| multiple implementations  |yes|nice to have|no|
| multiple node runners     |yes|yes|one active, one defensive|

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## It's all about trust
![](https://hackmd.io/_uploads/HkhExWuth.png)
https://vitalik.ca/general/2020/08/20/trust.html

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## Leverage L1. Don't copy L1
- L1 is fundamentally very different than L2
- If something works well on L1, doesn't mean it'll work well on L2. Some ideas that don't make sense over time:
    - PBS
        - Front-running / toxic MEV
        - Got its principal-agent problems
    - Base layer sequencing
        - Slow without pre-confirmation

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## L1 at time looks like
![](https://hackmd.io/_uploads/BJme6j_Fn.png)

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## We hope L2 to look like
![](https://hackmd.io/_uploads/ryZ8JnOFn.png)

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## Why I am bullish on L2

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## L1 has to make certrain tradeoffs
<img src="https://hackmd.io/_uploads/BJj2UIhYh.png" width="800" />

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<img src="https://hackmd.io/_uploads/r1KNykkc2.png" width="500" />

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## L1 supercharges L2 in three areas
- Scalability
- Security
- Decentralization

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## Data sharding
- EIP4844 (Q4/2023)
    - Call data -> Blob data
    - Target: 32kB/s Max: 64kB/s
    - L1 data cost reduction 3-10x
- Danksharding (in 3-5 years)
    - Super blob data via data availability sampling
    - Target: 170kB/s Max: 340 kB/s

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## Ethereum Proof of stake security
- PoW -> PoS
    - Reorg can be "seen" on-chain
- Economic finality
- Validators are attributable
- Superior censorship resistance properties

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## Faster confirmation rule
- Heuristic on the block will remain canonical under synchronous
- Break when the network does not remain synchronous
- No accountability, a confirmed block can be reorg, and no one is slashed
- Assume adversary < $1/3$ of network
- < 1min latency to confirm
- [Research post](https://www.adiasg.me/confirmation-rule-for-ethereum/)

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## L1 on-chain censorship racle
- Heuristic on whether there has been censorship
- Assume % validators are honest
- Count skip slots over $N$ period using a cumulative distribution function
    - $Pr(X≤k)=∑ki=0(ni)pi(1−p)n−i$
- Less than 34 missing blocks out of 688 slots (2hrs)
    - Confidence $10^-6$
- Equally less than 4 missing blocks out of 225 slots (45mins)
- [Research post](https://ethresear.ch/t/reducing-challenge-times-in-rollups/14997)


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## Single-slot finality
- Long-term goal, may not ship until 2025
- Finalize every 12s
- Networking and message aggregation challenges
- [Research post](https://notes.ethereum.org/@vbuterin/single_slot_finality)

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## Decentralization: statelessness
- Verkle trie ("Vector commitment" and "Merkle Trees)
    - New data structure to reduce data to validate
- Validate data using witnesses. Under polynomial commitment, witness size is small and can be gossip over p2p
- Two testnets are up and running


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## Decentralization: bounded historical data
- EIP4444: Stop serving historical data over p2p and locally prune historical data
- Historical data is not necessary for validating new blocks
- Historical blocks & receipts occupy more than 400GB of disk space (and growing fast!)
- To validate the chain, nodes must have a 1TB disk

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## L2 in the not-so-far future
- Scalability
    - Cost reduction 3-10x
- Security
    - Faster L1->L2 messaging
        - 1min to deposit
    - Faster L2->L1 messaging
        - 1-2hrs to withdrawal
- Decentralization
    - Running a L2 node becomes more accessible

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## L2 open innovations
- EVM+ (Stylus)
- Privacy
- Decentralized sequencing
- Permissionless challenge game
- L3

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<img src="https://hackmd.io/_uploads/H1VzXkych.png" width="500" />

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## Call for actions
- What can L1 do more?
- What can L2/L3 do more?
- What will you build?

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## Thank you! 
### Enjoy the rest of the arbitrum day!
@terencechain
<img src="https://hackmd.io/_uploads/SJnP3ZVK3.png" width="300" />