I want to talk about arbitrum where we

are and where we're going. Uh but let me

talk first about why arbitum and in

particular why a layer 2 chain and why

uh the the arbitrum technology in

particular. Um and the starting point is

just that it's incredibly expensive to

build and operate a layer 1 chain. Layer

one chains have to pay for security.

They have this very large staked

consensus and that's expensive. people

are locking a lot of assets and you have

to compensate them for that locking a

lot of assets through staking. So they

have tend to have near zero retained

earnings in the chain uh itself. Um and

any value beyond staking tends to flow

uh often to foundations or other

organizations. So bottom line is it's an

incredibly expensive thing to do. major

L2s uh or sorry, major L1s tend to uh uh

tend to issue three to 7% new issuance

of tokens to pay for those staking

costs. And uh that of course is value

that comes from token holders and it

fundamentally means it's super expensive

to operate an L1 chain. So why build

another L1 and pay that cost again? Why

not instead work with an existing L1,

build an L2 that anchors its security in

the security of that L1? And that's the

approach that we took by building the

arbitum technology to work on top of

Ethereum.

Okay, so L2s are built different. They

pay less for security. There's zero new

token issuance because that security

cost is simply paid directly by buying

gas in the layer one and that's passed

through to users in transaction fees

which are very reasonable. So the L2 is

able to retain earnings from the uh from

the from the transaction fees that it

charges and this compounds and grows the

treasury and we see this happening in

arbitum. Most L2s funnel their earnings

directly to some foundation or

organization. They're not controlled

directly by the by the DAO, by the token

holders themselves. But arbitum is

different. Arbitum is unique. The

arbitum DAO acrru all of the value

that's generated by the technology. That

value goes to the DAO and into the DAO

treasury. The arbitrum foundation helps

to steward and grow the technology, but

the foundation uh reports to and is a

creature of the DAO. It receives its

budget because the DAO has voted in. So

the DAO is in charge. If you're a token

holder, it's your chain and your rules.

That's undique. Uh we like to talk about

the the way that uh an ecosystem like

arbitum can create value by using this

analogy to a digital sovereign nation.

Let me talk a little bit about what that

means. A digital sovereign nation uh has

a set of constituents and stakeholders.

These are both token holders. These are

people building applications and users.

There's valuable natural resources that

are part of this. That is things like

the block space and the access to uh to

chain information. Um and all of this

works together to create an economic

zone of opportunity. A zone of

opportunity for developers and users.

But those zones of opportunity also

create value for the DAO and for the

token holders. Uh so it's that positive

feedback loop uh through the assembly of

this community putting the DAO the

community in control of what's happening

and then creating a zone where economic

value can be created without a lot of

top-down control by uh by any one

entity.

So the natural resources we're talking

about are things like block space. Um,

arbitrum one chain sells block space to

uh to for user transactions and 93% of

the revenue from that goes to the uh uh

there's a 93% margin on that which goes

to the uh the arbitum token holders. Um,

arbitum also supports uh the orbit

program which allows uh anyone to launch

their own chain provided that that chain

either settles to arbitrum 1 and

supports the DAO that way or if it

settles say directly to Ethereum then

there's a 10% revenue share from those

chains. So this also grows the zone. It

builds a set of if you will allied

nations that are uh contributing revenue

and contributing to the growth and the

size the network effect of that

community. Um, Arbitum is the only EVM

chain that supports multiple languages,

not just um, the Solidity programming

language which is super specialized for

blockchain building, but also supports a

conventional more more standard and

popular languages like Rust, C, and C++

through the Arbitum stylus technology

which is really unique to Arbitum. And

there's an additional revenue stream via

time boost which ex which captures

additional value from uh uh by charging

fees to to arbitrageers. So all of that

is part of the natural resource which is

controlled and owned by the arbitrum

dowo.

Okay. Um I want to shift gears a little

bit and start to talk uh a bit more

about where things are going. So let me

zip forward a bit. I could talk about um

uh we can talk about adoption uh the uh

the the adoption by Robin Hood of the

Arbano arbitrum technology has been a

really key step um how that drives

revenue and so on. Uh but I want to move

forward a bit um and talk about um uh

and talk about sort of the approach to

uh to the market and the approach to the

development of the technology. Um this

starts with this barbell uh strategy

which is arbitrum one is the most

credibly neutral secure and

decentralized platform that's available

among all the layer 2s but similarly the

orbit tech the idea that people can have

their own chain under a your chain your

rules but share revenue uh model that's

the most flexible and featurerich way

for people to launch their own chains

and the fact that both of these exist in

the same technology ecosystem is really

important for uh for adopters because

they're able to for example start

launching as an application on arbitrum

one and then migrate to have their own

chain if they want to do that. And so

what you get is this flywheel where the

technology platform is driving value to

the DAO and the DAO is investing in

continuing to grow the technology

platform.

So what does that look like? Let me talk

a little bit about what is coming soon

in terms of technology and functional

upgrades to the arbitrum technology. The

first one is ZK proving. Um, arbitrum

tech has focused on using an interactive

or optimistic proving mechanism simply

because that is the method that drives

lowest cost and good user experience for

users. We're always focused in thinking

about architecture for the technology on

driving down cost, driving down response

time uh and driving reliability and ease

of use. Uh but ZK technology has now

matured to the point where it makes

sense to incorporate it. This will

provide some advantages um and uh and

work to incorporate ZK proving into the

arbitum technology is well underway um

through uh a uh a cooperation between

off-chain and um and succinct. So that's

one of the big things that's coming. Um

it's an important internal upgrade

although the user experience uh won't

change that much. uh you'll simply get

um more capital efficiency for liquidity

providers. Okay. Uh second and really

important is horizontal scaling. What

this means is getting more throughput,

processing more transactions, more gas,

more activity on the same nodes. So the

nodes that operate the chain are

obviously getting faster. All computers

are getting faster. But the ability to

drive more traffic using the same

hardware resources and therefore at the

same cost is incredibly important. And

there's work going on here for example

to enable parallel execution um as well

as uh radically new models for executing

EVM code so you maintain compatibility

while getting a big factor improvement

in how much activity can happen. That

grows that economic zone and it also

drives more revenue to the chain.

Next, responsive gas pricing. And this

one is a little bit less high-tech, but

I think it's going to be a really big

and significant change for uh for

arbitum. And this has been proposed

already for a vote to the arbitrum dow.

Um and responsive gas pricing is comes

from a very common sense uh place. U so

common sense idea, complicated

technology to implement it. And the

common sense idea is this. Some days

there's more demand for the chain than

others. Some hours there's more demand

than others. So rather than having just

a fixed gas target or gas limit that's

the same in every day, same in every

hour, the technology should be able to

say there's a lot of demand today.

There's a lot of demand right now. Let's

temporarily raise the gas limit. Let's

temporarily let people do more stuff

without raising the price of gas. Now,

you have to be smart about that. You

can't get too far in the hole. All that

needs to be managed and that's where the

rocket science comes in. But the

research is there and let me show you

the result that it can give. Uh this

shows um a uh this is based on data from

uh the arbitrum one chain on September

22nd of this year. On the x-axis we have

time in seconds. It's about an hour and

a half across here. On the y-axis we

have the gas price. The red curve is the

actual gas price on arbitrum 1. We see

that because of a surge in demand that

happened during this time the price went

up to about four. The gas price went up

to about four guay. So the two lines at

the bottom in particular the blue line

this is the new responsive gas pricing

algorithm without an increase in the gas

limit or gas target is this is simply

smarter pricing. And what you see is

that the increase is almost not there at

all. The price goes up to just uh a

little bit over one guay instead of

four. Um, if you also increase the gas

target so that you allow the chain to

use more gas on average over time, you

can get down to the green line and

below. But the key thing here is

responsive gas pricing means that gas

price spikes are much less uh likely.

And then finally, crosschain interop.

This is one of the big pushes to grow

that economic zone by reducing friction

uh in crosschain transfers. And there's

some amazing technology in the pipeline

which uh unfortunately I'm not quite

ready to talk about yet but stay tuned.

Arbitum is in a great spot. The

community is strong, the economic

activity is strong, strong adoption and

the technology is only starting to

advance. So really bullish about what's

happening in the arbitrum tech and I

hope you join us. Thank you.