How Arbitrum Landed Robinhood With A.J. Warner & Steven Goldfeder

It's the most ambitious vision I've seen of somebody using Crypto Rails in like crypto history and that flexibility. And I think they had confidence in our team as a partner because of like, I think both the relationship we've built and also I think the ethos of how we build at Arbitrum, at Offchain Labs, that we're going to be really good partners in that flexibility, in that journey.

This episode is brought to you by SKALE, the next evolution in Layer 1 blockchains. Explore the gas-free ecosystem at scale.space. ecosystem and follow their journey on X @ScaleNetwork. Thanks to SCaLE for making today's episode possible. Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is for informational purposes only, and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of Blockworks. Our hosts, guests, and the Blockworks team may hold positions in the companies, funds, or projects discussed. All right, everyone, welcome back to Empire. We have a very special one hot off the presses. We've got AJ and Steven from Offchain Labs, contributors to Arbitrum. Very excited about this. AJ, I think it's probably like 11:30 or midnight for you, so we'll give you some graces on the show. And Steven, I think— I don't know if you're still out at ECC, but yeah, welcome to the show, guys.

Thank you for having us. It's great to be here.

Yeah, yeah.

Really excited for this.

Yeah. AJ, got a little energy or are you dead after the week?

I'm so ready for this. I'm hyped. It's been an incredible week and I'm ready to, to talk about it.

Good, good, good, good. Okay, so we are obviously talking about— I mean, you guys just had, I think, one of the biggest, like, crypto meets TradFi meets capital markets announcements probably in the history of crypto, which is that you guys are working with Robinhood to bring Robinhood— really to bring Robinhood on-chain. I'd say there was a tweet that from this guy who I don't know who it is. His name is Kaido. His bio just says like Eigenlayer, essentially previously Uniswap and Gitcoin. And he says, if there's ever a book on Arbitrum, I for sure want to read the chapter on Robinhood. Not many know the challenges that AJ and the team faced to pull this off. I'm familiar with the timeline, but it's still a bit of a guessing game. Just 2 months ago, Actually, we'll pause on that for a second. But he just says, AJ, AJ did an amazing job bringing Robinhood to Ethereum. This is a huge win for Arbitrum, huge win for Ethereum. Congrats, Arbitrum. Congrats, AJ. So, AJ, I want to just tell us everything that you can tell us about this deal. Like, how did this come together? Was this inbound or outbound? Was there a previous relationship? Like, tell us the whole story of how this whole deal came together.

Yeah, sure. So I saw that tweet. It was definitely an interesting tweet, but we've had a really close working relationship for a very long time. Joe and I have done like multiple fireside chats. We did an ETH Denver announcement where Robinhood added support for Arbitrum and native DEX support in their wallet. And we've had a vision together of how we can continue to grow our working relationship. It's been a really close relationship, really, for about 2 years at this point. We heard about this vision that they had around tokenized stocks a while ago. I think there was some evolution generally in their vision around, you know, the timeline for that, the ambition for what they want to do with the rest of maybe the Robinhood suite of products, how much they want to be lean to going into on-chain. And as that evolved, I think it turned into conversations around should Robinhood be building a chain. We spoke a lot about sort of the trade-offs between launching on public chains versus building your own chain. I'm sure we'll get into that because I think like that was a critical part of this story and this journey. And I think a critical part of why they chose to work with us. So yeah, I mean, we've got a really close relationship. I think it's like one of those things where if you're like on the inside, you know, it feels like just like a, you know, a close partnership, close relationship. And, you know, maybe on the outside there's rumors and stuff, but yeah, I think it came together largely probably around this idea of how Arbitrum as a platform has both like a very robust public chain and also a very mature and feature-rich environment to launch your own chain. And as Robinhood was thinking through their strategy of the evolution of what they want to do on-chain, that was very appealing to them. So I think like, yeah, it's— we've been working on this for quite some time and finally really excited that it got announced.

Yeah. When did this— so it sounds like you have this 2-year relationship. When did like this part of the deal come together of like, okay guys, we're actually doing this tokenized equity you know, crypto-native trading, Bitstamp integration, perps, the whole deal. Like, when did this part come together?

A few months ago. Yeah, it's been like, it's been like a few months. Yeah. So yeah, we've been working on this for a while. Yeah, that's cool.

All-out sprint.

Pardon?

I said all-out sprint.

Yeah. I mean, I think there are even things like I didn't even know about the perps component about this until like it went like, I think, 3 days before. So like some of this stuff because it wasn't like a core component of what, like, that's still like off-chain. It's on the Robinhood platform, right? So yeah, I mean, we aligned really around like the vision of how we can support their broad roadmap over a long time horizon. And the rest sort of kind of fell into place after that. I think that they really appreciated. One thing that they really appreciated was Stylus. I think they really liked the EVM, but there's components of the fact that Stylus lets you code in Rust that they viewed to be like really beneficial and really helpful for them. So that was like a a feature that like they really appreciate about the Arbitrum stack.

So part of this tweet said, you know, quote, just 2 months ago, Robinhood planned to build on Solana as their main platform with no immediate plans for Ethereum. And just people I talked to, I actually don't think that's true from, from, from people I talked to. But do you guys get the sense that there was like a broader RFP or that they were, you know, were they talking to like Optimism and Arbitrum and Polygon and zkSync and Solana and Base and I mean, obviously they wouldn't build on Base because of Coinbase, so I guess that one's eliminated. But do you get the sense there was a big RFP or like, how did they make this decision?

I'm sure they spoke with many different teams. Like, it's a very huge decision for the future of their business. I don't know if that tweet is accurate in the sense that like, I don't think they had this like committed plan. I think they obviously were doing their due diligence and Yeah, they ended up obviously choosing to work with us, but I think it would be pretty silly if they didn't do diligence and talk to like many different platforms just because of how the magnitude of the decision.

Do you know if it came down to like you guys versus Solana or— I mean, this tweet says they were building on Solana 60 days ago, but do you know if it came down to you guys or someone else?

Not like, not like firsthand. I mean, I'm sure like they had like a narrowing process, but like, I don't have any like formal information on that.

Yeah. Let's get into maybe, like, why do you think they— from folks that I spoke with, it seems like the ability for you. So they had an interesting model, which I was a little confused at first, but it kind of seems like this kind of like launch and migrate model where my understanding is they're launching. So you've got these stock tokens that are launching on Arbitrum and then they're actually planning to migrate to their own proprietary Robinhood L2. Which is built on your guys' stack. And like in very dumb terms, like for anyone who doesn't know the Arbitrum platform, you've got like Arbitrum One and then you've got Arbitrum, the Orbit stack. So it seems like they're, they're basically launching on Arbitrum and then, you know, as they scale up and they get more users and like more product shipped, they're actually pivoting off to the Arbitrum Orbit stack. Is this like, how did this come together? How did this plan happen?

I think that's actually one of the core benefits of the Arbitrum stack. It's just, you know, what AJ was telling you before, the Arbitrum stack stack is actually the only stack that has both a credibly neutral top 5 blockchain, if you will, and also a top blockchain stack where you can go ahead and build your own blockchain. If you look for an institution or really anyone that wants to maintain optionality, like the absolute best place to build is Arbitrum because we can grow with you. What Robinhood actually did was they said, hey, we're launching immediately, quickly today on Arbitrum One. Deep liquidity, a platform with deep liquidity, and one that's available right away. You know, they didn't have to do all this pre-work, um, to build the chain before it was announced, which would have been very difficult, of course, to get all the partners on, on board without this leaking publicly. So they could announce, be live day one on Arbitrum One, and then migrate when they're ready to their own chain and do that using the exact same software stack. So they don't have to change their contracts. If you imagine they used a different, uh, stack, you know, which has a different programming languages or just different features, it would be actually much, much more difficult to migrate. And this is actually something, you know, we've seen with other projects as well, uh, where they, you know, everyone thinks they're going to get— everyone wants to get to a point where they're going to launch, you know, their own chain. Uh, for Robinhood, it clearly makes sense, and they're at that scale, but not for everyone. It is for everyone, you know, for many people, it actually makes sense to begin with their own chain, but everyone has that vision that they want to get there. And the question is, like, do you have to decide that on day one and sort of lock yourself into one of these two worlds? In most stacks, you do. You know, if you talk to our competitors. Uh, there are those that have a public, uh, a public credibly neutral chain, and there are those that have a blockchain stack, but there's no one else that has both. And those that have a chain will tell you, no matter who you are, you should build your own chain. And those that don't will say, no matter who you are, you really don't want to build your own chain. We actually have the ability to work with you and say, maybe you should build your own chain today, maybe not. And even if you decide not to, uh, you can actually always revisit that decision tomorrow which is a really unique feature of what we do.

Yeah, I'll just add in some things that, you know, you know, Vlad shared publicly and, and I know from my conversations with them, it was really important for them to get this product out ASAP. And like, obviously when they did like ETHCC, right, they launched tokenized stocks in the EU. They wanted to do a whole show here. They wanted to have a bang that it goes live. They want to— this is like what they called phase one. They have a very ambitious roadmap for what they want to be doing on-chain to serve their core business. And designing the chain is not something they want to rush. And so like what Steven said, which is a critical point, is they can be building on Arbitrum and not rush that component of it without having to sort of add complexities that they would have to have if like it was a different sort of migration, right? So they want to announce the chain because they want to think about how do we attract the business you know, infrastructure, architecture, very hard to do that in stealth. So this ability is like, I think, a very valuable feature that they had in this whole product roadmap because like getting this product out was critical. Like you saw, like, you know, other tokenized stocks, you know, are coming to market and it's becoming a very competitive space. They want to put their foot down. I think they're the best position to win, which is awesome. And We want to be there for that journey, but like, they don't want to rush the chain, right? So like, Phase 2, Phase 3, everything beyond is, you know, could probably go to Robinhood Chain if it doesn't start there. But like, they were, they're able to do that while like not saying, oh my God, we're like, we're delayed on our core product and capturing market share.

Did they, from the, from the outset, did they know they wanted to build on a public chain? Or was this a conversation? I think AJ, you mentioned like public chain versus private chain, like Tell me about those conversations of— because if I'm them, I mean, you got to think about doing a private chain. Like, that's just a natural thought, I think, especially for someone who's maybe coming into crypto from the outside, not from the inside. So take me into those conversations.

Yeah, I think that like the questions about public chain versus private chain were probably somewhat related to what they ended up doing, which is they knew they wanted to launch like on June 30th, which is when they did. And like the question of can they get the public chain ready by then was like a critical product question, right? And sort of what Arbitrum solved for them is you don't have to make that decision, right? Like, you know, if they wanted to use a stack but it wasn't ready and they used the public chain equivalent of that sort of stack and it, you know, and it was like going to be poorly received as like an ecosystem or an environment where like it's unlikely to be successful, that wouldn't have been helpful for them, right? So what Arbitrum really allowed them to do is like recognize all the benefits and we can talk about them now because I think it's pretty important. Like from a thought process perspective, recognize the benefits of why you would want to launch your own chain if you're Robinhood, but also not have to like sort of wait on it. So that was probably like in the, to the extent that they were wavering on this question, I think it's related to just like timelines. Obviously, probably a better question, you know, for them than for us. But the reason why if you're Robinhood and I think L2 architectures, like this is a really important thing to understand, but L2 architectures The reason why if you have your own users, like at the size and magnitude of Robinhood, that having your own chain makes a lot of sense is critically like you're turning operating expenses into revenue, right? Especially if you're planning on abstracting it from your user base, right? Like they might not want to pay transaction fees on behalf of their users, or they might want to, I mean, and if they do that, like it's really an operating expense versus a revenue opportunity. And L2s like on Ethereum right now are like a 93% gross profit margin business. You have things like, and then that's even forgetting like, you know, MEV-focused revenue, right? Which if you're on a public chain, you're basically leaking out to external validators versus internalizing into your business. And in many ways that might be core to the business, right? So it's a really, I think, critical decision. And also, if your intention is to sort of bring multiple products on-chain, there are compounding effects from a user experience and what you can do in an application front end if all of this is sitting on sort of infrastructure that you own and control. And I think like, you know, I think BASE did a great job with this and they're continuing to do it like sort of like in the interactions between the exchange and the chain. I think, you know, you're seeing even like Binance do this more frequently now with like all the Binance Alpha components. So I think this is a model that like logistically is going to continue to be like mimicked in some sense, but like it makes a lot of sense. And, you know, I think a lot of people, and this goes back to like, Wait, AJ, can you summarize that again?

I followed everything until the end. What's the model that will get mimicked?

What you're going to see is one of the most frequent decisions about whether or not you should be launching your own chain be a function of the compounding of your different business lines.

Right?

Right. Like if you want to be owning an exchange product, if you want to be offering lending products, if you want to do all of these things, if you want to earn yield from the fact that there's stablecoins sitting on your platform, right? All of these things will have a compounding effect on growing your business lines. If you're thinking about wallet adoption, right? So like, you know, these things have like very strong network effects if you own the user already, that I think are actually going to be like really valuable. And they're much more valuable in a world in which the profit margins are as high as they are for building sort of an L2 architecture. That's, I think, one of the most misunderstood components of like the modular versus monolithic like debate. I think if you had a blockchain that theoretically like had all the scale and throughput in the world, it doesn't solve this. It doesn't solve the point of both turning operating expenses into revenue, right? Like, because the reason to launch on a public chain, any public chain, whether it's Arbitrum, Ethereum, Solana, etc., is the value that you generate from having like composability and access to liquidity in your eyes is greater than the costs that you're paying in operating expenses versus having it be revenue. And that's a function of your ability to attract users as a standalone, right? So you can have a blockchain that has all the capacity and all the throughput in the world, and you don't really solve that in an elegant way, right? So I, I think that we sometimes, like, in the conversations that we're seeing— and this is sort of like not even about Robinhood, just generally— and the conversations we're seeing, like, this is coming up up much more frequently. It's coming up not just in the context of users, it's also coming up in the context of asset managers and issuers, right? Like, if you control the ability to issue billions of dollars in assets, you have a lot of power in thinking about the economics of the sort of tangential business revenue drivers that are associated with, with the assets that you have.

Interesting.

Yeah.

And the other— it— I guess that just add a few points, like another, you know, another core differentiator between like, uh, you know, and public chain and launching your own chain is they're certainly going to drive a lot of other adoption to this chain, be it from their own products, like you said, and other people will definitely want to build and be co-located with Robinhood and their products. And it's kind of like the analogy, it's like having a shop in a hotel versus owning the entire hotel, right? So if you have this particular item that you sell on a chain, right, if some user comes to, if they launch on some other public chain and Now they brought other users there. They actually capture zero from, from all those other users that they brought in their transactions, uh, when you don't own the platform. So you're driving a lot of value. They're actually paying value, right? Because they're paying fees on behalf of users. Fee consistency is also an important one, right? We've seen what happens when, uh, someone famous goes ahead and launches, does a launch on a platform. Everyone else's fees go ahead and rise with this. If you have, you know, a 24/7 uptime product, that means, and you're paying user fees, That's what AJ is referring to by these operating costs expenses that you have. You have to continue paying those fees. If you actually own the chain, you're basically taking the funds from one pocket and putting them into your other pocket. And you can have fee consistency, you can actually have continued revenue. All this other activity that's coming to the platform because of you, you're continuing to drive. And in Robinhood's case, another thing people like to talk about in this context is like distribution, distribution. I think this is like the silliest thing that people talk about. Oh, which chain will Robinhood choose because of distribution? Like, no, no, no, the blockchain isn't providing Robinhood distribution. Robinhood has the distribution. They need to choose the absolutely best blockchain platform for that because they're coming with a product and they're bringing all of their users on-chain onto this platform. They don't need the necessarily adjacent distribution that the platform adds to it.

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Yeah. So I think like the nitty-gritty details are like things that were, I think, still like designing with their team. Like obviously the chain's not launched and, you know, we could launch a chain tomorrow if we wanted to. We'll talk about the customizations that we might think. I think that the most important thing for them was this flexibility. Right. This idea that, first of all, like, if you even just think about like Arbitrum as a platform, and we can talk about all the ways that we're flexible, like the Orbit product as it's constructed, it doesn't opt you into shared governance. It doesn't require you to be part of an interoperability set. You can do whatever you want with it. You can make any customizations you want to it. If you can figure out, you know, what sort of, you want custom gas fee token, do you want to use ETH, do you want to use an alternative DA, do you want to use Ethereum blobs? Do you want to have like a KYC layer built into it? Do you want to have specific ordering flows, whether it's time boost or PGA or first come first serve? Like you can do whatever you want. That was, I think, really important. And it was also, and Johann mentioned this specifically, they get full EVM compatibility with Arbitrum. If there's things they want to write in Rust, they still can using Stylus. We're the only one from a flexibility perspective that gave them the ability to write in both Solidity and Rust. And, you know, Johan, I think he was like kind of tongue-in-cheek, but when we were on the stage together, he said, I have a really hard time finding Solidity developers. I think the way he thinks about this is, again, he's not trying to build a product that appeals to crypto people. He's trying to use crypto rails to appeal and build his business for his user base that he wants to grow. Right. So the fact that I give him that flexibility and say, you can build in Rust, right? And if it's easier for you to find Rust engineers, That's fantastic. I think that flexibility, like throughout the decision-making process, launch on Arbitrum One or launch on Orbit or do both and migrate later, right? Write in Rust or write in Solidity, design the chain for the revenue structures that you want. Like, I think that flexibility throughout, because there's so many unknowns moving forward, right? Like they don't know what this future is going to look like. It's, it's an ambitious, it's the most ambitious vision I've seen of somebody using Crypto Rails. In crypto history and that flexibility. And I think they had confidence in our team as a partner because of, I think, both the relationship we've built and also I think the ethos of how we build at Arbitrum, at Offchain Labs, that we're going to be really good partners in that flexibility, in that journey.

Yeah, I think to zero in on the last point, it's the optionality is actually the core thing. So the full set of features, like, probably don't know what's going to exist today, but the idea is the Arbitrum stack allows you to govern yourself and give you the optionality that tomorrow or in a week or in a year or in 5 years, you can go ahead and modify the code at will without asking us or anyone else permission to go ahead and add the features that you want. And even if, you know, on launch— and I'm not saying it will— but even if on launch it looks very vanilla, the fact that at any point you can go ahead and make these deep customizations in the Arbitrum stack is actually very valuable.

This is a like probably the biggest, like, uh, if you're, if you're sitting down at the beginning of the year, you're like, you know, what, what are the dream logos? And, uh, that will like really drive value for the business. This is probably like one of the dream logos I would say is, is a Robinhood. How do you think about what the business model is of this? Right. Cause you've got the chain Robinhood's building on the chain. Then you've got the stack so that they can build the chain. What's the, especially for someone maybe who's listening to this and they, uh, they're not super crypto native. They don't, they're not, they're just trying to think of a P&L and maybe they're familiar with like the normal SaaS business model. Like, how do you think about the business model of what this is here for Arbitrum?

It's actually a very simple business model, um, and the bottom line is the Arbitrum DAO, uh, has economic alignment with all the activity in the Arbitrum ecosystem. And the way that it works is, uh, for Arbitrum One, so the chain that you mentioned, the chain that Robinhood launched on and is live on today, uh, the Arbitrum DAO collects the fees for that. Those don't go to some foundation wallet, those don't go to Offchain Labs, those go directly to the on-chain treasury, uh, that's controlled by the token holders. All those fees generated by the product today. But looking forward to Orbit, so what happens when they launch their own chain? How does, uh, how do token holders, uh, how does the DAO, I should say, um, see, um, revenue from that? And the answer is, um, the way that Orbit is set up is there's, uh, there are two different models. There's an L3 and Arbitrum One. If you're an L3 and Arbitrum One, you don't pay any fee. And the reason is you're naturally paying fees. You're settling on Arbitrum One. So all of your fees are being paid on Arbitrum One. Naturally, the ecosystem is collecting from you. But let's say you're taking the Arbitrum Orbit stack and building an L2 on Ethereum like Robinhood is doing, or you're building an L3 on Base like, say, Blackbird or DeGen Chain are doing. The Arbitrum ecosystem doesn't naturally get any fees from this arrangement. So the way that the licensing works is you pay 10% of your on-chain revenue to the Arbitrum DAO. And that's it. Very basic model. There's a 10% profit share that goes to, to the on-chain treasury. So that's 80% of it actually goes—

Robinhood is doing here is 10%.

Everyone does it.

That's just the arbitrage.

Everyone who launches an L2 or an L3 that settles elsewhere pays a 10% under the Arbitrage Expansion Program, it's called. Got it.

So Robinhood makes $1 billion in 2027 on their new chain. They're paying Arbitrum $100 million into and it goes into the DAO. Yeah.

To be clear, it's making it on transaction fees and like the priority access, right? It's not like if they charge users a swapping fee or something.

No, I know that makes sense. That makes sense.

Yeah.

Cool.

Got to break it down just like—

Pardon?

Yeah, no, I said it's got to be big.

It could be a billion.

Oh, it could be 10.

Sorry, go ahead, Stephen.

I was saying, just for the sake of accuracy, so of that 10% that comes in, 80% of that, so 8% goes to the on-chain treasury. And then there's something called the Arbitrum Developer Guild to fuel further building of the protocol, which gets 20%. But all this is completely transparent on-chain. You can track the funds as they go from, again, like AJ said, it's from every Arbitrum chain. They're either on Arbitrum One or they're paying fees to the DAO. That's just how the Arbitrum expansion program That works.

Got it.

Nice.

The main— there's a question going around Twitter, which I saw in the comments, which was like, how much did Arbitrum pay to get this? Or like, what is the grant? And I guess I would contextualize this question with my own personal thoughts around grants, actually, which is that they get a really bad rap in crypto because just because it feels like people hate pay-to-play and stuff like that, but it's actually a very tried and true model in like Web2. Like if you look at the like Like, I was just reading about this Amazon book about like Bezos and the growth of Amazon. And when they grew Alexa, what they did to get companies to go build on Alexa, like Nike, was they gave them a grant to come build something new on Alexa. And that kickstarts the growth for the ecosystem. Then Alexa gets big and then they don't have to do that. So I don't, I don't know. Again, I don't know how much you can share here, how much I'm like, if you're, how much you're comfortable, but I'd love to hear like how— if you, if you gave them a grant and how big of a grant it was and what that looked like.

Um, yeah, so unfortunately, like, uh, my policy, I can't share the specifics of the, uh, you know, partnership arrangement with them, uh, with Robinhood and the Arbitrum Foundation. Um, what I can say is that ultimately I think this is a very good deal for both parties. Obviously Robinhood is benefiting by getting access to the best blockchain technology available and, you know, one that's flexible to meet their needs. And the Arbitrum ecosystem is benefiting directly, as we mentioned before, both financially but also obviously from the large effects, ecosystem and community effects, and the rippling effects that will happen, you know, from this announcement. So ultimately, I could say that I think it's, you know, without getting into specifics, I think it was a very fair deal that both sides will benefit from.

Can you say if it's the biggest one in history, Stephen?

I can't unfortunately comment on that.

Okay, that's fair. So the last thing on this, I know you're not interested in these questions, but I got to ask them is, is you guys did the thing and I forget the exact— it was like the fall of 2024, which was the, the AIP. It was like funds to bolster Foundation Strategic Partnerships budget. I forget if that went through. I should have looked at that before this, but I think you guys— it did go through. So it was like $250 million ARB, I think, with the main objective to go out and get these strategic partnerships. And yeah, I mean, hats off to you guys. Like, you clearly landed the big one with Robinhood. And so I'm curious if this played a role. And then the follow-up question is like, okay, you got Robinhood. I'm guessing you didn't spend all of the $250 million ARB to do this. Like, who do you go get next? And like, how do you think about like growing beyond that? Multiple questions in one there.

But, uh, you want to take this one, Steven? You want me to?

Thanks, go for it. I'll add in if I need, but you—

oh yeah, so I, I think that, um, like the, the bucket is utilized like alongside like existing funds that exist at the Arbitrum Foundation. They don't view them as like sort of— I mean, they pull from there for different opportunities, but it's like they budget across both because they obviously give grants out of their traditional funding as well. But it definitely, the fact that the Arbitrum DAO recognized that sort of, and just for maybe take a step back, I think this is really important for your users to understand. Most L2s, L1s, this like foundations have control of a very large portion of the treasury of tokens. Like usually it's frequently in the range of like 30 to like 50% of the token supply. In the Arbitrum case, the Arbitrum Foundation only has about 7% of the token supply that vests over 4 years. Right. So they get somewhere in the range of, I think, 175 million tokens a year for 4 years per, per year for 4 years. Right. And they're frequently competing against ecosystems that have the foundations have most of it. The rest of the treasury of the Arbitrum DAO, which is about 2.7 billion tokens, sits in the same wallet that is controlled by token holders. And the only way for those tokens to move is for a token holder approved vote. Right. So what the Arbitrum— and then just to add one more detail, and Steven mentioned it earlier, is other L2 ecosystems the revenue generated from transaction fees flows into its foundation wallets. In Arbitrum, the foundation actually gets no revenue. The DAO gets the revenue, right? So for the foundation, it actually has— it's a really nice checks in place to make sure that they're continuing to be effective. But it also has a much more limited ability for them to continue to support themselves and sustain themselves. When we structured the— or when the foundation and the DAO structured the strategic growth bucket, it was a recognition that there's going to be opportunities. That are extremely valuable. And obviously, you're not going to be able to share them on a DAO forum and say, like, we were trying to close X and Y deal, we need funding for it, please give it to us. It was a recognition that, like, we should think about a pool of capital, that there's very specific requirements, like it's not used for operational expenses, it has to be if the grant is between A and B amount, or whatever, like the stipulations were, that we want to be able to pull to be able to close these things. Right. So that was like the structure, right? So again, even if you added it to the foundation's budget, it's still basically an order of magnitude less than the percentage of token supply that foundations typically have. So they've been drawing from it, if I remember correctly, on like certain occasions. And I think they're going to continue to do it. And we're going to continue to— when I say we, I mean, obviously the Arbitrum Collective and the Arbitrum community utilize it for more opportunities, right? Like if you look at the Arbitrum mandate, it's extremely broad, right? Robinhood's a major fintech chain. We announced a few months ago like Converge, which is Athena and Securitize's chain. I think like it's obviously a huge opportunity for asset issuance on that chain as well. Most of the major gaming chains that launch use the Arbitrum stack as well. So there's a really— we've got a very broad mandate. And also for Arbitrum One opportunities, right? There's some amazing teams that are building on Arbitrum One that you might want to support or attract to that ecosystem, right? So I think we've got a very broad, and just to sort of tell you where I think where our strategic priorities are today, um, we think Arbitrum is positioned extremely well in two like broad but defined categories. One is being at the connectivity between TradFi and crypto, right? We think that DeFi and crypto rails are going to be the thing that powers finance in a decade from now. We're not going to call things RWAs, we're not going to call things like DeFi. I think it's all just going to be finance powered by crypto. And I think Arbitrum with like a lot of the stuff we discussed about like the stack and the chain has like really good infrastructure for that. And then very specific use cases that want to make specific tailored decisions around products like gaming. The reason why Arbitrum, like all the gaming chains use Arbitrum is because of the power of the stack. So the reason why we see a lot of DePIN chains using Arbitrum is because of the customization of the stack. So like those are the two, I would say, core things that we think Arbitrum is uniquely positioned for. And again, like, do I know what we're going to work to pull capital from on the strategic bucket moving forward? I think we're looking at other opportunities, but probably somewhere that follows our strategic vision.

Just to add like one brief reflective moment, you'll remember better than anyone, Janno, that there were some questions early on around the foundation around why do we need a foundation? Why does the foundation, you know, need a budget? Um, why, you know, why does this all just happen in the DAO? And at the time, I remember like saying the, the response, uh, put out hypothetically was there will be deals out there, then there will be oppor— you know, companies that want to have NDAs that won't talk on a, on a DAO forum. And I think this is like a perfect example of that came out, right? Obviously, as AJ told you before, this was a deal that was years in the making, you know, if you look at the initial relationship, but certainly many months in the making. And obviously, the moment it was released to the public, there was a live product that already existed. And this sort of is validation of that model that even DAOs need legs and arms and eyes that can go into rooms and sign NDAs and actually represent the community. But the nice thing in the DAO structure is, of course, that the DAO has checks and balances. And if the foundation isn't doing a good job, if it's not actually making good use of his resources, it can pull that back and assign those elsewhere. But I think this is a very good validation that, hey, this model is working and the DAO is being well represented in private meetings as well.

Yeah, I have something to add. I don't want to take this conversation in a totally different way, but the structure of the Arbitrum DAO in which the power actually stems from the DAO is extremely powerful and unique. And I've spoken with Mike about this actually on his podcast. The critical thing is that, like I said, all of the revenue and all of the mandate for growth is a DAO-authorized decision, right? So the DAO has 23,000 ETH. The DAO owns like $50-something million in stables. It has $2.7 billion in ARB. And you can't move that without a DAO vote. And like you can't authorize growth incentive programs without a DAO vote outside of sort of what was already allocated to the foundation. For its core thing. And that checks and balances is extremely powerful. But more importantly, it gives a lot of authority to token holders. Like this idea that L2 tokens are like governance memes is extremely untrue in Arbitrum because in many ways, especially when you consider it compared to like an L1 token or other forms of utility tokens, like an L2 governance token, like you literally cannot make some decisions without the token holders' consent. And it gives you authority and a mandate to make bold decisions and take risks. Like, for example, like the Arbitrum Gaming Ventures, like, that's like the equivalent of having like the DAO be like the LP of a fund, even if it's structured a little bit differently. And it's a very powerful concept that is uniquely enabled by sort of where the power structure stems from in Arbitrum.

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So yeah, I think it's, it's, it's very uniquely positioned for a snowball effect, right? Again, it's, it, it's multiple different revenue streams of very high gross profit margin businesses. Um, we have a huge mandate like in Arbitrum to like continue to expand the relevancy of where we can be deploying capital. An investment opportunity. And yeah, I mean, yeah, not to like toot my own horn, I think, I think that post is a very clear way of describing like my personal hope for this vision.

Yeah.

Yeah.

Maybe getting on to a different topic for a sec. Steven mentioned like, whoa, crazy thought, like, you know, we actually need like people with eyes and ears and arms like to go into the room and like talk to the Robinhoods and the, you know, the banks, which is so obvious in hindsight, of course. This is maybe just a weirdly niche question that nobody will care about except for me, but I'll ask it anyways. Like, who is in the room? Like, Stephen, is this, you know, Stephen, we got lunch like a couple of months ago. Like, is this like you and Vlad getting lunch and like chopping it up? Is this like AJ and Joe, like, you know, figuring out the deals? Is this like your product managers getting together? Like, who does this kind of deal?

Yeah, I think it's a little bit of all the above, but, you know, definitely a lot of credit to AJ, who actually on our side built a lot of that relationship over the course of many years. But the deal happened basically on every level, you know, in person, virtually, working together in sessions to figure things out. It was quite complex. And really, as you could tell from the event, it had, you know, a lot of details thought in at every level and buy-in obviously from the very, very top of the company. And that's something which, everyone participated in. But I'll let AJ— I don't know, AJ, if you want to— if you want to—

yeah, it's like, again, like a deal and a relationship of this magnitude requires a lot of trust in a lot of places. So, um, team effort, I would say, 100%.

Yeah. Um, all right, there was a tweet that OpenAI sent where it says, uh, so one of the things that's happening that Robinhood's doing is like, I think, secondary markets on their chain, tokenized I got to dig into the announcement honestly a little more, but something along those lines. And OpenAI tweeted, said these, quote, OpenAI tokens are not OpenAI equity. We did not partner with Robinhood. We were not involved in this. We do not endorse it. Any transfer of OpenAI equity requires our approval. We did not approve any transfer. Please be careful. I have my personal takes on, on this tweet, but I'm curious to get your guys' commentary. I know it just dropped literally like an hour before we hit record.

But yeah, so I did see that. Of course, all I saw was that. I haven't seen any commentary from anyone at Robinhood, so I don't want to speak for them, of course. But what I can say is, and the product that you mentioned is this idea that not only are we tokenizing public— are they tokenizing public equities on-chain, but also private equities. And OpenAI and SpaceX were the two that they did. And I think the larger point is Investors want access to these assets, right? More and more recently, we're seeing companies either delay going public or never go public, and the most liquid and high-value deals are happening often on the private markets, and retail investors feel cut out, and retail investors want access to those deals. And ultimately, I believe we need to build a system and find a system where retail investors can get access to these deals. And, you know, minor spat aside, what's clear is we've never had rails before that could power something like this. And now, you know, drama aside, we do have rails that can power this. And it's clear to me that we'll need to figure out how this works and figure out the mechanics over time. But it's clear to me that this is something that won't go away. The demand for these assets is going to go up, and it will be crypto rails that they are offered on long term.

Yeah, I think that's the right take. I think there's a phenomenal episode with Bill Gurley and Patrick O'Shaughnessy, just the most recent, like, Bill Gurley episode with Patrick O'Shaughnessy. And he talks about just how private markets are becoming bigger and bigger and bigger. And it's one of the fastest, like, up-only trends right now is that companies are staying private longer and longer. And we're going to have these trillion-dollar private companies with like SpaceX and Stripe and stuff like that. And I'm sure you get the same emails that I do where it's like people offering Anduril shares and SpaceX shares and OpenAI shares. And I mean, it's just crazy. It's like such— you're like going back to the 1970s, like pink slips market, pink sheets or whatever it's called, like markets. It's like there should be— basically the idea is like there should clearly be a market, a liquid open market for private for these companies, for these like secondaries and private shares or whatever, should that be built on-chain or off-chain? And we're going to figure it out and it's obviously going to be on-chain.

Yeah, I think on-chain is going to be way easier to do it. The irony for me is that this was the number one reason why I got into crypto. I remember when I was in like— so it was 2014. I was like a law school student at the time, obviously not an accredited investor and very little money. And the thing that I kept thinking about was, and this was like when social media companies were getting huge and like none of them were yet going really going public or they were going public at like $150 billion valuations, which was then like, you know, like a trillion dollars today. And I'm like, I have no way of ever getting access to anything with like a 100x return. And then I discovered Bitcoin and I'm like, this is like the kind of thing that as a venture bet, even though it's like already a billion dollar thing, it's like a clearly a trillion dollar idea. And I'm just like, okay, I got to get access to this. So like, for me, it's like, you know, there's a lot of irony in these things, like how crypto rails can power these things, because that was legitimately the reason why I got into crypto was because of Bitcoin as an opportunity that was like the only thing accessible to somebody who was sort of in like my financial position.

Yeah, nice to see it come full circle. And maybe one or two more questions on this and then we can actually just move past the Robinhood deal. I have a few other just Arbitrum related questions. Do you have any sense of or dream, like dreams of who is next? Obviously you can't tell us, but like, is there anyone that you guys are working on right now? Like any potential deals where it's like of the Robinhood magnitude? And obviously you can't name names, but like, is it a bank? Is it a gaming company? Is it like, do you have a sense of what that could look like? AJ?

Yeah, I'll take this one. So I'll talk in broad strokes for like a number of reasons. Obviously. Um, the two areas where we're starting to see more, um, excitement and like acceleration, I would say, is financial institutions just being extremely curious and like being extremely concerned potentially about getting like disrupted by like a huge opportunity that like they've owned for like two centuries. Um, that's been moving very quickly, um, across like banks, asset managers, like globally, not even just like in the United States. So we've been seeing like a lot more in that category. And the second area where we've been seeing a lot is large enterprises that are thinking about, and again, this is also very quite global actually, large enterprises that are thinking about like, you know how like social media kind of disrupted the advertising business in many ways? Like what is the thing in their core businesses as enterprises that crypto will disrupt. And if they're early, they might be able to be like the disruptor instead of the disrupted. And we're seeing it in terms of like stablecoin payments, remittances, thinking about like, you know, like distribution for like ad revenues, all these kind of like more like in many ways like plumbing for like an enterprise. But things that can massively potentially change the structure of the businesses. Those are like— that actually really surprised me. I wasn't expecting this sort of level of relevancy. It's maybe something that's like adjacent to like sort of the stablecoin craze that we're seeing, but it's actually much more targeted in terms of like strategic business decisions than I would have expected. And it's coming together like quite quickly and like in quite like varied ways. So So that's been really, really cool to see.

Nice. Anything else on the Robinhood deal that you guys want to talk about?

I guess one thing which we didn't really cover too much here, just to stress, the coolest thing to me of this whole thing is that there are many actually, like, I think many who think that crypto is sort of this fringe asset. AJ mentioned before about DeFi and TradFi merging, which is what we're seeing here. And in particular, hard to access. Like, hey, you have crypto is only accessible if you can figure out how to get a wallet and back up your seed phrase and connect to an RPC service. And I think for many, that's what crypto is. And crypto will always be this kind of almost like alternative system. But the coolest thing what we're seeing with Robinhood, which we really haven't seen from anyone else at this scale is using crypto to build a product that's accessible to both crypto-native users and non-crypto-native users at the same time. They showed at the event this side-by-side between the US product and the European product. And if we didn't tell you that the European product was different, you would think that they were exactly the same and have no idea that it was built on crypto. And that to me is the absolutely mind-boggling zero-to-one moment here. Because when I got into crypto and I first encountered smart contracts in 2013, it wasn't like the NFTs and the new verticals that I imagined. It was how do we rebuild and reinvent the current system, which was the appeal of this technology. And I think kind of that got diluted over the past decade or so, and many almost sort of gave up on that and said, okay, no, crypto will always be its own thing. But the answer is no, no, no. Whether or not you know how to use a crypto wallet or even know what crypto is, we could bring a new product to hundreds of millions of European users that simply wouldn't be possible without these crypto rails. You can benefit from them. And it might be surprising to hear someone like me say, oh, disparage using a crypto wallet. But actually, I think the optionality of being able to take self-sovereign custody of your assets is all that you need.

Right.

The idea is that there are going to be some power users that the next billion users of crypto are going to engage with these low-level technical details. And we're seeing validated the crypto vision for the first time, that crypto is the next evolution of infrastructure to rebuild the current system. And you don't have to be crypto native to reap the benefits of it. That to me is like the most exciting thing about this deal.

Yeah, agreed. Hey everyone, Jason Yanowitz here. Wanted to just take a quick break and highlight everything that's been going on in the Mantle ecosystem. System. In just one year, Mantle has seen its TVL surge by over 1,100%, now reaching $1.69 billion. That's just such a crazy amount to think about. More than 225 protocols have made Mantle their home, while the platform's Eco Fund has invested $38.5 million in 51 pioneering projects through strategic partnerships with Bybit, including MNT as collateral, supporting Athena to scale, and the first Ethereum L2 to integrate Ondo Finance. They just continue to be on the bleeding edge of L2s. Be sure to stay up to date with what's going on by giving them a follow on X @0xmantle. Special thanks to the incredible Mantle team for sponsoring today's episode. I wanted to take a moment to tell you about today's sponsor, ZenRock, the permissionless decentralized custody network backed by 1Roundtable partners, 10T, Maven11, and Spartan. Now available on Jupiter, ROCK is the native token for transactions within the ZenRock ecosystem and secures ZenRock's decentralized custody network. The first application launching on ZenRock is ZenBTC, yield-bearing Bitcoin on Solana. ZenBTC will be live in April 2025. To find out more, you can follow ZenRock on X, or click the link in the show notes. Ever wish you could access cash without selling your Bitcoin? Ledn, the global leader in Bitcoin-backed lending, makes that possible. Since 2018, they've issued over $9 billion in loans, and not a single satoshi of client funds has ever been lost. Here's what makes a Ledn loan different. With custody loans, collateral is not lent out to generate interest. No credit checks, Funds in less than 12 hours and no monthly payments. Repay whenever you want with zero penalties. And they don't just talk security, they prove it. Ledn offers proof of reserves reports verified by a top accounting firm every 6 months. Ledn is 100% focused on doing one thing better than anyone else, giving Bitcoin holders a secure, transparent way to unlock liquidity without selling. Click the link in the show notes to find out more. As always, investments in blockchain technology involve risk. Terms and conditions apply. Okay, let's zoom out and just talk about the industry at large. I would say right now, the— I feel like the— there were all of these L1s and they competed against each other. Then it was L2 season and there was like you guys and Polygon and ZKSync and I'm going to get in trouble for forgetting people. Optimism.

Optimism. Don't forget.

Yeah. And, and, and now you and you guys like have kind of zigged and zagged and some people went more the stack route and some people went more the chain route and some people went trying to partner with hundreds of people. Some people kind of picked someone and, you know, kind of like, you know, tied themselves to the hip with like a single partner and stuff like that. How do you guys think about the L2 ecosystem writ large right now? AJ, I'm asking you, AJ, because I know it's like 12, it's like midnight right now, and I'm hoping you're tired enough to give a spicy take.

So there you go. I've got— I have like, they're not spicy, but I think like I've thought about this a lot. Maybe they're spicy. So I think that the mistake is that people were thinking of L1s and L2s in like differentiated ways. Right? I actually think that the, the point is, is that they're execution environments. And like for Arbitrum, it's an execution environment that doesn't need to have inflation to pay for security. It relies on Ethereum for its security. It's a more cost-effective mechanism. There might be trade-offs. Like for example, some people would probably not like the fact that, you know, ARB is not the native gas fee token. Like these are like the questions of like, they're almost like design decisions. And I think we got way too focused on if something's an L1 or an L2 versus it being extremely like product-focused. I think that when you think this through, like the end result in reality is that in many ways and not like the only like technology and product like are really the things that come to the forefront for me. When we thought about like stack versus chain, like my opinions on this have evolved completely. Like when the first sort of like, when the chain wars evolved into stack wars, I was extremely cynical about the whole thing. To me, it felt like us just trying to build a narrative. I'm like, none of our chains are like congested or saturated, right? What evolved my thinking is two things. One is like teams like Robinhood that are like, we have enough users, we don't want to be on a public chain in perpetuity and like do this whole like revenue operating expense analysis that we discussed before. And the second is people started doing things that were like way more creative in terms of how they want to design the chains. So like I never recommend unless you like want to launch a plain vanilla chain because you have all the users in the world, you should launch probably on Arbitrum One or another L1 or L2. Like I just call them execution environments, like a shared composable liquid execution environment unless you have a justification not to.

Right.

And I think that what happened was And I think it was a result of competitive dynamics. And in some way, like, one of the things that happens— maybe this is my spicy take, you know, you got me— one of the things that happens in crypto is like product roadmaps evolve because of like broader narratives in crypto. Like, there is a time where everybody wanted to be an L2, right? So like they evolved from like focusing on an application product that was like critical to the success of their product. And I've got like very distracted. By the fact that they're now running a chain infrastructure. Even if you're using a RAS, like, it's still like a huge added thing to think about from a product perspective. And then when L2s became less hot, people are like, oh, we want to be L1s. And then it's like, wait, like, now our token, instead of like being used for like growth and this, is like, now we have to give it to validators. And it's like, people make these decisions that have very long-term consequences as a result of like 3 to 6 months shift in narratives. I think it's a, again, spicy point. I think it's a broader criticism of our industry that we have investors, stakeholders that have influences on like a very short-term time horizon. One of the things I like to get— I'm really going down the rabbit hole now, you got me. Crypto companies, even if like tokens are not like going public, it's like you have to be much more responsive than like if you were a private organization. And it does influence, in my opinion, like a lot of like product decisions that I think cause that. To bring it back to us and Arbitrum, the way we've thought about this is we've tried our best to be extremely product focused to solve problems. And once it became very clear that people wanted their own chains, we thought about like, what is the most logical way that we can provide that and also build a sustainable business? So that's why we talked about like the Arbitrum expansion program thing of like L3s versus L2s, like, that's like a SaaS business, right? And the idea of having like an SDK that is feature-rich, robust, like modular, you can turn off and on features, that's like a very strong product decision. So we've tried to remain very focused. I think that's probably one of the areas where we've got a good reputation, which is like, you know, we're probably not like the sexiest name in crypto generally, but I think we have a sterling reputation for focusing on delivering what people want at a product level. Um, did that answer your question, by the way?

Yeah, it does. It does. There's just a lot there. I'm just thinking about that, that, that response. Um, okay. So this guy Austin from Dragonfly had an interesting tweet that I'm going to read. It's kind of a long one, but I'm going to read a decent chunk of it and then I just want you guys to respond and comment on it. So Austin said Robinhood is joining Arbitrum as Base is abandoning the Superchain. The pendulum is swinging back. Here's a trip down memory lane. Arbitrum was dominating Optimism in 2021. OP whitelisted developers while Arbitrum was open to everyone, and ARB quickly became the home of DeFi with GMX, DopeX, and others. Then in 2023, Coinbase chose the Superchain. Base became so successful that they monopolized developer attention, including from Optimism. OP mainnet became a complete ghost chain. Forcing them to pivot into only prioritizing the Superchain while their canonical L2 became neutral block space for governance. This strategy actually worked well for a while, while other huge names chose the Superchain like Uniswap and Kraken and Worldcoin. But now that Base has most of the assets and apps, they have zero incentive to opt into the native Superchain interop. So obviously they won't. They've already announced their own security council, which directly conflicts with being in the Superchain. My personal take here is that it's very clear at this point that Base is leaving the Superchain. Back to his thing, he says, and now Arbitrum, which spent 2 years being looked down on, has a canonical chain that still has a lot of DeFi apps and activity, and B, has landed Robinhood, who rivals Coinbase in retail presence, to build their app chain using Arbitrum Orbit. I would love to just— I mean, this is really a commentary on like Arbitrum versus versus Optimism, which for years I've thought of Optimism as your guys' biggest competitor. So I'm curious to just get your commentary here.

Yeah, a few things. First of all, I think, you know, the— it's interesting how he mentions, like, you know, the— in the case of Optimism, he says, like, they abandoned their chain and will go all in, all in there. I think this is the important— all into the stack. This is the importance of the dual strategy that we have, that it's very, very actually important to have a very, uh, a very liquid, public, neutral, right, credibly neutral chain in the ecosystem. And that is Arbitrum One. And to have a stack and actually having both of these, you know, is an extremely important value proposition. And again, having it public and incredibly neutral infrastructure is extraordinarily valuable. And that's something which, um, you know, I don't think that we'd want to, um give up, and it's something that's important for us to continue to build. In terms of like, I don't want to speculate on rumors of Base leaving the Superchain or not. I don't know. So I'm not going to comment on that. But I'll say that there's a very different core difference in the business model of these two stacks, which is very, I guess, a bit of nuance, but pretty important in this context. And the actual, like, maybe somewhat spicy take-in is like, people in crypto are very afraid to have business models. It's like almost embarrassing. It's like you're going to make money. That's shameful. Like, why would you do that? I remember the most, like, one of the lightbulb moments for me was one of our earliest deals. We were talking to an early enterprise and the deal didn't actually end up working out. It was early on. It was a huge company and they were saying, so how much are you going to charge us? And this is before we had anything. We're like, oh, whatever, it's free. Don't worry about it. And they're like, no, no, no, you don't understand. We want you guys to charge us because the biggest risk to us is not you guys making a few dollars. The biggest risk to us is you guys not actually having a good business model. So you're not actually going to be able to be here. And that was like the aha moment for me. That's— it's not bad to have a business model. It's actually important and it's actually good to have a business model. When it comes to the differences in the business model, you know, in the Arbitrum business model, we charge for the things that people want, right? To use the execution environment. That's it. Simple model. That's what you pay for. In the OP case, the actual execution environment is free to use and it's additional services that they charge for, like governance as a service. An interop as a service. And personally, actually, I don't think that those are very useful services. I think most institutions are actually going to want to govern themselves, like, for example, and I don't think people want to pay for that long term. So I actually think having an aligned business model, which you can align with the teams that are building with you, share in their business model, charge directly for the thing that you're good at, and also give the teams the confidence that, hey, we'll do well together so you don't have to worry about it. Like, that's actually going to be very, very, uh, welcome to many of these teams. So, you know, core difference in our business model, which I think is important. But AJ, let me pass it to you if you have anything to add there.

Yeah, I think you largely covered— I mean, we've spent a lot of time internally, me and you, like thinking through the strategic stuff about like the chain and the stack. The thing I would add is like, is it's really important in this industry to make sure you have a close touchpoint to the developers. Um, because if you lose that or you outsource that, um, you lose your funnel, right? And then when you lose your funnel, you lose in many ways your mandate and your leverage. Um, and we've tried to optimize across like all the verticals, making sure that we're the relevant touchpoint for whoever wants to build or create anything. Um, and that's like the main, I would say, sort of distinction, which is, um, we in our mandate, because we have both products, we can talk to everyone. And we might be in a position where we can like recommend them what their original decision was, was wrong. So I've convinced many teams that want to launch a chain to launch on Arbitrum One. And I've convinced many teams that want to launch on Arbitrum One to launch a chain. So we haven't outsourced any of the relationships that we have with the builders or the developers and the founders. And that's like a really critical component of this because it's hard to get that back. If you don't have that sort of funnel, it's like really hard to crawl back from it. And we really prioritize in our strategy making sure that as people want to launch chains, like a great example of this is like Hyperliquid. Right, so people like to joke like Arbitrum is the hyper liquid bridge. I promise you every single blockchain wishes they were the hyper liquid bridge, right? We're getting incredible amounts of economic activity, assets flowing through the chain. Arbitrum is like New York in this sense, right? Um, if we didn't have Arbitrum One and we prioritized— like, Hyper Liquid was not looking to launch an L2 chain, right? We but they still have an economic relationship in the sense, not like a grant relationship, but like in that they use Arbitrum One as their source of liquidity with us. And I have a great relationship with that team. We chat all the time. We think about how we can help each other grow each other's businesses. But like even in something where you'd think that we don't have a funnel for developers, we do because of this, right? So that like to us is like a really, really important of, of the strategy. Again, Austin used to— by the way, just, Austin used to work at Offchain Labs, just as a heads up. Um, so I feel like that's like worthwhile for disclosure.

Uh, actually, the other thing that he mentioned, which is the self-critical moment, which I'll just address as well, is, you know, there are always ups and downs. And definitely, you know, um, actually, just as a life of a founder, like, you know, sometimes you'll feel fantastic and sometimes you feel like everything's crashing down. And sometimes the highs and the lows are like days apart from each other. So the one thing about Arbitrum is I think we've done an off-chain labs. We've done a pretty good job at trying to ignore the noise of the moment and really be long-term focused on what we think matters. So AJ mentioned this deal and other large deals go back many months. It was like, you can imagine in the depths of meme coin season where we're getting you know, complaints every day. Why is— why are there no memes in Arbitrum? This is the future. Like, you know, we had a strong conviction that actually the future that we believe, um, you know, is, is, is actually largely, um, by doing things like these deals, rebuilding the system, bringing big institutions on-chain, and actually being able to focus there and saying, hey, you can't always win every short-term narrative, but we're here to build long-term sustainable value and actually just, you know, seeing through that. So definitely there were ups and downs in the narrative, and I'm sure there will always be. No one's— you know, that's just the way that these cyclical, uh, you know, these, these cycles are. But ultimately having long-term focus on where the value is in crypto is something which, you know, we've been, uh, you know, very, very, uh, laser focused on.

Yeah, somebody once told me, I can't remember who it was, like, maybe it's like a famous quote and I'm going to sound like an idiot, like, you never won or lost, you're either like winning or losing, um, and you can always flip that. And it's like, I think, very true in this industry.

Yeah, we, um, we got a— we had a quote, we had, uh, one of our advisors like 3 months into the business was like, in an industry as volatile— so we were like talking to them about how do we compete with like CoinDesk back in the day? Because they were like the 800-pound gorilla. We had like, we had no employees actually at the time. It's just Mike and me. And then they had 180 employees. We're like, how do we compete with CoinDesk? And they basically— the advisor was like, don't chase the shiny things. In an industry as volatile as crypto, sometimes all you need to do is survive and let your competitors kill themselves. And I mean, it's just like if I could give one piece of advice to a founder in crypto, I don't know if it's still the same because now the industry is like, I think that, I think the cycles will smooth out a little bit, but like at least the last 10 years that's been true. I have two last topics here as we think about wrapping this up. One is, I mean, you guys are doing well, like you, you've got a top 5 chain and you got a top 5 tech stack. I mean, you could probably top 3 for both. I don't, I don't know that like the top 3 or top 4 or top 5, but like you've got a top thing for the chain and you've got a top chain stack, which is great, but the token is at an all-time low, which like, I mean, if I were in your guys' shoes, that'd be really frustrating. Like that'd be annoying. And if I, I would, is there another answer outside of like, hey, you can't look at the price and like, the PR answer here is like, look, don't look at the price, just keep building. Like, the market will figure it out. Is there like a— is there a different answer that you could give there in terms of like, how do you really feel about the price of Arbitrum and how do you really think about it?

I think, and you know, it's going to sound cliché and probably very reminiscent of kind of what you, you know, the answer you just foreshadowed. But the— I can't tell you, you know, there's a lot that people do when it comes to like short-term narratives and like what a particular trader, you know, thinks on a daily basis. I literally don't think about that at all. I can't, and it's nothing that I can optimize for, and it's not what I think about. What I think about is how do I build long-term value? And by the way, how do I build long-term fundamental value? Like, you know, we discussed revenue. How do we grow sources of revenue so there's like real, truly trackable value that you can really put a number to, and the value is quite high? Those are the things that I think are important. And there's always going to be short-term narratives that play in different ways. But the thing that I want to be are these— and by the way, the thing that I want to be is a long-term steady narrative that Arbitrum is continuing to sustain and continuing to grow. And over time, that will become apparent. And it's just building actual real value. And you see this a lot when it comes to different chains. I won't name any, but over the course of the years, this happens like once or twice a year. I'll get a phone call from an investor and they'll say, this particular chain, look, they're attracting all this investment. They're going to dethrone Arbitrum. And, you know, obviously, as the game is never over, but what typically happens is someone's throwing out like unsustainable incentives and their chart goes like this and looks like this. And the Arbitrum chart— I mean, by chart I mean here adoption, right? The adoption of the chain and the TVL of the chain, all the metrics of adoption, you know, continues to climb steadily. So there will always be these blips that are going like this as we're climbing. But my goal is to keep climbing, keep building value. And what I can tell you, what I'm very confident in, is looking forward 3 or 5 or 10 years from now, Arbitrum will be here. Arbitrum will remain extremely relevant, and Arbitrum will power the absolute largest institutions of the world as they come on-chain and rebuild the system on-chain. When and how individual investors or large investors take note of that, how they value that, I can't tell you. But I can tell you that we're building for the long term.

Steven, I have a, a, a slide from our annual kickoff that I'm gonna show you, which is called Be the Line, which is basically just, look, we're gonna have competitive, like in this industry's very volatile. There will be times when competitors look like they're growing faster than us, but oftentimes those, that growth is extremely unsustainable. I mean, we had a competitor who we had, we, we had 30 employees. They had 30 employees. We woke up, we had 50 employees. They had 200. Turned out they were taking money under the table from, you know, you know, like, you know, FTX and SBF and stuff like that. So, yeah, you just got to be the line and don't, don't chase silly growth.

So I guess that's the— well, the succinct way of saying the, the long thing I just said.

Yeah, exactly.

Be the line. To put— just to go one step deeper in there, just because I have to ask it, like the thing that a lot of— I talked to a lot of like the founders of different chains and stuff like that and protocols and The really hot narrative right now is corporate treasuries. And like my gut take on these things initially was like, oh my God, like what a money grab, like what a grift. But actually, like, as I look into them a little bit more, like they, they're— they kind of make sense. Like there's a big pool of institutional capital that wants to buy things like ARB token maybe, but they don't want to open a Coinbase account or they don't want to open a MetaMask wallet or something like that. So like maybe it actually does put in— makes sense to put an institutional equities wrapper around an Arbitrum token. Do you guys have any— AJ, I know you do a lot of like the corp dev or corporate development. Do you— how do you think about these treasury companies?

Yeah. So I think there's like a gap between the two things you said, which is one, like corporate treasuries and then making it available in an equity format.

Right.

Because like, I'm not sure if I was like running like a treasury management strategy, it would make sense to have like a hugely volatile asset, um, on balance sheet. Um, obviously like typically you have it in like much more safe and less volatile assets.

Maybe treasury company is the wrong word, but like a vehicle that is owning just Arbitrum tokens or something.

Yeah, yeah, yeah.

So, um, I think it's like part of a broader question of like how do we get and make sure that, um, traditional investors, whether they're retail or non-retail, um, can have access and exposure in ways that they're familiar with. So I think that they're interesting in that sense. I think like some of like the strategies that are employed are like overly complicated and like ripe for like these things kind of blowing up. But I think the broader principle of like how can we make sure that investors can, you know, invest in these assets in ways that they're familiar with on platforms that they're familiar with, is like directionally like a very good idea. I just hope we don't sort of do what we sometimes do in our industry, which is take a good idea and like turn it into a bad idea by extending it way too far. So like, you know, that's kind of like my take, right? Like if in a regulatory compliant way you're able to do these things, it's like a very interesting thing because like it's just helpful for people that want to invest. Um, I'm just a little bit sort of maybe more cautious about like how it's going to play out, um, if that makes sense. Because I think we are seeing people like view these things like— this came up with like the Trump stuff in like the White House where it's like, what should be in like the reserve? Like, even though I love ETH, like Ethereum maxi, like I don't know if it's crossed that chasm where like like, it's not like a multi-trillion dollar asset yet. And maybe like, I don't know, I just don't know if I want the government to be taking like speculative bets that it becomes one, if that makes sense. And then if there's any asset like besides for Bitcoin, like I think ETH is the most logical, like, and obviously like, you know, but we're starting to see it with like sort of tokens that are like sub-$1 billion like market caps, which is like, I think probably a little bit too far down that path. I don't know, Stephen, if you have like a different take, but yes, in the idea of like making things accessible, But like, let's just be prudent about it.

What will you— will you do one of these companies, AJ, for Arbitrum?

I'm not personally working on anything like it, but it's— it might make sense for the foundation to explore.

Yeah, yeah, yeah. I would guess that all these chains get them by the end of the year. Like, even if it's not you guys doing it, I would guess someone like someone, someone will do it. Yeah.

They don't even need our permission. I don't think.

Yeah, someone can do it. What about on the acquisition side, AJ? Like this is something that actually we haven't really seen much of is, I mean, you guys have a massive pool of capital and usually when companies have massive pools of capital, they make acquisitions. And like we're seeing it, like Coinbase acquired a company today. There were two acquisitions today. There's like, I feel like an acquisition a week right now in crypto. It's kind of, I mean, it's just extremely hot. So do you, do you think about acquiring, I mean, even acquire, do you think about acquiring other chains? Do you think about acquiring wallets? Like how do you think about just acquisitions?

I'll take this one because it's probably more relevant for work I do outside of Offchain Labs. So just for context, there's been like sort of a restructuring of how the Arbitrum DAO operates, and we've introduced this concept called the operating company. Um, and that operating company has like an oversight board, which I'm a member of, like in my personal capacity. Um, and one of the core mandates that we're trying to do is build out diversified business lines that are owned by the Arbitrum DAO on and its token holders, essentially. And I love this stuff. Like, this is the kind of stuff that keeps me up, like, thinking and dreaming all day long. I think it's really cool. I think from a strategic perspective, we did the Arbitrum Gaming Ventures. We've been building a treasury management strategy. We've been starting to do actively managed DeFi stuff on behalf of the Arbitrum DAO. The thing that I think when I think about this is there are certain acquisition types that make a lot of sense or product offerings that make a lot of sense for DAOs and certain ones that don't. I think DAOs do very well or could do very well in capital-intensive, human capital-light opportunities, right? Because the coordination layer of DAOs is still very immature relatively. So if you want a very high-touch product offering, it's a very hard structure for a DAO to own. But in like 100% owned capacity, I do think that we've looked at different structures in which the DAO can be— there's been proposals that we've looked at around fund of funds. There's been proposals around sort of investments into Arbitrum ecosystem projects. So there's ways that you can do this. But I would say the way I frame it typically is like the priority should be to compound demand for our block space and demand the assets of the treasury. It's much harder to do in like human capital intense businesses than it is in capital intensive businesses. So that's like been our sort of core focus in how I've been thinking about it and others that I've been like jamming with on this, like the guys, former, you know, Blockworks team, obviously shout out to them. So Yeah, like, I love this stuff, but I think you want to make sure that, like, the type of either— whether it's an acquisition or whether it's like an investment in a new product, like, we've been getting much more aggressive with the treasury. You want to be thoughtful about your capabilities and your core strengths and weaknesses.

Yeah.

Yeah. I've been thinking about it a lot too, because it's funny, we— I feel like this was supposed to be the year, this year and last year, where it's like the industry gets less fragmented, but the industry feels more fragmented than ever. And You know, Robinhood's launched—

I'm not sure I understand the, what you mean by that.

Um, well, what I was actually thinking of is not only with chains, like there's a lot of chains, but actually with— there's all these exchanges are launching tokenized stocks. And I was like really hyped on that. I'm still very excited because it's awesome to bring equities on chain, but it's going to be like, you know, raw, like it's, I don't like— Kraken's going to have like KApple and Robinhood's going to have like RApple and it's going to it just like, it just feels like a crappy user experience. And I don't know, like, I don't know if there'll be— I still don't know if there'll be like 1,000 more chains than there are today in 10 years, or if like there'll be a few chains. Like, I don't have conviction on the app chain, on like the app chain thesis basically. But I don't know, the industry just feels like still, still decently fragmented. Like new chains are still launching all the time. All these exchanges are launching like different types of assets. So I don't know.

So I'll tell you, I'll tell you my take on this, and I think you're thinking about this from like a crypto native, right? I think like, for example, let's just use the example you said of like rApple and kApple. I think 99% of Robinhood users are never going to know that kApple exists, and 99% of Kraken users are never going to know that rApple exists.

Yeah, that's a good point. That's a good point. It's like stablecoins. It's like there will be a lot of stablecoins, but like you won't actually know that you're using like like PYUSD or XRPUSD, whatever their Ripple thing, RUSD or USDC. Yeah, yeah, right.

So the stablecoins, I think, is actually a little bit more complicated in the sense that, like, those, like, I think show up in different UIs. That, like, is right. Like, I mean, like, I assume Robinhood's not going to list Kraken versions of Apple and vice versa, right? But, like, they might have, like, USDC, USDT, etc. What we're starting to see on the stablecoin side, though, is they're becoming more specialized in what they're supposed to right? I think like USDC, USDT, and like, I think, I think Athena's like crossed that chasm of like, just like stablecoins that are like generally proliferated in DeFi. I think what we've seen is like, it's very hard for new stablecoins to break into DeFi, right? I also think that what you'll see in payments is that the stablecoin issuers and enterprises, like if it's a white label version, like I mean, this is probably like Stripe strategy, I'm guessing, based on their acquisitions, is going to be like much more white label and, and abstracted, right? So like if you want to be like, you know, if you're going to accept stablecoins and like, let's say like an online payment platform, that might be the type of thing where it's like they're not going to show you USDC, USDT, PYUSD, etc. Like they're going to have like their payment platform provider. It's going to say US dollars and it's going to be Stablecoin Rails underneath. So I think it really like I think it kind of is thematic of what we've all been talking about for the entire podcast, which is we've moved from, I think, you know, the paradigm of where we should be viewing things through the lens of crypto native to what the user experiences that people are going to be seeing, you know, sort of in like traditional sort of, you know, experiences that they interact with the internet.

Yeah. AJ, I know it's 1 AM and you guys have had a long day.

4 more minutes.

So we can, we can wrap this up. Any, any closing thoughts, things that we didn't talk about that you guys want to cover?

No, just, you know, hit me up, reach out if you want to build with us. I'm going to plug, you know, Arbitrum everywhere. We want to build and support, you know, all the different ecosystems and, and use cases. And thanks for having us on the show.

That's a— that's— I got it. We're going to clip that and put it on. Anything else you want to cover? AJ just goes, not just hit me up and just hit me up.

Yeah, it was great to be here. Thank you for having us. Um, I think we covered a ton today.

Cool. Well, congrats guys. Monumental deal for the industry and yeah, big, big win.

So thank you.

Thanks.