The Offchain Labs Arbitrum software is compatible with Ethereum Dapps and is designed to allow smart contracts to process more than 500 transactions per second. The company is releasing the Arbitrum code as an open-source project so that other developers are able to build blockchain dapps at scale.
Offchain Labs is led by former White House Deputy Chief of Technology Ed Felten. Felten served during the Obama Administration and is a professor of computer science at Princeton University. Felton was guest on Brave New Coin’s Crypto Conversation podcast last month.
Felten says the problem with current smart contracts is the limited capacity on layer one blockchains. Ethereum records each step of a smart contract execution to its main blockchain, which limits its capacity to run multiple contracts and Dapps.
Felten’s Arbitrum solution allows most of the activity of managing a smart contract to be done off the main blockchain. “We do that in such a way that participants get a guarantee that the result is correct,” says Felten. “So the only case where you need to bring the main blockchain into the picture is if there is a dispute among contract participants about what the contract will do. And so we create strong incentives for the participants to agree among themselves.”
Arbitrum will be made available for use on other blockchains over time says Felten.
“Our core technology is not specific to any one underlying layer one blockchain. We're building it on Ethereum first because that's where the biggest developer community is but there's no technical or fundamental barrier to porting our system on to other layer one chains. We expect to do that over time. Which chains we move to and what the timeline is, will be driven by where we think the developers will be.”
Felten says he thinks of blockchain as a set of connected technologies and that different pieces of the blockchain technology stack are at different places in the Gartner hype cycle, with some closer to technological maturity than others.
“I think smart contracts are still relatively early,” explains Felten. “There has been a lot of excitement about them, but it's pretty clear that the technology is not quite ready for a boom, we may go through another trough of disillusionment before smart contracts reach maturity, but in this space, you have to keep your eye on the long term. I feel very confident in the long-term value proposition. These systems provide a type of functionality that is not available through other types of technologies. And that seems to have a lot of value.”
The company announced this week that Coinbase Ventures has invested an undisclosed sum into the company. The investment follows a previous seed round of $3.7M led by Pantera Capital.