By Amy Wu and Ravi Mhatre
Today, Offchain Labs made history in decentralized finance as the first layer 2 scalability solution on Ethereum to go live publicly on mainnet with over 400 application partners, including SushiSwap, Uniswap, AAVE, and others. We are also excited to announce that Lightspeed is leading the $100M Series B round in the company.
We first met co-founders Steven Goldfeder, Ed Felten, and Harry Kalodner earlier this year and learned how they founded the company at Princeton University. Ethereum’s dominant popularity among developers and DeFi users was causing sky-high gas fees per transaction and slow transaction times. It was the manifestation of Ethereum-founder Vitalik Buterin’s Scalability Trilemma, by which Eth 1.0 optimized for decentralization (with its many thousands of validators) and security, at the expense of scalability. Layer 2 solutions, which executes transactions off Ethereum, but posts a summary of the transactions and thus secured on Ethereum, provides a key unlock for scalability.
As Ethereum reaches new total value locked (TVL) highs of $116B, gas fees have once again grown to an average of $6 per transaction. ArbitrumOne, Offchain Lab’s L2 solution using optimistic roll-ups, will usher a new L2 era as the first launching to the public on mainnet today. Arbitrum both lowers gas fees by over 90% while increasing transaction throughput by orders of magnitude.
Ethereum TVL
A lot has been written about how L2s work and the differences between optimistic and zero-knowledge roll-ups, and which are theoretically better. In deciding to lead Offchain Labs’ Series B, we focused on the most important thing: what is easier and better to use for developers.
It’s hard to put it in better words than Reddit did when they announced their selection of Arbitrum over 21 other blockchain solutions last month to launch their tokenized Community Points:
It’s easy to use, hundreds of Ethereum applications have chosen to use them, and the team consistently delivers when they say they will. Some of the biggest DeFi applications have integrated with Arbitrum in under 24 hours. Arbitrum doesn’t require developers to make changes in the code because they are the only L2 with bytecode compatibility with EVM. On top of that, Steven, Ed, and Harry believe in a fair launch, treating their largest and smallest developer partners equally, which is why all protocols who requested access are going live at the same time. It’s an ethos we also believe in.
Ravi and I are thrilled to have participated in the Series A, and thrilled to continue our support today for Steven, Ed, Harry and team by leading the Series B. We are still in the early days of DeFi, and see a future where the number of users scale from single digit millions to billions.
Offchain Labs will be one of the most important teams driving the next stage of evolution on Ethereum in DeFi and outside of DeFi.
