Offchain Labs, developer of the popular Ethereum Arbitrum Layer 2 scaling solution, has reached an agreement to acquire Prysmatic Labs, one of the leading software development teams responsible for maintaining, upgrading and innovate the Ethereum network, Offchain announced on Wednesday.

This decision represents a major development for Arbitrum, one of many so-called stacking solutions built on top of the Ethereum network. Rollups bypass the slow speed of the Ethereum mainnet and volatile and often exorbitant gas costs by collecting large amounts of Ethereum transactions into a unit which is then presented to the principal as a single transaction.

Arbitrum is currently the leading solution for accumulating Ethereum by total locked value. According to data from DeFi Llama, some $965 million is currently circulating across its 123 protocols. By acquiring Prysmatic Labs, one of the leading teams responsible for the innovation of the Ethereum mainnet, the creators of Arbitrum reinforce the centrality of the scaler in the Ethereum ecosystem.

We believe Arbitrum at Tier 2 and Ethereum at Tier 1 will grow and succeed together,” said Ed Felten, co-founder of Arbitrum developer Offchain Labs. Decrypt. “Joining the Prysmatic team connects us even more closely to some of the most exciting and important research happening in the Ethereum community.”

Prysmatic Labs is the developer of Prysm, a consensus client software used by node validators around the world to implement the Proof of Stake consensus algorithm that has powered Ethereum and authenticated its transactions since the network’s inception. historic merger last month. According to data from clientdiversity.org41.5% of node validators use Prysm to validate Ethereum transactions, more than any other software.

Despite the fact that the developers of Prysmatic will now report to the owners of Arbitrum, the team doesn’t expect their day-to-day work to change that much.

“The Prysm client will continue to be a leader in Ethereum node software,” said Prysmatic Labs co-founder Raul Jordan. Decrypt. “We will continue to develop the Ethereum roadmap at the same pace as the other consensus client teams and be at the forefront of the challenges facing Ethereum L1.”

Perhaps not coincidentally, Ethereum’s development roadmap is currently leading towards deployment solutions like Arbitrum in the months and years to come. Danksharding, one of most anticipated upgrades on Ethereum’s post-merger program, would dramatically increase the speed and ease with which huge amounts of data are verified on Layer 2 networks. Vitalik Buterin, Co-Founder of Ethereum highlighted the centrality of perfecting Ethereum’s Layer 2 solutions to the future of the network.

“A large number of [Ethereum’s] the upcoming articles are very focused on major improvements for L2s, which makes our work at Offchain Labs perfectly aligned,” said Jordan. “Ethereum is following a deployment-centric roadmap, and much of the work ahead will be to enable this as much as possible. On top of that, we have a lot of great ideas on the L2 front that we look forward to exploring. at Offchain.

However, this alignment between the priorities of Prysmatic and Offchain could also be interpreted as a conflict of interest. Prysmatic will play a key role in planning the future of Ethereum, especially regarding the network’s relationship with Layer 2 solutions, and one of these Layer 2 solutions is now paying Prysmatic’s bills.

This fact is not lost on Jordan; he is, however, adamant that the diversity of Ethereum’s customers would naturally correct any favoritism shown by its software team towards Arbitrum.

“If Prysm deliberately tries to disadvantage other teams with our software priorities, it will be obvious to the Ethereum community and to our users,” Jordan said. “Many would switch immediately and use some of the other great options for node software. We will face the consequences. Prysm will remain neutral on all fronts.

Whether or not this mechanism proves effective, Wednesday’s acquisition highlights the relatively small number of players in the supposedly decentralized Ethereum ecosystem. Arbitrum and another scaler, Optimism, together account for over 96% of all financial activity on Ethereum Layer 2. Only two other consensus client software besides Prysm – Lighthouse and Teku – amassed more than 5% of all node validators.

While validators still have alternatives to turn to, if Arbitrum were to loosen its self-serving control of Prysmatic, it would take less than a handful of acquisitions like today’s to permanently upset the delicate balance. powers that currently rules Ethereum.

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