Exploring Scalability with Arbitrum

Today’s product strategy chat focused on scalability solutions for Omen, Swapr and Mesa. Rising gas prices have debilitated Ethereum dApps, which will only get worse if Ethereum’s growth continues.

DXdao has already explored and experimented with scalability solutions; Rails is built on Loopring’s first zk-rollup, Mesa has an xDai version, and DXdao has also established a ‘base’, or a clone of DXdao, on xDai. These have been fruitful learning experiences but they are not sufficient.

Although there is strong demand for cheap, secure and fast transactions tied to Ethereum, many scalability solutions have not launched, but expect to in 2021. Rollups are emerging as one of the most viable options, with Vitalik even going so far as to lay out a ‘rollup-centric ethereum roadmap’. Most importantly, rollups offer the same security properties as Ethereum (often referred to as “Layer 2”.

One of the most important features for DXdao is EVM compatibility; which makes it easy to migrate Ethereum mainnet smart contracts with little to no changes to the underlying code.

Arbitrum is a Layer 2 solution built by Offchain Labs. It’s a rollup that is fully EVM compatible that has been on testnet since October. It along with Optimism are vying to bring ‘Optimistic Rollups’ to Ethereum mainnet.

Myself and several other DXdao contributors had a call yesterday with Steven, AJ and Fred of Offchain Labs about the possibility of working together to bring DXdao and its products onto Arbitrum’s testnet and its mainnet (when launched).

The consensus of today’s product strategy call was to explore all scalability solutions vigorously and to partner with Arbitrum on their testnet.

This is an important strategic decision for DXdao and community input is important. Partnering with Aribitrum does not exclude pursuing other Layer 2 options, but it does position DXdao to be a first-mover.

Does it make sense for DXdao to move forward with a deployment to the Arbitrum test net? And if so, which product is best suited? Or should we experiment with launching a DXdao base on Aribitrum?


I would be curious what the main arguments are for Arbitrum over xDAI?

We (at Gnosis) spend quite some time a few months ago to evaluate different L2/ scalability solutions and ended up picking xDAI.

The main argument was maturity, adoption, and developer tooling.
A product like Omen interacts in some form with a lot of other projects and code. On the surface, you might think first of reality.io and Kleros but in reality, the list is much longer. (3box, theGraph, (Safe) proxySDK, Conditional tokens framework, …)

Then there are developer tools/ analytics/ block explorer:

xDAI has been around for years now and thus slowly build up support of all those mentioned. Newer solutions will often start with none of those.

In terms of scalability - as long as a chain is EVM based - they will all run fundamentally run into the same limit - the limitations of an Ethereum full node. Also here the xDAI team is quite experienced and is working closely together with the current full Node implementations including potentially more scalable designs like turboGeth.

So IMO the only disadvantage of xDAI over newer scalability solutions is NOT related to scalability but to the security of the token bridge mechanism. Plasma/ Rollup chains can theoretically provide higher security/ guarantees over the fairly simply token bridges with basically a multisig that xDAI uses.
While I agree that more long-term (2-3 years) those L2 solutions could be trusted more - right now I personally would think the likelihood of a bug in those often complicated designs is higher than a 3 out of 5 multi-sig going rouge. Concretely I would be more comfortable with a few $million in a multisig controlled by known reputable entities than in an unproven new mechanism. If the last point is the concern very likely token bridges that are relevant to dxDAO can also be made more “secure” with e.g. dxDAO, Kleros, GnosisDAO or such entities becoming additional signer.