Final Report Modular Crypto & Arbitrum

DAO Programs & Initiatives Questbook Updates
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Final Report Modular Crypto & Arbitrum

2 events, 3 reports, 2 workshops & 1 study group about governance :blue_heart:
Modular Crypto is a media and education company focusing on bringing crypto education to Brazil in an effective way. We work for educate the Portuguese-speaking community about blockchain & web3. :large_blue_circle: https://modularcrypto.xyz/

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Modular House RJ | Arbitrum Report | 1st event

Date: July 26, 2024
Location: Arca Hub, Rio de Janeiro, RJ
Sponsor: Arbitrum
Total Attendance: 232 participants
Link register
Link photos/video

Introduction
The Modular House RJ event, held on July 26, 2024, was a major success, bringing together blockchain technology enthusiasts, developers, investors, and industry leaders to explore innovations and discuss the future of the crypto ecosystem. The event attracted 180 participants, providing a unique platform for networking and knowledge exchange.

Speakers
JoĂŁo Kury: Co-founder of Modular Crypto
Gabriella Mena: Co-founder of Modular Crypto
Bruno Maia: Cartesi
Gino Matos: Modular Crypto
Felipe Fink Grael: TWIST Systems
Guilherme Ribeiro: Paradigma

Event Info
Free Admission
Open Food & Open Bar & Open Swag
Node Hub Web3

About Modular House
Modular House is an initiative by Modular Crypto that encompasses various events throughout Brazil, aiming to foster local crypto communities and drive national cryptocurrency adoption. These events serve as a warm-up for a major crypto event that will take place in March 2025 in Brazil.

Arbitrum Participation
Arbitrum played a fundamental role as the event sponsor, significantly contributing to increased brand visibility and the dissemination of information about its innovative solutions. During the event, we highlighted several features and advantages of Arbitrum, such as:
Scalability
Reduced Costs
Compatibility with Ethereum
The ease of integration with existing decentralized applications (DApps) was an important point of discussion.

Arbitrum Panel
One of the event highlights was the panel dedicated to Arbitrum, where experts discussed the innovations and practical applications of the scalability solutions offered. The topics included:
Rollup Technology
Use Cases
Future of Scalability

Benefits for Arbitrum
Arbitrum’s participation in the Modular House RJ resulted in several benefits, including:
Increased Brand Visibility: The event presence allowed Arbitrum to reach a highly relevant audience and enhance its visibility in the crypto community.
Direct Engagement with the Audience: Direct interactions with blockchain developers and enthusiasts provided valuable feedback and strengthened relationships with the community.
Education and Knowledge: Through panels and discussions, we educated the audience about Arbitrum’s advantages, consolidating its position as a leader in scalability solutions.

Special Event NFT
To celebrate the success of Modular House Rio de Janeiro, we created an exclusive NFT for the event. This token not only commemorates the occasion but also serves as a digital keepsake of the impact of Ethereum’s Layer 2 solutions. NFTs are ideal for events as they create a lasting, unique connection with attendees, marking significant moments and reinforcing engagement.

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Modular House SP | Arbitrum Report

Date: October 4, 2024
Location: Login House eXP, Rua Harmonia, 21 - Vila Madalena, SĂŁo Paulo, SP
Sponsor: Arbitrum
Total Attendance: 157 participants
Link Register - Modular House | São Paulo · Luma
Link Photos: FOTOS - Google Drive

Introduction
The Modular House SĂŁo Paulo event was part of a series of regional initiatives by Modular Crypto to strengthen local crypto communities and promote the adoption of decentralized technologies in Brazil. The event brought together developers, investors, and crypto enthusiasts to explore Layer 2 (L2) solutions and emerging opportunities in the Web3 ecosystem.
Attendees enjoyed educational talks, panels on scalability, and networking sessions. Open food and gifts from sponsors enhanced engagement and provided a friendly environment for collaboration.

Speakers
João Kury – Co-founder, Modular Crypto
Gabriella Mena – Co-founder, Modular Crypto
Fernando Santanna – ICP HUB Brazil
Felipe Escudeiro – Bitnada
Guilherme Ribeiro – Paradigma Education
Henrique Marlon – Cartesi

Event Info
Admission: Free
Perks: Open Food & Open Swag

How the Event Benefited Arbitrum
The session on Arbitrum was a key highlight, emphasizing how its Layer 2 solution can revolutionize the Ethereum blockchain and bringing strategic insights for developers, users, and the broader crypto ecosystem. Below are the main ways the event supported Arbitrum’s goals:

Local Engagement:
Modular House connected 157 participants with Arbitrum’s technology, reinforcing its position as a leading Layer 2 solution in Brazil.

  • Education and Adoption:
    The presentation enhanced participants’ technical knowledge, driving greater adoption of Arbitrum’s platform among local developers.
  • Networking and Opportunities:
    The event fostered new partnerships and collaborations, laying the foundation for Arbitrum’s ecosystem to grow across new markets.

Key Points from the Presentation

  1. Scaling Ethereum with Arbitrum:
  • Arbitrum offers an effective solution to reduce congestion and transaction costs on the Ethereum mainnet.
  • Explained how Rollups enable higher transaction throughput without compromising on security.
  1. Ecosystem and Developer Tools:
  • Arbitrum provides a robust toolset for developers to build scalable applications.
  • Encouraged the migration of smart contracts and development of decentralized
  • applications (DApps) on its platform.
  1. Decentralized Governance:
  • The Arbitrum DAO plays a key role in governance, ensuring community-driven decision-making.
  • Participants learned how proposals are submitted and voted on, fostering community engagement.
  1. Collaboration between the DAO and Arbitrum Foundation:
  • The Arbitrum Foundation offers strategic support to ensure continuous development and maintenance of the protocol.
  • The foundation and DAO work in synergy to sustainably grow the platform’s infrastructure.
  1. Opportunities with Arbitrum:
  • Shared insights on funding programs and incentive initiatives available to innovative projects.
  • Highlighted global partnerships and ambassador programs aimed at expanding Arbitrum’s reach into new regions.

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:teacher: Governance Study Group: Dive into Blockchain, DAOs, and Governance

Link Register: Governance Study Group & Debating · Luma
Arts - https://drive.google.com/drive/u/1/folders/1_kN1-B6J6e_HIbJmCLN-I8zySOa1Chsw
:small_blue_diamond: Powered by Arbitrum :small_blue_diamond:
Join us to explore the world of DAOs and blockchain governance with renowned experts! The Governance Study Group offers a unique opportunity to learn, discuss, and debate crucial topics for the future of decentralized organizations.

:date: Study Group Meeting Dates:
25/08, 2 PM - Class 1
01/09, 2 PM - Class 2
08/09, 2 PM - Class 3
15/09, 2 PM - Class 4
22/09, 2 PM - Virtual debate championship on governance and blockchain

:teacher: Instructors:
Romina Seijas - CoFounder EthKipu
Candu - Leader Seed Latam
Guilherme Ribeiro - Researcher Paradigma Education
Rafael Castaneda – Founder CastaGuilda
JoĂŁo Kury - CoFounder Modular Crypto

:books: Course Content:
The course includes 4 intensive classes on the following topics:

  • Class 1: Introduction to Governance in Web3
    Basic Concepts: Defining Web3, differences between Web1, Web2, and Web3, introduction to blockchain and smart contracts.
    Traditional vs. Decentralized Governance: Comparing centralized and decentralized governance models.
    Examples of Web3 Governance: Cases from Ethereum, Polkadot, and introduction to DAOs.

  • Class 2: Philosophy of Governance in Web3 and Valocracy. Philosophy of Decentralization: Principles and comparison with traditional philosophies.
    Valocracy: Definition, implementation in DAOs, and practical examples.
    Governance and Values: Impact of values like transparency and fairness in decentralized governance.
    Open Discussion: Debate on valocracy and social impacts of decentralized governance.

  • Class 3: Structures and Tools of Governance in Web3
    Governance Models: Structure and functioning of DAOs, and hybrid models.
    Governance Tools: Voting platforms and governance tokens.
    Case Studies: Analysis of DAOs and on-chain and off-chain voting systems.
    Class 4: Governance in Arbitrum
    Governance in Arbitrum: Introduction and discussion on the importance of governance in Web3 projects with Candu.

  • :classical_building: Debate Championship
    Topic: Governance and Blockchain
    Prizes: R$500 for the winning duo
    Open Championship
    To compete for the prize, participants must attend all classes in person or submit a report for any missed class.

  • :classical_building: Institutional Support:
    Support: CONDEB (Confederation of Debates of Brazil)
    UFMG (Senatus), UFRGS (GDO), UFRJ, UERJ, BrasĂ­lia, UFC, UFBA, IBMEC, UFSC, Recife, Natal, FDV, UFES

NFTs (certificate) modularcrypto

Class 1 Summary

In the first class, we explored the fundamentals of the cryptosphere and the revolutionary technologies shaping the digital future. Guiriba, a DAO expert and analyst at Paradigma Education, discussed how Web3, smart contracts, and DAOs (Decentralized Autonomous Organizations) are transforming the current landscape.
Web1, Web2, Web3: The transition from Web1 (centralized content) to Web3 (decentralized, immutable data without intermediaries) allows us independence from large corporations and banks, utilizing digital wallets connected to the blockchain.
Bitcoin and Ethereum: Introducing Bitcoin as a milestone in the creation of Web3, Guiriba explained how its proposal for a decentralized economy eliminated controlling entities. Ethereum, in turn, expanded on this idea by enabling the creation of decentralized applications through smart contracts.
DAOs as the Future of Organizations: DAOs were presented as the future of cooperatives in Web3. Examples like Uniswap, MakerDAO, and Botto demonstrated how these organizations operate in practice, with decentralized governance and the use of tokens for decision-making.

Class 2 Summary

xIn the second class, Rafael Castaneda (Casta Crypto) delved deeper into governance within the crypto ecosystem, highlighting the importance and challenges of decentralization. Casta introduced philosophical and political concepts of Bitcoin, which was created as an anti-government and anti-bank tool but is now widely seen as a financial asset.
Governance and Power Concentration: Although DAOs are decentralized in infrastructure, economic incentives can lead to power centralization, similar to what occurs in traditional political systems. Casta criticized the belief that simple decentralization will solve all problems, emphasizing the need for a clear political system within DAOs.
Digital Nation-State and Valocracy: Casta explored the idea of “digital nation-states” and how they could be organized, suggesting “Valocracy” as a way to organize digital societies that attempt to separate economic power from political power. Blockchain is fundamental in this context to ensure integrity and prevent corruption.

Class 3 Summary

In the third class on Governance Structures and Tools, Romina began by highlighting that we live in a society where power structures are centralized, leaving citizens with little influence. This contrast is important when we think about DAOs (decentralized organizations), which cannot be evaluated using the same criteria as traditional organizations.
She explained that each DAO is unique, with its own rules, stages, and characteristics. To understand its structure, one must observe factors such as the treasury, its composition, the token holders, and how voting is conducted. Romina emphasized that decentralization within a DAO should be evaluated not just by the number of participants but also by the quality of this decentralization. She mentioned that Latin America still participates little in these structures compared to regions like Europe and North America, where DAO presence is much more expressive.
Regarding the role of delegates, Romina mentioned that they represent token holders who delegate their voting power, and that the success of delegates is tied to the number of votes they can attract. The election of delegates depends on the trust of DAO members, but there is a lack of formal criteria for this choice, which Romina considers an important point to be discussed.
She also addressed the concept of the Security Council, a group responsible for making urgent decisions to protect the DAO’s interests. These councils are usually composed of members with specific technical skills, as poorly informed decisions can harm the entire organization. Despite their importance, there are no formal requirements to become a council member.
The class also explored voting platforms. Romina explained the difference between on-chain voting, which is recorded and executed directly on the blockchain (using gas fees), and off-chain voting, which takes place on platforms like Snapshot without requiring gas fees but with less automation and transparency compared to on-chain voting (Tally eg)

Class 4 Summary

In the fourth class on Governance in the Arbitrum DAO, Ana Belén started by explaining that Arbitrum is a technology focused on scaling Ethereum securely, allowing faster and cheaper transactions. She highlighted that Arbitrum enables the creation of smart contracts, DApps, games, NFTs, and facilitates cryptocurrency transfers with minimal fees, making it the most advanced, large, and decentralized L2.
Ana mentioned that since its founding in 2014, Arbitrum has integrated over 2,000 DApps and moved $19 billion in Total Value Bridged (TVB). Arbitrum holds more than 33% of the market share among Layer 2 solutions and has the highest volume of ETH bridged, being the only one to reach Stage 1 of decentralization on the L2Beat mapping.
The creation of the Arbitrum DAO occurred when Offchain Labs transferred control of the Arbitrum One and Arbitrum Nova networks to the DAO, emphasizing the importance of security and decentralization. Ana explained that ARB token holders are responsible for DAO decisions, such as voting on updates, smart contract integrations, and managing the treasury, which contains 35% of all ARB tokens.
She also highlighted the role of the Arbitrum Foundation, which assists the DAO in executing its decisions, comparing it to the “hands” of the Blockchain, while the DAO acts as the “brain.” Ana encouraged active participation, especially from Brazilians, in the Arbitrum DAO, emphasizing that anyone can propose improvements to the network and, if approved, these proposals can be funded by the DAO.
Following this, João Kury presented the Quest Book, a platform for DAO fund distribution. He explained that “domain allocators,” elected by the Arbitrum DAO community, are responsible for selecting projects and allocating resources.
Finally, Gabriella Mena explained how to submit grant proposals in Arbitrum. She emphasized that proposals must be feasible and add value to the ecosystem. After going through the voting phase and, if approved, funds are gradually released as the project progresses.

Debate

EC prefers a world where global democracies follow the governance model of DAOs
Government: The government side argued that representative democracies are flawed due to the concept of centralized power. They contended that institutions of power perpetuate structures that restrict the multiplicity of ideas and decisions, limiting individuals’ autonomy. The current model of power delegation in long elections prevents direct citizen participation in decisions affecting their daily lives. Centralization of power leads to a disconnect between individual needs and political decisions, resulting in ineffective solutions to local problems.
They also emphasized that the competition for interests in a centralized system forces people with completely different realities to make decisions that interfere with each other’s lives, increasing inefficiency. For them, DAOs, with their decentralized governance, allow for more active and direct participation in decisions, eliminating the problem of power delegation and providing individuals with more control over local and personal issues.
Opposition: The opposition, on the other hand, argued that DAOs can intensify inequalities and favor short-term individual interests. They pointed out that the current centralization, although flawed, allows minorities to elect representatives and protect their interests within a democratic system. In the DAO model, where power is often based on the number of tokens, wealthier or more privileged individuals would have greater decision-making power, potentially perpetuating inequality.
Additionally, the opposition highlighted that in DAOs, individuals may tend to vote for their own immediate interests without considering the needs of other groups, especially minorities. They also argued that long-term political decisions are often necessary, which may not be popular in the short term but are crucial for urban and environmental well-being. In this sense, a DAO governance system could undermine these long-term decisions in favor of short-term interests.
Conclusion of the Debate: The debate showcased two clear perspectives: on one side, the critique of centralized power and the appeal for more participatory and decentralized governance, as seen in DAOs; on the other, the concern about inequalities and the short-sightedness that a decentralized governance model may generate. Both teams presented strong arguments regarding the challenges and promises of implementing a governance model based on DAOs within the context of global democracies.
Judges’ Decision: After considering the arguments presented, the judges decided that the government emerged victorious in this debate, recognizing the relevance of their proposals for a more inclusive and decentralized governance.

Arbitrum Workshop - Ricardo Gordon (Episode 1)

João Kury and Guelfi hosted Ricardo Gordon from the Arbitrum Foundation, who began by explaining in a simple and educational manner how a Layer 2 works and its purpose: increasing the scalability of the Ethereum network, reducing costs, increasing transactions per second, and improving speed. He showed the differences between the Arbitrum One, Arbitrum Nova, and Arbitrum Orbit networks, highlighting their characteristics and primary uses. He then explained what Arbitrum Stylus is, a technology that allows the creation of smart contracts and DApps in programming languages other than Solidity. Finally, Ricardo explained what Orbit Chains are. The Orbit technology allows developers to create customized blockchains, defining whether they will be Layer 2 or 3, gas fee tokens, transaction ordering, block speed, and privacy, ensuring total control over the created chain’s roadmap.

Arbitrum Workshop - JoĂŁo Kury and Guelfi (Episode 2)

JoĂŁo Kury and Guelfi conducted a workshop on Arbitrum, emphasizing that it remains the largest L2 in TVL and showed resilience after the distribution of its token, unlike other Layer 2s that lose momentum. They also presented game-focused blockchains built within the Arbitrum Orbit ecosystem, such as XAI and Proof of Play, which is responsible for the game Pirate Nation. Another highlight was the Renegade protocol, which enables private cryptocurrency trading using Arbitrum Stylus technology, allowing the use of different languages beyond Solidity, enabling developers to create DApps. In the end, they analyzed Arbitrum blockchain metrics and identified some opportunities they believe to be promising within the ecosystem for further exploration.

Research 1

Arbitrum and Liquidity Still Go Hand in Hand

Despite the underperformance of the ARB token, the Arbitrum ecosystem remains active and liquid, standing strong in the competitive Layer 2 (L2) landscape of Ethereum.
2024 has seen intense competition among Ethereum’s L2 solutions, with rapid fluctuations in Total Value Locked (TVL) reflecting this dynamic environment. These shifts are often tied to airdrops, as users flock to networks without native tokens, temporarily boosting TVL but withdrawing once tokens are distributed. Liquidity plays a crucial role in the health of a blockchain ecosystem, and Arbitrum remains a balanced example despite the volatility.
Although networks like Base have seen rapid growth, Arbitrum’s TVL stands out, leading all L2s with almost $14 billion, representing a 119% annual growth. While others, like Mantle and Base, have outpaced this growth with increases exceeding 1200%, their metrics may be skewed by temporary airdrop incentives, unlike Arbitrum’s more established and organic liquidity.
The Ethereum Improvement Proposal (EIP-4844) in March 2024 drastically reduced L2 transaction fees, resulting in record-breaking activity in July with 394.5 million transactions. This surge underscores the significance of understanding where transactions are most cost-effective.
Stablecoins emerge as a key indicator of liquidity, and Arbitrum leads with $4.5 billion in stablecoin reserves, far surpassing other L2s. This high liquidity correlates with increased activity, reinforcing Arbitrum’s strength in the L2 market.
While ARB’s price has declined by 67% this year, the network’s health remains robust. The ARB token’s price doesn’t accurately reflect Arbitrum’s underlying strength and growth as an L2 solution, highlighting that ecosystem health is often independent of token value. In conclusion, Arbitrum remains a dominant L2 player, showcasing sustainable growth and liquidity amidst a highly competitive environment.

Research 2

Orbiting in Arbitrum’s Interoperability

The report explores how Arbitrum’s Layer 2 (L2) solutions, including Rollup and AnyTrust protocols, address scalability issues on Ethereum. With 41% of the Total Value Locked (TVL) in Ethereum’s L2 ecosystems, Arbitrum leads in innovation and usability by offering public networks like Arbitrum One and Arbitrum Nova.
The primary focus is on the Orbit ecosystem, which allows the creation of customized blockchains, known as appchains or general-purpose networks, using the Arbitrum Nitro infrastructure. Orbit provides developers with freedom in aspects such as governance, transaction execution, and security mechanisms, as well as enhanced interoperability between blockchains.
Projects like ApeChain and Plume Network demonstrate how this modular infrastructure facilitates the creation of networks focused on NFTs, blockchain gaming, and real-world asset (RWA) tokenization. Plume highlights Orbit’s modularity as a key factor for agility in project development and liquidity expansion.
In conclusion, the report argues that Arbitrum is at the forefront of interoperability, offering greater customization and scalability for developers while addressing future blockchain industry challenges with a modular and strategic approach.

Research 3

Arbitrum Dapps

The Arbitrum network, a Layer-2 scaling solution built on Ethereum, is designed to increase efficiency by offloading transaction processing, known as “execution,” from Ethereum’s main network. Layer-2 solutions like Arbitrum have grown competitive, particularly as they vie for attention and liquidity within the broader Ethereum ecosystem.
While Arbitrum continues to showcase strong metrics, such as Total Value Locked (TVL) and stablecoin supply, the ecosystem is dominated by decentralized finance (DeFi) applications. Data suggests that users are moving funds to Arbitrum primarily for DeFi purposes, although these transactions may not always result in locked value within the platforms. Additionally, a sports betting application has gained significant traction recently, adding diversity to Arbitrum’s utility.
The report highlights key metrics like transaction volume, unique active wallets (UAW), TVL, and average daily transactions. Data from platforms such as Artemis and DappRadar helped analyze Arbitrum’s performance, particularly in terms of sector-specific activities. Categories such as DeFi and stablecoins remain central, but the “Other” category, representing unclassified applications, leads with the highest number of active wallets.
Applications such as Hyperlane (for cross-chain interoperability) and Wrapped BTC (WBTC) exemplify the DeFi dominance, though social interaction platforms like Galxe and Layer3 also play a role. While these platforms contribute to high user activity, their impact on long-term engagement is less clear. Nevertheless, Arbitrum’s DeFi applications continue to sustain healthy usage, positioning it as a key player in Ethereum’s scaling efforts.

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