Request for Feedback: When, and How, Should the Arbitrum Foundation Issue a Licence for the Arbitrum Technology Stack to a New Strategic Partner

Proposals
1

During the 4th Governance call, I brought up the fact that the Arbitrum Foundation is in contact with strategic partners who are interested in obtaining a licence to utilise the Arbitrum technology stack as a layer-2 solution.

It is the right time to initiate a discussion on the most suitable approach on granting licences to strategic partners.

To facilitate this discussion, we have scheduled two community calls for this week at the following times:

  1. Wednesday, 9th August 2023, at 7pm BST
  2. Thursday, 10th August 2023, at 2pm BST

We have three main goals for the above calls:

  1. Understand the community’s sentiments regarding the issuance of licences.

  2. Determine if there should be any specific conditions attached to these licences.

  3. Establish a score-based system and a set of criteria that needs to be met before a licence can be granted.

Additionally, it is important to highlight a short term and medium term roadmap that we should consider in all discussions.

In the short term, the Arbitrum Foundation is hoping to issue licences to strategic partners who can meet a set of predefined criteria and agree to adhere to conditions that benefit the wider Arbitrum ecosystem. This process will allow us to work with partners who align with the community’s objectives.

Looking ahead in the medium term, the Arbitrum Foundation plans to assess the feasibility of creating an ecosystem licence. This licence would grant any project the opportunity to utilise the Arbitrum technology stack, on the condition that they adhere to the specified licence conditions.

The primary aim is to foster a thriving ecosystem for the Arbitrum DAO and ensure that all forks of the Arbitrum technology stack will contribute to the overall growth and success of the Arbitrum ecosystem.

Current Licencing Arrangement

The Arbitrum technology stack has a Business Source Licence:

  • Offchain Labs remains the licence owner.
  • The Arbitrum DAO has the right to issue a licence to new projects.
  • The Arbitrum Foundation can request Offchain Labs or the Arbitrum DAO to issue a licence on its behalf.

Additionally, the Arbitrum Constitution specifies how the Arbitrum DAO can decide the governance model for the newly approved chain:

  • ArbitrumDAO-governed chains: The Arbitrum One and Arbitrum Nova chains and any additional chains authorised by the ArbitrumDAO
  • Governed Chains: Any ArbitrumDAO-approved chains that are governed by the $ARB token
  • Non-Governed Chains: Any ArbitrumDAO-approved chains that are not governed by the $ARB token

It is important to clarify that the Arbitrum technology stack can be freely forked by anyone, given that they deploy it on top of either Arbitrum One or Arbitrum Nova. These deployments, known as ‘Arbitrum Orbit’ chains, are in line with the layer-3 roadmap.

Feedback to Date

We have engaged privately with a number of delegates on the topic of the Arbitrum Foundation issuing licences to strategic partnerships.

So far, most of the feedback has been positive. The main comments can be summarised as the following:

  • The strategic partnership should offer something back to the community. This may be development resources, ability to onboard millions of new users, or to share a portion of their revenue back to the Arbitrum DAO.

  • It appears to be a strategic blunder that the Arbitrum Foundation or Offchain Labs have not already issued a licence to large strategic partners to use the Arbitrum software stack. This dithering may actually be harming the Arbitrum ecosystem.

  • The DAO should have an opportunity to provide its feedback before the Foundation begins issuing licences to strategic partnerships.

We have not had any feedback that the Arbitrum Foundation should not issue a licence for the Arbitrum technology stack to strategic partners. It has mostly focused on the criteria for doing so, conditions that should be attached to it and allowing the DAO to give its initial input on that process.

Next Steps

As mentioned, we have arranged two governance calls to talk with the Arbitrum DAO and the community about how the Arbitrum Foundation may begin issuing licences to strategic partners.

We invite community members to:

  • Comment on this thread with your thoughts,
  • Join the two community calls,

All discussion should be focused on whether the Arbitrum Foundation should issue licences to strategic partners, and if so, the short-term and medium-term goals for how we may reduce the friction for projects to deploy an instance of the Arbitrum Technology stack while ensuring they remain aligned with the wider Arbitrum ecosystem.

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I support moving forward with issuing licenses to strategic partners in the short term and the development of an ecosystem license in the medium term.

Arbitrum has best-in-class rollup technology, but the current (relatively restrictive) licensing structure has limited the proliferation of that technology among the developer community. Opening up the license presents an opportunity to meaningfully expand the set of developers who build on Arbitrum.

In my ideal world, anyone could permissionlessly deploy their own version of Arbitrum One or Arbitrum Nova under the ecosystem license, but somehow still be subject to a very strong economic incentive to contribute to the Arbitrum DAO in terms of revenue, development, and go-to-market resources. I’m not sure if it’s possible to strike this balance, but for me that should be the goal.

Excited to contribute to this discussion!

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Over the past month, alongside two public governance calls last week, the Arbitrum Foundation wanted to get the Arbitrum DAO’s perspective on whether we should issue L2 licenses to partners.

Governance call 1: https://drive.google.com/file/d/1UFRweX1tRkk_mXKuSXC4PWaIGqoxdp2p/view?usp=sharing

Governance call 2: Special Governance Call - L2 Licence (2023-08-10 14:05 GMT+1) - Google Drive

Key points from the discussions can be summarized as follows:

  • Foundation should issue licenses. All comments have acknowledged that the Foundation is well-placed to issue a software license to allow partners to deploy their own Arbitrum L2 on top of Ethereum. Note, projects can already permissionlessly deploy Arbitrum as an L3 (“Orbit Chains”).

  • Score-based Criteria. The Foundation should have a set of criteria, ideally score-based, that enables partners to launch their own chain.

  • Value accrual to the DAO. If possible, the DAO would like to see value accrual back to the wider ecosystem. This can be a percentage of the chain’s revenue at the infrastructure and/or smart contract layer, contributing developer resources to the core technology stack, or the partner’s ability to onboard millions of users to the Arbitrum ecosystem. There should be a clear win for the Arbitrum ecosystem.

  • Discretion of DAO governance. The DAO understands that a partner may not want to be governed by the DAO. In such a case, a moral obligation clause can be added to the agreement that reminds the partner that they should consider decisions made by the DAO in good faith.

With this in mind, we have put together some criteria that will help form the basis for a score-based system:

  • Financially capable. The partner has the ability to pay the operational cost of running the infrastructure, over a multi-year horizon, to a high quality of service.

  • Potential for mass adoption. The partner has the capability to attract thousands, if not millions, of users to the crypto-ecosystem.

  • Commitment to giving back. The partner is commit to giving back to the Arbitrum DAO and the wider community which may be financial, community-oriented, or developer resources,

  • Up to date software stack. The partner will upgrade their smart contract suites and infrastructure to the latest version in a timely manner,

  • Explicit MEV strategy. The partner should disclose their intended MEV strategy and it will be evaluated by the Arbitrum Foundation on whether it is an acceptable policy.

  • Independent branding. The partner’s branding should not be confused with Arbitrum One, Arbitrum Nova, or any DAO-approved chain.

At the Arbitrum Foundation, we will continue working on a scored-based criteria system that will be used to approve a new L2 license to partners and we will begin to issue licences with the above as the initial set of guidelines.

A second topic around the L2 license emerged during the discussion and it was also covered in both governance calls.

  • Can the Arbitrum DAO improve the process, or remove the barriers, for authorizing a new DAO-governed chain?

The Arbitrum DAO can issue a new L2 license if a project submits a proposal to the DAO and the DAO votes for it via a Constitutional AIP. Only one project has approached the Arbitrum DAO for a license, but their efforts have stalled.

Delegates discussed the idea of a new license, accompanied by deployment code, that allows a project to deploy their own version of Arbitrum as long as it opts-in to be governed by the Arbitrum DAO. Other conditions may be included such as a share of Sequencer revenue or to be run as a Freemium model unless the project purchases a license from the Arbitrum DAO.

The enablement of seamless deployments of the Arbitrum Stack as an L2 still requires further discussion and development. All discussions will need to involve the wider community including Offchain Labs (owner of the BSL license), the Arbitrum Foundation and the Arbitrum DAO. We, the Arbitrum Foundation, will work to facilitate this discussion amongst all community members.

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If the aim is to increase the proliferation of Arbitrum among strategic partners, the Foundation could consider multiple licensing tiers. Similar to the ‘freemium’ vs ‘pro’ models seen in industries like streaming, each tier could correspond to a different set of permissions / tools that are usable by partners. Depending on how ecosystem management ends up looking, it may make sense to expose different parts of the stack to different counterparties. While a risk manager may need a window into the whole stack, security experts may only need something more limited. You can extend the metaphor to smart contract development, community engagement, etc.

The intention to maximize economies of scale makes sense, but it’s not clear what is meant by “opportunity to utilise the Arbitrum technology stack” given the ability to fork the whole technology. Is there a centralized dashboard or API that provides deeper insight into the state of the chain than what is currently exposed right now? Or is it more of a summary tool that provides a comprehensive sense of ecosystem state as the L2 expands?

Most of the solution is likely derivative of creating a “a set of predefined criteria [s.t. strategic partners] agree to adhere to conditions that benefit the wider Arbitrum ecosystem.” There’s reason to think we can consider multiple gradients of benefit instead of one absolute scale to compare everyone on. I suppose it’s all design anyway. However, given the structure of the existing proposal process and other aspects of Arbitrum growth, there’s arguments to trade complexity for more modularity in the licensing process.

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Hey @stonecoldpat

Thank you for providing this summary.

On that point, this is applicable only for Orbit chains that decide to settle on Arbitrum One or Arbitrum Nova, correct?

For those Orbit chains that prefer not to rely on the Arbitrum DAO and wish to settle on another chain, what’s the proposed plan?

Will they be subject to the same license allowing partners to deploy their own Arbitrum L2 on Ethereum?

Would love to understand the flexibility and options available for Orbit chains, especially concerning their relationship with Arbitrum and other potential chains. Looking forward to learn more on this topic!

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Hi @sam.ng

At present, the software licence around Orbit Chains allows anyone to deploy it on top of Arbitrum One or Arbitrum Nova directly. There is no need to seek permission on that.

If you want to deploy on another chain, then the licence does not permit that yet.

Allowing teams to adopt Arbitrum Orbit and deploy on other chains can/should be part of this discussion too.

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Hi all,

We are working on a general licence (“DAO Ecosystem License”) that may allow projects to adopt the Arbitrum technology stack as long as they return a share of chain revenue back to the DAO. The intention is to allow any project to adopt the Arbitrum codebase and modify it to suit their purpose (i.e., shared sequencing, Stylus VM, etc). This work is in collaboration with Offchain Labs to ensure all stakeholders including Offchain Labs, the Arbitrum DAO and the wider ecosystem will benefit. Additionally, we are actively chatting with several projects now about how they may adopt a licence based on the above guidelines.

Of course, any deployment should ultimately settle on Ethereum and protect assets that are bridged from Ethereum :slightly_smiling_face:

Hopefully will have more concrete details in the coming weeks, but I wanted to provide a small update, so everyone is aware of our on-going work.

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There could be risks that a licensee open sources the code, or deploys it in a way that removes the benefit to arbitrum.

Rather than dealing in code / trust would there be a way to deploy these side chains in a trustless decentralized manner?

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no problems here :pray: :pray: :pray: