(Bloomberg) -- Offchain Labs, the software developer behind the Arbitrum blockchain, is launching a new unit that will focus on fostering mainstream adoption of crypto networks.
Arbitrum is a so-called layer 2 blockchain that is used to facilitate faster and lower cost transactions on Ethereum, the most commercially successful crypto network. The total value of cryptocurrencies on Arbitrum stands at around $15 billion, or 41% of the total layer 2 market, according to tracker L2BEAT, making it the largest in the sector.
Offchain Labs has committed more than $10 million to Tandem, which will concentrate on projects outside Arbitrum, according to Steven Goldfeder, chief executive officer and co-founder of the Princeton, New Jersey-based firm. Offchain Labs is backed by venture investors including Lightspeed Venture Partners and Ribbit Capital.
Tandem will primarily focus on projects that are still within the Ethereum ecosystem but focusing on the mainstream adoption of the blockchain, said Goldfeder, who cited Robinhood Markets Inc, which is a partner of Arbitrum, and blockchain-based games.
“You won’t see us supporting projects that are completely differentiated from what we’re doing or have no connection,” he said.
Layer 2 blockchains exist to improve the scalability and efficiency of networks such as Ethereum. They process transactions off the main blockchain, reducing congestion and lowering fees, while still benefiting from the security of the main network.
As a service provider to Arbitrum, Offchain Labs’s main revenue source is the fees it collects from the network. Once the new business unit launches, Goldfeder expects it will make up a significant portion of revenue.
(Adds a chart listing the largest layer 2 blockchains.)
©2024 Bloomberg L.P.
