Kinto is an Ethereum L2 rollup designed to accelerate the transition to an on-chain financial system. It features permissionless KYC/AML and native account abstraction to solve the two biggest blockers to mainstream adoption: compliance and user experience.

Kinto is now an Arbitrum L2

For the last six months, we have been hard at work building Kinto. Back in March, we launched our Testnet rollup through the OP Stack. During the last six months, we have been testing the limits and developing the capabilities of our chain.

While Optimism has served us well, we believe Arbitrum ultimately offers a better experience for our users and community. Consequently, after serious deliberation, we have made the conscious decision to launch Kinto as part of the Arbitrum Orbit Ecosystem.

Kinto is now an Arbitrum L2.

This blog post will cover the rationale behind this important decision and explain why other founders building in the space should seriously consider Orbit as the first choice to launch a blockchain rollup.

L2 Deployment

The initial framework of the** Arbitrum Foundation and Arbitrum DAO required governance approval** for teams wanting to launch an L2 while allowing developers the flexibility to create an L3 permissionlessly.

Given the KYC/AML modifications required for our chain, it wasn’t practical to explain all the nuances of our network on a public forum before we started. We decided against going through this lengthy governance proposal cycle and focus on development.

Arbitrum is now switching its L2 deployment model to a system based on licenses granted directly from the foundation. Once we learned this, our main roadblock to using Arbitrum was removed, and we proceeded to evaluate the ecosystem in depth.

Follow the Leader

Arbitrum is the undisputable leader in the rollup space regarding adoption, TVL, and technology maturity.

As you can see in the graph above, Arbitrum has more than double the TVL of Optimism. Although a few protocols like GMX, Uniswap, Aave, or Radiant are the main drivers behind this TVL, Arbitrum is a community-driven ecosystem with thousands of projects being built by crypto-natives.

Regarding technology, Arbitrum is the only optimistic rollup provider with interactive proofs, which means it has already reached stage one. Vitalik explained in his famous post that rollups must have valid fault proofs and limited upgradeability powers to reach stage one. Arbitrum’s secret sauce is its interactive proof system, and although we are confident other teams will be able to develop their systems over time, it’s not a trivial endeavor.

Regarding transaction costs and efficiency, Arbitrum and Optimism currently feature similar transaction fees. However, Arbitrum offers higher throughput and can support more transactions per second (TPS). Furthermore, when blocks are empty, using the Arbitrum stack, you don’t have to write empty blocks. This can lead to 10x savings in tx costs in the early days of a rollup.

Given Kinto’s focus on security and maturity, partnering with the most advanced roll-up technology provider was a no-brainer. Arbitrum provides a credibly neutral, efficient, and mature platform that is a perfect fit for the foundation of Kinto.

DeFi Native Ecosystem

Arbitrum has, since the beginning, been the platform of choice for DeFi natives. The rise of GMX kickstarted an Arbitrum DeFi summer. Many protocols like Camelot, Pendle, or TraderJoe quickly followed, creating a powerful network effect.

For Kinto, as we stated in our launch announcement, we want to facilitate the transition to an on-chain financial system built on Ethereum. We need to extend a bridge for TradFi into DeFi without alienating the principles and ethos of crypto.

If we do not make an open network that these institutions can use, they will inevitably move down a path of closed networks– a panopticon of private blockchains and Central Bank Digital Currencies (CBDCs).

To that end, we developed our user-owned KYC system to provide the tools to meet compliance and counterparty risks needed for institutions. At the same time, this system is user-owned, and Kinto is a permissionless and decentralized network on top of Ethereum, the most significant open network.

Arbitrum is a perfect fit for us because it has an extensive DeFi network and positions Kinto as part of a broader open ecosystem that is mature and ready for institutional adoption.

Arbitrum Coalition

Finally, the Arbitrum Foundation and core team have been extremely diligent in assembling the best team of technology providers in crypto.

If you want to go fast, go alone. If you want to go far, go together

You have probably seen announcement after announcement in the last few weeks. These are not accidental. Arbitrum is consciously building solid relationships with the best teams in the space.

Thanks to Arbitrum, we have established relationships with the leading RPC infrastructure company Alchemy, the robust Rollup as a Service provider Caldera, and the most promising decentralized sequencing solution, Espresso.

The support from the Arbitrum team in our journey to launch Kinto has been unmatched. Responsive, diligent, and with a shared mindset of playing long-term games that are positive sum. Kinto aims to bring additional institutional partners and allocators to the Arbitrum and Ethereum ecosystems.

Kinto’s launch is now live on Arbitrum.

Engen will mark the beginning of Kinto. An Arbitrum-powered system can match the guarantees of traditional finance, increase availability 24/7, and decrease the friction and costs associated with traditional asset issuance. Together, we want to accelerate the transition to an on-chain financial system.

If you share our vision for a secure, open, decentralized financial system, help us realize it.

Join our Engen Launch here

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