A mysterious Redditor makes an information-driven conjecture the next major phase of rise in the blockchain space come in layer-2 solutions, mainly on Ethereum.
The May 22 publish explains that “We’re in a turning point” in which the market is leaving bridging between L1 blockchains toward L2s that are “right from the gate, safer and decentralized than alt-L1s and therefore are created to use seem cash on a credibly neutral platform:”
“L2 adoption is going on now, even if it’s slow as well as in bursts. Behind the curtain, L2’s are improving reliability, decreasing charges, and growing ease of access. L2’s continue to be building and improving, and that’s fantastic.”
An L2 scaling solution uses the safety of the L1 chain like Ethereum and alleviates traffic onto it by “rolling up” numerous transactions right into a single package to become settled at the same time.
Other L1 chains like Solana, which boasts relatively cheap and fast transactions, have received support from users switched off by high charges.
The typical Solana (SOL) transaction costs about $.0025, while Ether (ETH) transactions cost about $1.30 during the time of writing. Despite the fact that wild disparity, demand for Ethereum block space has continued to be overwhelmingly dominant since it’s $73.89 billion total value locked (TVL) outweighs Solana’s $4.24 billion, according to blockchain tracker DefiLlama. Furthermore, Solana continues to be plagued with reliability issues lately.
As of times of writing, Arbitrum may be the largest L2 on Ethereum with $2.65 billion in TVL, according to L2beat. The whole Ethereum L2 ecosystem includes a TVL of $4.77 billion. These figures might be looking for a surge when the right forces conspire to attract users and capital from other L1s.
Several major decentralized apps (DApps) happen to be deployed on L2s. Decentralized exchange (DEX) SushiSwap and yield aggregator Curve take presctiption Arbitrum. Meanwhile, crypto derivatives protocol Synthetix and DEX Uniswap are on Optimism.
Related: MakerDAO deploys on layer-2 network StarkNet to boost functions of DAI stablecoin
The incoming Optimism airdrop could mark the start of an immediate increase of users to L2s. This can be because of the same network effects that attracted users to Ethereum and Ethereum Virtual Machine (EVM)-based decentralized finance (DeFi) protocols in the last 2 yrs.
Optimism is definitely an L2 with $474 million in TVL. EVM chains are ones which are suitable for Ethereum token standards for example Binance Chain (BNB), Polygon (MATIC) and Fantom (FTM).
Ultimately, if there’s a rise in L2 utility, the Ethereum L1 have a natural rise in use, that could further solidify Ethereum because the world’s leading smart contract and decentralized application platform.
