Ethereum Layer-2 (L2) scaling solutions are thriving and will be the highlight of the next bull market. So, how can you find your 100X in this race? To answer this question, we will delve into the 7 L2 projects with the greatest future potential.
This article compiles the views of Crypto researchers MooMs and 0xFinish in a Twitter thread.
1. Optimism
In October 2022, Optimism launched the OP Stack, an open-source development stack that supports the OP mainnet. It introduces the concept of superchains, which are a set of L2 blockchains (OP chains) built on top of the OP Stack.
This stack consists of various code libraries that can be used to create highly customizable L2 blockchains. Essentially, its purpose is to simplify the creation of L2 blockchains.
The Bedrock upgrade on June 6, 2023, is the first official version of the OP Stack, bringing several key improvements:
• Reduced costs
• 70% shorter deposit times
• Improved modular proofing
• Enhanced node performance
After the Bedrock upgrade, the next step for Optimism is to upgrade to superchains. Optimism's L2 Rollup chain will be the first member of the superchains. Coinbase's upcoming Base chain for the mainnet will be the second member.
After raising $240 million, Worldcoin is also dedicated to building on the OP Stack. Binance's BNB Chain has also launched the testnet for the OP chain opBNB, which is EVM compatible based on the OP Stack.
The ultimate goal is to build a "superchain" consisting of various L2 networks built using the OP Stack - all L2s will share sorting, proofing, and cross-chain infrastructure, facilitating seamless communication between the networks.
Optimism is currently the third-largest L2 calculated by TVL, but with its vision and partnerships with the OP Stack, it is poised to become the leader in L2 in the coming years.
Many people are bullish on Arbitrum but overlook Optimism. Coinbase and Binance have brought in a huge user base for Optimism, and I believe this is just the beginning.
2. Arbitrum
Arbitrum is an Optimistic Rollup and currently the largest and most dominant L2 network calculated by TVL. It launched its mainnet in August 2021.
The Arbitrum ecosystem currently includes:
• Arbitrum One: The core Rollup of the entire Arbitrum ecosystem
• Arbitrum Nova: A Rollup for projects with expected high transaction volume
• Arbitrum Nitro: An open-source stack supporting Arbitrum L2.
Here, let's focus on Arbitrum Nova, which has 90% lower gas fees compared to Arbitrum One. Although Arbitrum Nova has lower security, it is well-suited for gaming, social, and other high-bandwidth applications. Opensea and TreasureDAO recently launched markets on Arbitrum Nova.
What is the vision of Arbitrum? Like Optimism, Arbitrum launched an open-source framework called "Arbitrum Orbit" in March 2023, which is available for everyone to use, allowing any developer to create and deploy L3 without permissions or formal approvals.
The easiest way to understand L3 is to think of them as an L2 of Ethereum called Arbitrum One. They greatly enhance the scalability of Arbitrum One, making it the ideal solution for high-throughput applications.
The difference between OP Stack and Arbitrum Orbit is that L3 will be built on top of Arbitrum One, while the OP chain will be an independent network that shares security with each other.
L3 could potentially be a good narrative in the future. However, I believe OP Stack has greater room for growth as it targets a wider range of users through institutional entities.
Arbitrum vs Optimism
The main technical difference between the two chains is that Optimism uses single-round fraud proofs while Arbitrum uses multi-round fraud proofs.
This means that Optimism's approach is faster, but it may be more expensive due to higher gas fees as it is executed on L1. Arbitrum takes more time to settle but is more cost-effective.
In addition, Optimism uses EVM while Arbitrum has its own Arbitrum Virtual Machine (AVM). This means that Optimism's programming languages are limited to Solidity, while Arbitrum supports all EVM programming languages.
3. Polygon
Polygon is a blockchain dedicated to enhancing Ethereum scalability, and they achieve this goal by employing various solutions. Their flagship product is the Polygon PoS sidechain, which currently processes 300,000-400,000 addresses and 2-3 million transactions per day.
Polygon also ventures into dApp chain narrative and has released their own solution called Supernets, which enables developers to build customizable dApp chains.
In addition, Polygon zkEVM (its EVM ZK-rollup solution) went live on the mainnet at the end of March, with approximately 20,000-50,000 transactions per day since then.
The recent upgrade of Polygon 2.0 aims to unify these platforms to create a seamless user experience.
The concept of Polygon 2.0 is an ecosystem consisting of various L2 chains supported by ZK technology, utilizing a unique cross-chain coordination protocol to achieve seamless interoperability between Polygon zkEVM, Polygon PoS, and the SuperChain.
Polygon 2.0 consists of four protocol layers, each supporting a critical process within the ecosystem:
• Staking layer: Provides users with the ability to re-stake using Polygon's native token, MATIC
• Interoperability layer: Facilitates cross-chain message passing within the ecosystem
• Execution layer: Enables any Polygon chain to generate batches of ordered transactions, i.e., blocks
• Proof layer: Proves all transactions on each Polygon chain
I believe Polygon is a major competitor to Optimism in terms of wide-scale adoption. They have partnered with many large Web 2.0 companies, attracting millions of users.
4. Base
"Base is a secure, low-cost, developer-friendly Ethereum L2, aimed at bringing the next billion users into Web 3."
Base is built by Coinbase based on the OP Stack and plans to decentralize gradually over the next few years.
Due to Coinbase, as a cryptocurrency exchange, having an easy "cryptocurrency fiat currency" gateway, Coinbase's 110 million users and $80 billion in assets can easily adopt Base.
Base's testnet was launched on February 23rd and is expected to go live this year.
Even in a bear market, Coinbase has 8.3 million monthly trading users (according to data from December 2022), while its competitors Polygon, Optisium, and Arbitrum have an average fee of 3.04 million, average revenue of 1.23 million dollars, and an average of approximately 200,000 daily active users.
This means that Coinbase only needs to convert 2.50% of its 8.3 million bear market users to Base users in order to reach the average daily active user count of these three competitors. Therefore, Base has the possibility of becoming one of the main L2s in the DeFi (trading) field.
5. Mantle
Mantle is a novel modular L2 network designed to take Ethereum's scalability to a new level while maintaining a high level of decentralization and strong security.
Mantle is set to launch in 2023 and it separates the three key layers of the blockchain (consensus, execution, and data availability) to allow independent optimization:
• Consensus layer: Works similarly to how the L1 chain operates, focusing primarily on transaction and block ordering.
• Execution layer: Isolated from the other two layers, dedicated to executing transactions and smart contracts.
• Data availability layer: Based on innovative DAS technology, ensures data is available and not hidden, enhancing network security.
Mantle's modular design could change the game in the L2 race. By separating the three key layers to allow independent optimization, it can make the network more flexible and scalable without compromising security or decentralization.
Mantle has also attracted attention for its partnership with the decentralized autonomous organization BitDAO. This strategic partnership could bring tremendous value to the Mantle network and solidify its position in the blockchain ecosystem.
One unique aspect of Mantle is its focus on enhancing user experience, particularly for blockchain gaming or GameFi. With Mantle's high scalability, lower transaction costs, and faster transaction speeds, it has the potential to completely change the GameFi landscape.
Although Mantle is a newcomer in the L2 space, it has demonstrated immense potential. Its innovative technology, focus on user experience, and commitment to decentralization make it a strong competitor in the increasingly competitive L2 race.
6. opBNB
In June 2023, Binance announced the launch of the opBNB testnet. Built on the OP Stack, opBNB places great emphasis on maintaining compatibility with Binance Smart Chain (BSC), providing significant advantages for BSC developers and users.
Similar to Base, opBNB will leverage Binance Exchange's massive user base to provide a seamless and cost-effective L2 solution to millions of users already using Binance. This indicates opBNB's immense growth potential within the DeFi ecosystem.
It is worth noting that the success of opBNB will be closely tied to the native token of the entire Binance ecosystem, BNB. If opBNB gains attention, it may have a positive impact on the value of BNB, leading to a chain reaction throughout the Binance ecosystem.
According to the roadmap, opBNB will launch its mainnet in 2023. The launch of opBNB's mainnet is worth attention as it will showcase Binance's L2 solution in areas such as high-frequency trading, gaming, and social networks.
7. zkSync
zkSync is an L2 scaling solution developed by Matter Labs. It utilizes zkRollup technology and aims to provide Ethereum-level security. It is one of the key projects driving the L2 revolution.
zkSync combines multiple transactions into one proof using zero-knowledge proofs. By moving most of the computation off-chain while maintaining high-level security on the Ethereum mainnet, it enhances scalability.
A notable advantage of zkSync is that it allows users to pay gas fees with tokens they want to transfer, rather than being restricted to ETH. This greatly improves user experience and makes Ethereum more accessible for mainstream adoption.
Matter Labs is also committed to enabling zkSync upgrades without the need for a hard fork. This modular design ensures its integration into future Ethereum improvements and scalability with the growing Ethereum ecosystem.
By utilizing a PoS consensus mechanism for block validation, zkSync maintains decentralization in line with Ethereum's core values.
The main goal of zkSync is to be fully permissionless, allowing any project to build and deploy smart contracts on its network. This will further contribute to Ethereum's scalability and support for diverse dApps.
zkSync's vision goes beyond being just a scaling solution; it is a stepping stone towards a more scalable, secure, and user-friendly Ethereum network. With zkSync, the possibilities for Ethereum to revolutionize various industries are limitless.
Keeping an eye on projects like zkSync is crucial for understanding the future of Ethereum and DeFi. As Ethereum continues to evolve, zkSync will undoubtedly play a pivotal role in its growth and adoption.
zkSync is not only a competitor of L2 projects, but also sets standards for the security, scalability, and efficiency of L2. As the Ethereum ecosystem continues to evolve, zkSync deserves long-term attention.
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