[Part 1] Layer 2 Ecosystems: Rollups

August 1, 2022 - Around 5 mins mins to read

Mapping out layer 2 systems – Drawing to understand Rollups projects being developed on layer 2. We will focus on two main technologies Rollup and sidechain which are divided into 3 parts.

Quick Take

Layer 2 is one of the solutions to help overcome the disadvantages of Ethereum that is of great interest.
The author lists projects built on layers 2 and projects as bridges for asset conversion between L2-L2, L1-L2, fiat on/off ramps, etc.

In the era of DeFi boom, the limitations of the Ethereum network are more obvious than ever. Long processing speed, exorbitant cost, etc. all are greatly affecting the user experience.

As a matter of fact, solutions to overcome the disadvantages of Ethereum are increasingly noticed and one of the outstanding solutions is layer 2.

Layer 2 is a solution to reduce transaction processing pressure on the original blockchain by processing transactions on a second layer, thereby improving speed and minimizing transaction costs.

Current main layer 2 solutions include Rollups, Plasma, Channels, and Sidechains. Each solution will provide a different throughput and have different advantages and disadvantages.

Below the author will list the projects being developed on layer 2 along with the types of bridges being developed on them.

Read more: Layer 2 – The key to solving problems on Ethereum

Rollups

Zk-Rollups

ZK-Sync

zkSync is a protocol for scaling payments & smart contracts on Ethereum. Product of zkSync: zkWallet.

1. Bridge

zkSwap: Dex AMM has a bridge that allows transferring and withdrawing assets from the Ethereum network to layer 2 of zk-Sync.
Argent: Crypto wallet with a simple interface, the project is also developing a bridge from L1 to L2 of zk-Sync and has a plan to develop a bridge to L2 of Optimism.
Trustless Capital: Providing financial products and services, the project is developing an app to help bring fiat to layer 2 and vice versa.

2. Projects that use zkSync

Developed:

Numio: The first non-custodial mobile wallet to use the zkRollup solution.
Gitcoin: An open-source bounty platform. Gitcoin enables open source developers to get paid for their work, as well as to collaborate with each other.
Golem: A decentralized marketplace for computing power. The project helps CPUs and GPUs connect to a P2P network, allowing both individual users and project owners to hire resources from other vendors.
StablePay: A decentralized payment solution that allows users to pay online with the project’s tokens (applicable to products and services priced in USD).

Developing:

Curve: A decentralized exchange protocol designed specifically for Stablecoins or Crypto Assets pegged 1:1 of equal value (eg sBTC, renBTC, wBTC, etc.) efficiently. Unlike Uniswap, Curve allows users to trade stablecoins with low slippage, low fee and Liquidity Providers (LPs) that will receive trading fees and lending interest from Compound or yEarn.finance.
Balancer: Protocol Automated Market Maker (AMM) allows anyone to create Liquidity Pools for any token with an arbitrary ratio (maximum 98/2).
Argent: A crypto wallet that favours simplicity.
MyKey: An identity autonomy system integrated on multiple blockchains.

Loopring

The scaling project uses zkRollup for Exchange and Payment Protocol. Loopring products: Loopring Exchange & Mobile wallet.

1. Projects using Loopring

Developed:

Gitcoin: An open-source bounty platform. Gitcoin enables open source developers to get paid for their work, as well as to collaborate with each other.
Rails: Billing project on Loopring L2.

Developing

pNetwork: Governance layer for the ecosystem using pTokens. pTokens is an unchained asset that allows liquidity to move back and forth between different chains. In addition to zk-Sync and Loopring, there are other projects that use ZkRollups but are in the development stage such as StarkWare, Aztec, etc.

Optimistic Rollups

There are currently two prominent projects using Optimistic Rollups: Optimism and Arbitrum.

Optimism

This is a layer 2 project for Ethereum using an Optimistic Rollups solution. You can see more about Optimistic here.

1. Bridge

One limitation is that the current solution requires a long time (about 7 days) to withdraw assets. However, recently Optimism announced a partnership with MakerDAO and created a DAI bridge, allowing for fast asset withdrawal.

2. Hop

An exchange that helps transfer assets between networks using rollups and from layer 1 to layer 2 using rollups currently, the testnet platform supports Ethereum, Arbitrum, Optimism and xDAI.

3. Projects using Optimism:

Synthetic: A decentralized synthetic asset platform on Ethereum. Allows users to have “exposure” to assets such as fiat money (USD, EUR, JPY), Cryptocurrency (BTC, ETH, BNB), Commodities (XAU, XAG), shares (TSLA)
Uniswap: An Automated Market Maker (AMM) protocol that allows users to swap any ERC20 token.

Decision

Is a layer 2 project for Ethereum using an Optimistic Rollups solution. Currently, the project is still in the testnet stage.

1. Projects using Optimism

Bancor: AMM supports one-sided liquidity provision.
MCDEX: A decentralized perpetual contract exchange.

Verdict

Above is information about the ecosystem of Rollup technology. In part 2 and part 3, we will analyze the ecosystem of projects using Sidechain technology.

If you have any questions, comments, suggestions, or ideas about the project, please email ventures@coincu.com.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your research before investing.

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