As the Ethereum network experienced increasing utilization, its inherent limitations began to surface, including slow transaction speeds, frequent congestion, and expensive gas fees. To address these challenges, Layer 2 has emerged, seeking to enhance Ethereum’s scalability and overall performance. Let’s explore the top Layer 2 crypto projects with Coincu in this article.
What are Layer 2 crypto projects?
Layer 2 crypto projects, as they are commonly referred to in the cryptocurrency community, represent a collection of projects and technologies designed to mitigate Ethereum’s scalability issues while preserving its robust security features.
One of the standout characteristics of Layer 2 crypto projects is their integration with the Layer 1 blockchain, Ethereum itself. This strategic alignment allows Layer 2 platforms to inherit Ethereum’s formidable security measures while significantly improving transaction speed and reducing costs.
By the end of 2021, Ethereum boasted nearly 4,000 decentralized applications (dApps), underscoring its position as a blockchain powerhouse. Nevertheless, the growing demand for Ethereum’s services revealed the network’s shortcomings. Slow transaction speeds made conducting business on the blockchain laborious, frequent congestion led to frustrating delays, and soaring gas fees imposed substantial financial burdens on users.
In response to these challenges, a multitude of Layer 2 crypto projects emerged, providing a diverse range of strategies to boost Ethereum’s efficiency. These solutions employ various techniques, including sidechains, state channels, and rollups, to offload transactions from the main Ethereum network.
By doing so, Layer 2 crypto projects can process transactions at a faster rate and significantly reduce the associated fees, making decentralized applications more accessible and cost-effective for users.
Top 5 Layer 2 crypto projects in 2023
zkSync Era
zkSync Era is an upgraded version of zkSync Lite and was launched on the mainnet on March 24, 2023. The project is a layer 2 solution that utilizes Zk Rollups technology to increase transaction speed and enhance network security.
This project is a product of Matter Labs, a blockchain company primarily focused on layer 2 technologies with a focus on zkSync. Furthermore, Matter Labs has raised $458 million in funding from major investors such as Dragonfly Capital, a16z, Blockchain Capital, and more. With such strong financial backing, Matter Labs has the ability to lead the Zk Rollups technology trend with the zkSync Era.
Mission and vision
The Future Proof: zkEVM
Since zkEVM and Ethereum are compatible, current Ethereum dApps may quickly switch to zkEVM for increased performance and scalability without sacrificing security or decentralization.
Scalability Beyond Limits
As the demand for Web3 applications surges, the need for blockchains to scale seamlessly, akin to the internet, becomes apparent. This concept, termed “hyperscalability,” is the zkSync Era’s ultimate goal. It aims to process an unlimited number of transactions without compromising security or incurring exorbitant costs, paving the way for a more efficient and accessible decentralized ecosystem.
Unparalleled Security
ZK-rollups, like the one employed by Era, are unique in their ability to inherit 100% of Ethereum’s security. However, zkSync Era goes above and beyond in its commitment to practical security, striving to become the most secure Layer 2 solution in operation. This dedication ensures that user assets and data remain safeguarded, bolstering trust in the system.
Revolutionizing User Experience
While scalability and security are paramount, user experience (UX) is equally critical in driving the mass adoption of Web3 technologies. zkSync Era sets out to revolutionize UX by combining self-custody with an intuitive, delightful, and security-enhancing interface. This user-centric approach aims to simplify interactions with blockchain technology, making it more accessible to a broader audience.
A Growing Ecosystem
zkSync Era has garnered substantial interest from the blockchain community, with over 200 projects, including industry giants like Chainlink, SushiSwap, Uniswap, Aave, Argent, 1inch, Gnosis, and Curve, expressing their intent to deploy on the platform. This collective effort represents a significant step forward in pushing the boundaries of what is possible in the world of decentralized applications.
Highilights
zkSync is the first Layer 2 zkEVM built on the Ethereum Mainnet network, which offers significantly faster speeds compared to other Layer 2 crypto projects using Optimistic Rollup technology.
The zkSync Era ecosystem is currently one of the fastest-growing ecosystems, with a TVL reaching over $700 million in just half a year. Currently, zkSync Era has nearly 5 million wallet addresses with over 30.58 million transactions. This is a significant number of users for a blockchain that has been on the mainnet for only 6 months.
Arbitrum
Arbitrum is a layer 2 solution built to enhance the capabilities of Ethereum smart contracts, increasing their speed and scalability while adding additional privacy features.
Mission and vision
Arbitrum was created with Ethereum compatibility as a top priority, so the experience is almost identical to using Ethereum, with the important exception of being much faster and cheaper.
Highilights
Arbitrum currently ranks as the number-one largest compilation in terms of total value locked, with a growing number of prominent DeFi protocols deployed on the network.
The project provides an extension solution within the Rollup model. The main difference of Arbitrum lies in the operation of Fraud Proofs.
When challenged validators believe another validator has improperly or illegally put together an incoming batch of transactions into the following block, they submit fraud evidence.
Arbitrum also utilizes a multi-round rollup protocol to address disputes, where it will break down the dispute into smaller ones until it becomes a very small dispute, and then resolve it on-chain.
Optimism
Optimism is an extension solution on Ethereum aimed at reducing gas fees and increasing transaction completion speed, thereby providing a smoother experience for users while still maintaining security from the original Ethereum chain. Optimism belongs to the Optimistic Rollup field, utilizing the fraud-proof security mechanism.
In simple terms, user transactions are considered valid and approved if they cannot be proven fraudulent.
Mission and vision
OP Mainnet, a blockchain network with a unique vision, goes beyond traditional blockchain functions. It stands as an experiment in sustainable ecosystem funding, driven by protocol-generated revenue. At its core, OP Mainnet embraces the concept of Retroactive Public Goods Funding, a straightforward and innovative approach: if you contribute to the public good, you become eligible to receive a grant.
Highilights
- Transaction experience: With fast processing speed, the gas fee is currently reduced by 88 times compared to gas on the current Ethereum.
- Convenient for scalability and deployment of DApps: Fully supports EVM, Ethereum DApps, or dApps in compatible EVM ecosystems and can be run on layer 2 with just a few lines of code.
- Security: Optimism inherits the strict security level of Layer 1 Ethereum.
StarkNet
StarkNet is an Layer 2 project that utilizes Zk Rollup technology, built and developed on Ethereum. StarkNet enables dApps to operate, function, and scale limitlessly without compromising Ethereum’s composability while also benefiting from additional security.
Its smart contracts and operating system are written in the Cairo programming language, which supports the deployment and scalability of any use case and is not limited by any business logic.
Mission and vision
In the ever-evolving landscape of blockchain innovation, Starknet shines as a Validity Rollup Layer 2 solution that promises to reshape the Ethereum ecosystem. Offering high throughput, reduced gas costs, and upholding the same rigorous security standards as Ethereum Layer 1, Starknet brings efficiency and scalability to the forefront.
In this approach, each computation of a solution becomes a one-time event, eliminating the need for replication by society and significantly reducing computational overhead.
Highilights
With StarkNet, developers may create and launch their own apps. Users may engage with StarkNet just as they would with Ethereum by sending transactions to be carried out.
All StarkNet transactions will be batch-processed, and the legitimacy of each transaction will be established using STARK proofs before being validated on Ethereum. StarkNet will greatly scale Ethereum since the computing effort needed to validate STARK proofs is exponentially lower than the computational effort that has been shown.
Only legitimate state transitions are recognized on Ethereum since all transactions on StarkNet are STARK-proven. A complete set of on-chain data will be made available in order to completely reconstruct the StarkNet state. A StarkNet node may be operated by anybody. StarkNet will become as safe and permissionless as Ethereum thanks to these characteristics.
Polygon
Initially, Matic Network was created to address the congestion and high transaction fees of Ethereum. Currently, they are one of the largest projects in the market with the most well-known product being Polygon PoS – a Layer 1 blockchain with a peak Total Value Locked (TVL) of $9 billion. Building on this momentum, Matic Network has rebranded as Polygon.
Polygon is a project developing scaling solutions and infrastructure. To date, Polygon has 5 main products operating in various areas to drive the development of the DeFi market.
Mission and vision
- Vision for Polygon is simple: to build the Value Layer of the Internet.
- The Internet allows anyone to create and exchange information. The Value Layer allows anyone to create, exchange, and program value.
- Enter Polygon 2.0: a blueprint to build the ultimate Value Layer.
Polygon 2.0 is a set of upgrades that radically reimagine almost every aspect of Polygon, from protocol architecture to tokenomics to governance.
It is a roadmap for how Polygon will become the Value Layer, offering unlimited scalability and unified liquidity via ZK tech.
Highilights
- Polygon is currently a leading team capable of connecting the traditional market with major partners in the Crypto market.
- The network can be considered the most successful IEO project of Binance and one of the few projects that has continued to develop from 2017 until now.
- Polygon PoS is one of the chains with extremely low transaction fees, similar to Solana.
- The dynamic Polygon team always updates new market trends to develop, such as NFT, Gaming, ZK, App-chain…
Conclusion
Solutions like zkSync Era, Arbitrum, Polygon, Optimism, and StarkNet have stepped into the spotlight, offering compelling advancements that hold the potential to drive long-term growth and adoption across the blockchain landscape.
The growth and adoption of these Layer 2 crypto projects have the potential to redefine the blockchain landscape as a whole. As they address key challenges related to scalability, cost-efficiency, and user experience, they lay the foundation for a more accessible and sustainable blockchain ecosystem. They represent a collective effort to push the boundaries of what is possible in the world of decentralized applications and blockchain technology.
DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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