What if Level 2 is the next turning point in cryptography? Some signs do not deceive.
The mysterious Redditor may have made a very accurate prediction of the next major development in the blockchain world. This could focus on layer 2 solutions and mainly Ethereum.
What if Level 2 is the next turning point in cryptography?
The May 22 post in question explains that “we are at a crossroads” as the industry shifts from L1 blockchains to L2 solutions that are “right here, more secure and decentralized than L1 alternatives and designed to use money. ” on neutral platforms. L2 adoption is happening right now, albeit slowly and unsustainably. Behind the scenes, L2 improves reliability, reduces costs and increases availability. L2 is still in development, it keeps getting better and better and it’s fantastic.”
The L2 scaling solution takes advantage of the security of the L1 chain like Ethereum and reduces the traffic on it by grouping a number of transactions into a single batch that can be decided immediately.
Other L1 channels, such as Solana, which offer relatively cheap and fast transactions, are popular with users who don’t like high fees. A Solana (SOL) transaction costs an average of $0.0025, while an Ether (ETH) transaction costs around $1.30. Despite great disparity, demand for Ethereum blockspaces remains largely dominant, with TVL at $73.89 billion, compared to “only”$4.24 billion for Solana, according to dedicated tracker DefiLlama. In addition, Solana has been suffering from serious reliability issues of late.
Some signs don’t deceive
At the time of this writing, Arbitrum is the largest L2 on Ethereum with a TVL of $2.65 billion, according to L2beat. The entire L2 Ethereum ecosystem represents a $4.77 billion TVL. These numbers could rise sharply if this trend away from L1 in favor of L2 continues.
Several large decentralized applications (DApps) are already deployed on L2. Decentralized Exchange (DEX) SushiSwap and Cruve are on Arbitrum. The Synthetix protocol and DEX Uniswap are optimistic. The Optimism airdrop, due out soon, could be the start of a user transition to L2. And this may be due to the same reasons that attracted users to Ethereum-based DeFi protocols and the Ethereum Virtual Machine (EVM). Optimism is L2 with $474 million in TVL. EVM chains are compatible with Ethereum tokens such as Binance Chain (BNB), Polygon (MATIC), and Fantom (FTM).
After all, if there is a real increase in L2 usage and utility, L1 Ethereum will see a natural increase in usage, which could solidify Ethereum in its leading position in the industry.