Government Abstract
Ethereum had a breakout 12 months in 2021. It’s native asset, ETH’s, market capitalization surpassed $500 billion for the primary time. Its community facilitated upwards of $7 trillion worth switch. Non-fungible tokens (NFTs) emerged as one other “killer utility” which have put its know-how on the worldwide stage and caught the eye of the plenty.
All-time excessive ranges of engagement are pushing Ethereum to its scaling restrict. Excessive transaction charges clearly showcase its scalability challenges. Particular person transactions that used to price within the cents now routinely price tens or lots of of {dollars}. Customers paid ~$10 billion in mixture transaction charges on the Ethereum community in 2021.
Basic-purpose scaling applied sciences are wanted – badly. Various layer-1 platforms, sidechains, and layer-2 networks are all taking totally different approaches to extend blockchain scalability with totally different tradeoffs. This report focuses on layer-2 rollups which purpose to carry scaling beneficial properties whereas inheriting Ethereum’s base layer safety to the utmost extent.
Layer-2 rollups are at an inflection level when it comes to adoption. Many rollup networks had been deployed in manufacturing environments in simply the previous few months. They nonetheless have comparatively low ranges of adoption in comparison with different layer-1 networks and sidechains. However a number of knowledge sequence on this report spotlight indicators of early product market match.
Layer-2 scaling options are surrounded by technical jargon. This report introduces a easy evaluation framework for evaluating and contrasting them. It evaluates six totally different layer-2 networks in depth and profiles their associated organizations, outlines how they’re technically designed, analyzes their on-chain and ecosystem knowledge, and identifies challenges and catalysts for his or her adoption.
Layer-2 improvement organizations are effectively positioned to bolster ecosystem development. Practically $1.3 billion of enterprise capital has poured into these organizations within the final ~18 months. Growth organizations have ample funding to spend money on their core protocol know-how and incentivize developer and consumer adoption.
Layer-2 incentive applications seem like on the way in which. There may be wide-ranging consensus that many layer-2 networks will launch native tokens. Nevertheless, it stays unclear when they may accomplish that. This report briefly examines the use instances of layer-2 tokens which might be presently in circulation and identifies a number of elements that make the launch of further layer-2 native tokens probably.
Notice: Shortly previous to the publication of this report, Optimism introduced plans to launch a local token (OP) by means of a retroactive airdrop – the small print of which aren’t included within the report. Extra data relating to the airdrop could be discovered within the challenge’s associated weblog submit right here.
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