Blockchain layers are the inevitable results of the shortcomings of legacy blockchains, or Layer 1 platforms as they’ve come to be recognized. Layer 2 platforms have been a sizzling property within the sector ever for the reason that Ethereum Basis started embracing the idea as a concrete resolution to Ethereum’s ongoing scalability challenges. During the last 12 months, specifically, as curiosity within the crypto ecosystem has resurged, the Layer 2 panorama has grown quickly, with complete worth locked growing to an all-time peak of round $50 billion in June. Though the current market pullback has invariably dragged that determine down, consumer exercise underscores the general trajectory of progress.
One noticeable function is the distribution of worth and utility throughout the L2 ecosystem, which is coming to mirror that of the broader cryptosphere. Common-purpose platforms resembling Arbitrum One, Base, and OP Mainnet are carrying the vast majority of visitors, equally to how BTC, ETH, and USDT dominate the crypto rating tables. Nevertheless, application- or use-case-specific blockchains resembling gaming-focused Immutable X and Sorare are additionally contributing to the variety and catering to a big selection of consumer and developer wants.
Sanket Shah, VP Development& BizDev at Polygon – an authentic pioneer of the complete L2 idea since manner again in 2017 – not too long ago shared another excuse why software or utility-specific chains could also be holding their very own so properly towards general-purpose opponents:
“Differentiation is a serious precedence for a lot of Layer 2s as a result of utilizing one can include trade-offs, and the most effective a part of co-existing is having a differentiated blockchain area. In different phrases, it is all about discovering the correct utility for the L2.”
So, whereas concentrating on a phase as “the blockchain for players” or “the blockchain for funds” is one solution to stand out, L2 platforms are additionally differentiating themselves on particular options, resembling Aztec Community and its ZK-enabled privateness.
Nevertheless, he cautions towards the dangers of differentiating too far:
“A multilayered ecosystem can develop into fragmented, which inhibits cross-chain communication. The danger of getting too many Layer 2s that may’t interact with each other is that they develop into siloed, and the top result’s that they’ll merely fail to ship on their potential.”
Polygon has had a while to contemplate this problem. Its Chain Growth Package (CDK) resolution offers builders with a standardized stack for constructing sovereign, zk-enabled Layer 2s that may simply work together with each other.
Then there’s the most recent stage on the stack – Layer 3s, taking specificity a step additional. Layer 3s sometimes function as a utility-specific platform that introduces a function resembling interoperability or customizations not accessible on the 2 decrease layers. One instance is Orbs, which operates as a decentralized, serverless cloud for the deployment of good contracts, which integrates with a number of Layer 1 and a couple of platforms for underlying safety.
Layer 1 – Nonetheless within the Recreation
What does all this upper-layer improvement imply for the established group of Layer 1 platforms that don’t essentially share Ethereum’s want for a Layer 2 ecosystem?
Nicely, a rising tide lifts all ships, it appears. Removed from drawing exercise away from present L1s, the proliferation of Layer 2 and three platforms seems to be having the other impact on progress and improvement. As Luigi D’Onorio DeMeo, COO at Ava Labs (developer of the Avalanche blockchain), factors out:
“There are several types of Layer 1 blockchains out there. Monolithic chains resembling Solana intention to extend the capability and throughput of a single chain. Different ecosystems, resembling Avalanche are constructing an interoperable community of L1s which are tied collectively by a standard communication protocol. As well as, they pursue scaling the capability and throughput of a single chain.”
These methods are yielding outcomes. In June, Solana introduced the launch of ZK compression of blockchain information immediately on its Layer 1, introducing enhanced scalability.
In the meantime, Avalanche’s give attention to growing its ecosystem and community has additionally been paying off. The Californian Division of Motor Autos not too long ago put 42 million car information on-chain utilizing Avalanche as a part of its ongoing efforts to scale back fraud and streamline the car switch course of. Cosmos, one other multi-chain L1, not too long ago welcomed Router, a platform centered on chain abstraction, into its fold. Chain abstraction is designed to resolve a really actual UX problem –{that a} multi-chain ecosystem can rapidly develop into too darn difficult.
Complexity however, the emergence of an L2 ecosystem has confirmed to be a worthy addition to the blockchain sphere. It offers much-needed options for Ethereum customers, creating the aggressive crucial for additional improvement of established L1s whereas supporting the general progress of the ecosystem.