Kraken's Potential Launch of Layer-2 Blockchain Technology

Choosing the Right Developer

The Kraken team is reportedly in discussions with blockchain developers Polygon, Matter Labs, and the Nil Foundation for a layer-2 blockchain network. This follows Coinbase’s successful launch of its own layer-2 blockchain, Base.

Kraken is carefully considering which developer to choose, with the project still shrouded in secrecy. Anonymous sources have revealed that talks are ongoing, and no official announcement has been made yet.

No Confirmation, Only Clues

When asked for a comment, Kraken did not provide specific details. However, a spokesperson stated that they are always looking for new industry challenges and opportunities. A job listing on their website seeking a “Senior Cryptography Engineer” further suggests their interest in layer-2 solutions.

Layer-2 Technologies: Optimistic vs. ZK

In August, Coinbase introduced its own layer-2 network, Base, built on the OP Stack by OP Labs. It quickly gained market share and boasts $574 million in total value locked. Optimism, Arbitrum, and Base employ Optimistic Rollup technology to scale Ethereum by processing transactions off-chain in batches.

In contrast, existing layer-2 solutions from Polygon, Matter Labs, and Nil Foundation are based on zero-knowledge (ZK) proof solutions. These also aim to scale Ethereum but rely on validity proofs for individual transactions.

Kraken’s Potential Direction

While it remains uncertain which layer-2 network Kraken will ultimately choose, it is likely to be based on ZK technology if they proceed with the firms under consideration. ZK Rollups offer certain advantages due to their EVM compatibility and faster transaction processing without waiting periods.

Ethereum co-founder Vitalik Buterin also expressed a preference for ZK Rollups over Optimistic Rollups due to their basic advantages.

Hot Take: The Future of Layer-2 Networks

As competition between crypto exchanges intensifies, Kraken’s choice of developer and technology will play a crucial role in determining the success of a possible layer-2 network.