Finding Value in Crypto Layer 2 Networks
As a crypto enthusiast, you are always looking for the latest trends and developments in the world of blockchain technology. One area that has been gaining a lot of attention recently is Layer 2 networks on Ethereum. These networks offer scalability solutions that can help improve the efficiency and speed of transactions on the Ethereum network. In this article, we will explore some of the most successful Layer 2 networks on Ethereum and how they are finding value in the wake of the recent EIP-1559 upgrade.
The Rise of Rollups
One of the key innovations in the world of Layer 2 networks is the rise of rollups. These are a type of technology that allows for more efficient processing of transactions off-chain, before settling them on the Ethereum mainnet. There are two main types of rollups: optimistic rollups, which rely on fraud proofs to ensure the validity of transactions, and ZK rollups, which use zero-knowledge proofs for the same purpose.
- Optimistic rollups
- Major optimistic rollups have switched to using blobs to store data on the mainnet
- Big three optimistic rollups have made this conversion
- Popular ZK rollups like zkSync Era and Starknet have also moved to blobs
- ZK rollups
- Scroll is a ZK rollup that recently announced plans to support blob data
- Scroll was slow to convert to blobs
- Scroll is now the rollup with the most expensive data publishing costs
The Case of Scroll
Scroll is one of the larger players in the ZK rollup space, ranking fifth in Total Value Locked (TVL) and third in daily activity. However, the network was not as popular overall in the scaling network space until recently. In April, Scroll announced plans to support blob data with its Bernoulli upgrade, scheduled to go live on the mainnet on April 29. Despite this update, Scroll has now become the rollup with the most expensive data publishing costs.
- Increased spending
- Less than 10% of fees across rollups in February
- Now accounts for roughly 50% of fees
- Spent 837.6 ETH in April on data publishing, compared to 820 ETH spent by all other rollups combined
- Popularity surge
- Scroll spending peaked at 2,510 ETH in March
- Record number of transactions in March
- Continuous growth despite high data publishing costs
Future Outlook
Despite being the network with the highest data publishing costs, Scroll’s recent growth and popularity are evident. The upcoming Bernoulli upgrade is expected to improve efficiency and reduce costs, making Scroll a more competitive player in the Layer 2 space. As more Layer 2 networks adapt to using blobs for data storage, the overall ecosystem is expected to become more efficient and cost-effective for users.
Hot Take: Navigating the Layer 2 Landscape
As a crypto enthusiast, staying informed about the latest developments in Layer 2 networks is crucial for navigating the ever-evolving crypto landscape. Understanding the implications of technologies like rollups and the shift to blob data storage can help you make informed decisions about your crypto investments and transactions. Keep an eye on emerging trends and updates in the Layer 2 space to stay ahead of the curve and maximize your crypto portfolio’s potential.
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