Is Kraken Planning to Build a Layer 2 Protocol?
Cryptocurrency exchanges faced difficulties during the bear market, with some collapsing and others resorting to layoffs. Regulatory crackdowns also impacted the industry, prompting major exchanges to diversify their businesses.
Kraken Layer 2 Plans
Kraken is currently hiring a senior cryptography engineer for a position involving the design and implementation of Layer 2 solutions. This has led to speculation that Kraken is planning to build its own Layer 2 protocol. Reports suggest that Kraken may utilize the technology of Polygon, Matter Labs, and Nil Foundation for its Layer 2 network.
A Layer 2 protocol operates on top of a blockchain protocol, enhancing scalability and efficiency. Kraken has been contacted for confirmation but has not responded yet.
Following in Coinbase’s Footsteps
Coinbase, another centralized crypto exchange, launched its own Layer 2 solution called Base network in February. Since its mainnet launch, Base has experienced significant growth and currently ranks as the third largest Layer 2 protocol based on total value locked (TVL), with $294.08 million locked as of writing.
However, Base has faced challenges such as network outages and rug pulls.
Hot Take: Kraken’s Move Towards Layer 2
With the potential development of a Layer 2 protocol, Kraken is following in the footsteps of its competitor Coinbase. By embracing Layer 2 solutions, these exchanges aim to enhance scalability and efficiency in their operations. While Coinbase’s Base network has seen success, it has also encountered challenges along the way. It remains to be seen how Kraken’s Layer 2 plans will unfold and whether they will face similar obstacles. As the crypto industry continues to evolve, exchanges must adapt to changing market conditions and explore innovative solutions to stay competitive.
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