The Layer 2 season is approaching, a look at the progress of seed projects like Optimism and Arbitrum

Original Title: "The Ethereum Layer 2 Season May Be Coming, Understanding the Progress of Seed Projects in One Article"
Written by: Overnight Porridge, 8btc

The hot topic of the "metaverse" has led to a persistent "fever" for NFT avatars recently. Almost every day, we observe the issuance of 1-2 "generative art" NFT projects on the "ETH Burn Ranking." The short-term gas prices exceeding 2000+ Gwei caused by this fervor mean that the release of a single NFT project can burn millions of dollars worth of ETH in user value, undoubtedly resulting in significant waste.

Reality tells us that the application of EIP-1559 does not lower Ethereum's transaction costs; its purpose is merely to burn ETH, providing momentum for the meme of Ultra Sound Money.

Before us lies the continuous boom of NFT markets like Opensea and CryptoPunks on one side, and the watchful eyes of new public chain forces like Solana, Terra, and Avalanche on the other. So, at this moment, is Ethereum, the king of public chains, in a state of panic or not?

To answer this question, we need to understand the recent progress of numerous Ethereum (Rollup) Layer 2 projects, which are seen by Vitalik as the solution for Ethereum to achieve scalability (i.e., reduce transaction fees) in the medium to short term.

In this article, we will quickly review the situations of several highly anticipated Rollup Layer 2 networks: Arbitrum (Offchain Labs), Optimism, ZkSync (Matter Labs), Loopring, and StarkWare (dydx, deversifi, Immutable X).

Optimism Opens New Gateway Interface and Improves User Experience

As one of the most well-known Optimistic Rollups teams, Optimism recently released a new gateway interface that allows users to transfer any token from the Ethereum mainnet to the Optimism Layer 2 network and vice versa. In the previous version, Optimism only allowed the transfer of a limited number of tokens.

Additionally, a developer from Rari Capital, t11s, launched a new project called Nova, which is a trustless contract call relay deployed on Optimism and the Ethereum mainnet, currently limited to approved projects. By using Nova, users can conduct Uniswap DEX trades, NFT transactions, and utilize Aave lending services on the Ethereum mainnet while enjoying the benefits of L2. Here are the specific principles involved with Nova:

“To interact with L1, contracts/users on L2 submit a 'request' to the Nova 'registry,' which contains all the data needed for contract calls on L1.”

“Users prepay the gas fee for each call on L2, and then the Nova 'relayer' (an off-chain bot) competes to relay the request on L1.”

“The request is relayed through the Nova contract on L1, and when the request is relayed on L1, the contract sends a message to L2 notifying it that a specific request has been executed. Once the message reaches L2, the relayer will receive the gas cost for relaying the request.”

“Users can also attach tokens to a request. The relayer uses its own tokens to execute the request on L1 and refunds on L2, which makes actions like depositing into L1 lending markets, trading on L1 AMMs, and purchasing NFTs possible.”

For early users of the Optimism Layer 2 network, the 7-day withdrawal waiting period experience has been very poor, which undoubtedly poses the biggest obstacle for Optimism on the road to mass adoption. Recently, the emergence of Hop Protocol allows users to quickly withdraw USDC and USDT from Optimism to the Ethereum mainnet, avoiding the 7-day optimistic rollup withdrawal wait time.

Arbitrum May Launch Mainnet by the End of This Month

Arbitrum, another highly anticipated Optimistic Rollup Layer 2 project, launched a beta version mainnet for developers in May this year. So far, mainstream DeFi projects such as Aave, Curve, MakerDAO, Uniswap, and Perpetual Protocol, as well as centralized exchanges like Huobi and OKex, have announced their integration with the Arbitrum Layer 2 network. According to statistics, the number of projects supporting the Arbitrum Layer 2 network has exceeded 400, temporarily leading the Ethereum Layer 2 race.

Excitingly, Ed Felten, co-founder of Offchain Labs, recently revealed that the Arbitrum mainnet will officially launch at 11:59:59 PM Eastern Time on August 31!

In this regard, Larry Cermak, research director at The Block, believes that even after Arbitrum launches and opens to any Dapp, it will still face infrastructure challenges for a long time. In his view, the initial phase of Arbitrum may not be very smooth (especially for newcomers).

I personally agree with this view, especially since Arbitrum officials previously stated that they would not issue tokens. In the absence of incentives, participants willing to migrate liquidity to the Arbitrum Layer 2 network may be relatively few. Of course, there is also the possibility that Arbitrum may change its mind later.

zkSync 2.0 is About to Welcome Public Testnet

Developed by Matter Labs, zkSync 2.0 claims to possess the security, high throughput, and efficiency of ZK Rollup (ZKR), while also being EVM compatible, making it regarded as the best Ethereum scaling solution. So far, projects such as Gitcoin, Argent, and Index Coop have chosen the zkSync solution as their scaling option.

According to Alex G, co-founder of Matter Labs, designing and implementing zkEVM is indeed a very challenging project. In their upcoming public testnet, they have implemented a compiler-based zkEVM, while other zkEVM efforts seem to focus on native execution of EVM bytecode, which is an order of magnitude more complex. Therefore, he estimates that the implementation of a native zkEVM will take several years longer than the compiler approach, and it may even be unachievable…

The progress of zkSync 2.0 has indeed been a bit slow, but that does not prevent zkSync from being a project worth interacting with. The reason? Everyone understands.

Loopring Supports NFT Minting, Trading, and Transfer Operations

As one of the earliest Ethereum Layer 2 networks to implement zkRollup solutions, Loopring has recently experienced a new wave of growth due to its support for NFT minting, trading, and transfer functions.

According to Loopring founder Daniel Wang, any NFT minted on the Loopring zkRollup Layer 2 network can be extracted to the Ethereum mainnet, and vice versa.

Additionally, he mentioned that Loopring is exploring potential partnerships to help expand its ecosystem.

StarkWare Seizes the Heights of Derivatives and NFT Games

The financing giant StarkWare (which has raised a total of $111 million to date) has provided foundational services for dydx, deversifi, and Immutable X. Recently, dydx and Immutable X have demonstrated strong competitiveness in the derivatives and NFT gaming fields, respectively.

Note: The rapid explosion of dydx is largely related to its recently launched trading mining incentive measures.

At the end of July this year, after the launch of StarkEx version 3.0 on the mainnet, it enabled DeFi Pooling and dAMM functions. DeFi Pooling is akin to a "Pinduoduo"-style integration feature that allows retail investors to participate in L1 network DeFi strategies at low costs, while the latter, dAMM, allows ZK-Rollup-based L2 scaling solutions (such as DeversiFi, Loopring, etc.) to asynchronously share liquidity, alleviating the liquidity fragmentation issues caused by different L2 scaling solutions.

According to StarkWare CEO Uri Kolodny, the number of transactions processed by the StarkEx Layer 2 network reached 944,000 last week, an increase of nearly 50% compared to two weeks ago.

Summary

Whether it is Arbitrum, Optimism, ZkSync, Loopring, or StarkWare, they have all made considerable progress; however, they have yet to welcome their own shining moments, which may not be far off.

NFT Summer is underway, and Layer 2 Autumn is about to arrive.