Overview of the progress and ecosystem of 7 Layer 2 scaling projects in 2021

Organizer: Nianqing, Chain Catcher

2021 was a year of rapid development for the Layer 2 ecosystem. Chain Catcher reviewed the major progress and development status of seven key projects in 2021, including Arbitrum, Starkware, Optimism, zkSync, Metis, Boba Network, and Aztec.

1. Arbitrum

Arbitrum was originally an academic scaling project at Princeton University, built by a world-class team of researchers, engineers, and Ethereum enthusiasts known as Offchain Labs, and launched its testnet in October 2020. Arbitrum addresses the blockchain trilemma: scalability, decentralization, and security. Arbitrum rollup has the capability to scale Ethereum without compromising the decentralization and security of the mainnet, and is also the most EVM-compatible solution.

Currently, mainstream projects such as Aave, Curve, MakerDAO, Chainlink, MCDEX, Uniswap V3, WePiggy, Sushi swap, and SynFutures have all deployed on Arbitrum. According to L2BEAT data, as of January 6, the total locked value on Ethereum Layer 2 has reached $6 billion, with Arbitrum having the highest locked value among scaling solutions at $2.74 billion, accounting for 46.8%.

Currently, projects focusing on Arbitrum include GMX, Dopex, Tracer, Premia, Umami Finance, Swapr, and Cap, all with locked values exceeding $20 million.

Major Progress:

On May 28, 2021, Arbitrum opened the mainnet beta version Arbitrum One to developers.

At the end of August 2021, Arbitrum developer Offchain Labs announced the completion of a $120 million Series B financing at a valuation of $1.2 billion, led by Lightspeed Venture Partners, with participation from Polychain Capital, Ribbit Capital, Redpoint Ventures, Pantera Capital, Alameda Research, and Mark Cuban.

On September 1, 2021, Offchain Labs announced the official launch of the Arbitrum mainnet, removing the whitelist mechanism and opening all projects to users, while also publishing asset bridging tutorials. Additionally, Arbitrum launched a $1 million bug bounty program on the Immunefi platform, primarily aimed at rewarding the discovery of vulnerabilities at the smart contract level.

In October 2021, Arbitrum's permissionless token bridging feature was opened to all projects. The default bridging contract type is standard ERC-20, supporting basic ERC20 functionality and transferability on both L1 and L2; it also supports custom ERC-20, allowing project teams or individuals to deploy governance, snapshot, and other features for ERC20 tokens.

In October 2021, Arbitrum announced the upcoming release of the next version of Arbitrum One, Arbitrum Nitro, which is more compatible with EVM and is expected to be an order of magnitude faster than the current technology. The team anticipates that the execution speed of Layer 2 will increase by 20 to 50 times after Arbitrum Nitro goes live, with costs decreasing.

2. StarkWare

StarkWare was founded in 2018 and is an L2 scaling solution based on STARK and ZK-rollups technology, aimed at providing secure, trustless, and scalable operations for blockchain applications. Currently, StarkWare's total TVL has reached $1.21 billion, with important protocols such as dYdX, Sorare, DeversiFi, Immutable X, and Celer Network deployed on StarkWare. No tokens have been issued yet.

Major Progress:

In March 2021, Starkware completed a $75 million financing round led by Paradigm, with participation from Sequoia, Founders Fund, Pantera, Three Arrows, and Alameda Research.

In November 2021, StarkWare raised $50 million in a Series C financing round, with a valuation of $2 billion. This round was led by Sequoia Capital, with other investors including Paradigm, Three Arrows Capital, Alameda Research, IOSG Ventures, and Founders Fund.

At the end of November 2021, StarkWare launched the StarkNet Alpha mainnet based on the ZK Rollup concept, supporting composability with other StarkNet contracts and L1 contracts through L1<>L2 messaging.

In December 2021, StarkWare proposed a Layer 3 solution.

3. Optimism

Optimism uses the Optimistic Rollup solution, which more easily supports general-purpose smart contracts, allowing some of the current popular DeFi projects to migrate to Layer 2 seamlessly and faster. By running computations off-chain, Optimism can reduce Ethereum gas fees by 10,000% or more and increase throughput by 200 times.

Currently, major projects in the Optimism ecosystem include Synthetix, Lyra, Uniswap, and Perpetual Protocol.

Major Progress:

In January 2021, the testnet based on the Ethereum mainnet was launched, with deep participation from Uniswap, Compound, and synthetic asset Synthetix.

In February 2021, Optimism completed a $25 million Series A financing round led by a16z.

In August 2021, Optimism supported the US dollar stablecoin USDC, allowing users to choose USDC for deposits on the Optimism Gateway.

In September 2021, Optimism doubled the throughput limit of the mainnet. Before starting to restrict higher gas prices, it could handle up to 200,000 transactions per day.

In November 2021, Optimism completed an EVM (Ethereum Virtual Machine) equivalence upgrade, merging OVM2.0 changes into its main branch.

In December 2021, Optimism removed the whitelist and fully opened deployment permissions for applications.

4. zkSync

zkSync is an L2 scaling solution developed by Matter Labs, using ZK-Rollup technology to process transactions on the Ethereum blockchain while maintaining its security. The gas fees on zkSync are equivalent to 1% of Ethereum gas, making it cheaper than using Optimistic Rollup, with over 2000 transactions per second (tps), compared to 14 tps on Ethereum. Additionally, assets can be moved back to L1 at any time.

Major Events in 2021:

In May 2021, zkSync launched the zkSync 1.x testnet, supporting NFT and exchange functionalities.

In June 2021, zkSync 2.0 launched the Alpha version of the zkEVM testnet, allowing users to view activities on zkSync 2.0 using a block explorer.

In August 2021, Matter Labs announced a delay in the launch of zkSync 2.0.

In November 2021, the zkSync development team, Matter Labs, completed a $50 million financing round led by a16z, with participation from Placeholder, Dragonfly, 1kx, Blockchain.com, Crypto.com, Consensys, ByBit, OKEx, Alchemy, and Covalent.

From November to December 2021, the zkSync development team, Matter Labs, successively reached cooperation agreements with OKEx, Huobi, and Banxa to provide fiat on-ramps and off-ramps for the project.

5. Metis

Metis is a Layer 2 + DAO foundational protocol that adopts the Optimistic Rollup technology route. It launched its Alpha testnet in April this year and its mainnet in November, currently with a TVL of nearly $270 million.

The main project in the Metis ecosystem is the decentralized trading platform Netswap, which currently has a total TVL of over $85 million.

Major Progress:

In March 2021, Metis completed a Series A financing round, with investors including OK Block Dream Fund, ConsensusLab, YBB Foundation, and Gate.io.

In November 2021, Metis announced the launch of a $100 million ecological fund in partnership with partners, allocated to projects in vertical fields such as DeFi, gaming, and DAOs.

In December 2021, Metis successively partnered with cross-chain bridges such as Poly Network and cBridge to support users in transferring assets from other networks to the Metis network.

6. Boba Network (BOBA)

Boba is a next-generation Ethereum Layer 2 Optimistic Rollup scaling solution that reduces gas fees, increases transaction throughput, and expands the capabilities of smart contracts. It was built by the Enya team, which is the core team of the OMG Foundation, and was renamed from OMGX Network. Boba provides fast exits supported by community-driven liquidity pools, shortening the Optimistic Rollup exit period from 7 days to just a few minutes.

Currently, Boba's TVL is approximately $420 million, with the main ecological project being the decentralized exchange OolongSwap.

Major Progress:

In August 2021, Enya, the developer of decentralized infrastructure solutions, launched the mainnet test version of Boba Network.

In September 2021, the Boba mainnet went live, and the OMG Foundation launched a new governance token BOBA for the network.

In October 2021, the Boba Network mainnet launched the OVM 2.0 version, allowing developers to deploy contracts from Ethereum Layer 1 on the Boba Network without modification.

In December 2021, the cross-chain network cBridge supported Boba Network.

7. Aztec

Aztec is currently a Layer 2 solution in the Ethereum ecosystem that particularly focuses on privacy issues, aiming to bring scalability and privacy to Ethereum, and is dedicated to achieving affordable private crypto payments through zero-knowledge proofs. Currently, Aztec's TVL is $8.66 million.

Major Progress:

In March 2021, Aztec officially launched Aztec 2.0 Rollup on the mainnet, enabling privacy Rollup services for ETH and a block explorer.

In December 2021, Aztec Connect, a private bridging solution for Ethereum DeFi, went live on the testnet, potentially saving up to 100 times on gas and enabling fully private transactions by default.

In December 2021, Aztec Network completed a $17 million Series A financing round led by Paradigm.