With the anticipated Ethereum Cancun upgrade in Q1 2024, featuring the EIP-4844 update – or Cancun – promises to significantly reduce fees for Ethereum Layer-2 solutions. It will introduce a groundbreaking concept known as proto-dank sharding, aimed at significantly reducing costs associated with Roll-Ups. Thus, it’s time to take a closer look at Layer-2 protocols.
In today’s article, we discuss 4 leading L2 protocols and evaluate them based on their long-term viability from a fundamental standpoint and their potential in future scalability. As we continue to consider a longer-term scenario, current Layer-2 solutions seem not to fully address the issue, as seen during the network congestion in the Arbitrum airdrop process.
Therefore, the vision of Layer-2 projects is to find new solutions to overcome this. After careful consideration, we have selected Optimism, Arbitrum, zkSync, and Polygon as they are all built to cater to billions of users, such as Optimism’s OP Stack, Arbitrum’s Orbit, etc.
Optimism
Optimism is a frontrunner in the Layer-2 field, with a current TVL of over 1 billion dollars. In October 2022, it launched OP Stack, a detailed plan for developing open-source Modular code to build other L2 blockchains.
OP Stack introduces the concept of Superchains, referring to a unified set of L2 blockchains built using the same technology and sharing the same security algorithm. Importantly, these are not L3 but a merger of multiple L2 chains.
OP Stack has its unique advantages, such as:
- In terms of scalability, OP Stack is modular and open-source, allowing other developers to freely use it to build their applications, and its code is highly adaptable, such as easily integrating with Ethereum’s EIPs.
- Regarding simplicity, Optimism strives to keep things simple, believing that complex code hinders future scalability, which is entirely true.
- On familiarity, to attract experienced Ethereum developers, Optimism has built OP Stack on the same architecture and standards. This allows Ethereum developers to easily transition to OP Stack.
It’s worth noting that Optimism updated its mainnet on June 6, 2023, to integrate the development of OP Stack. The improvements brought by this update are also quite evident, such as:
- 77% reduction in fees
- Approximately 70% shorter staking withdrawal time
- Enhanced modular proofing
- Improved node performance
Currently, many renowned projects have announced joining Optimism’s superchains, such as the famous Base (L2 launched by Coinbase), BNB Chain, Worldcoin, etc. In summary, Optimism may become a superchain network in the near future. The more superchains it has, the stronger its ecosystem will be, and these superchains can interact with each other like a single blockchain.
Arbitrum
Arbitrum is undoubtedly the largest L2 currently, with a TVL of over 3 billion dollars, and it offers a very different scalability solution compared to Optimism.
Currently, Arbitrum mainly develops 4 products: Arbitrum One, Arbitrum Nova, Arbitrum Nitro, and Arbitrum Orbit. Today, we will focus on Arbitrum Orbit, a scalability solution proposed by Arbitrum.
Arbitrum Orbit is a development framework for creating and deploying L3s on the Arbitrum mainnet. The direct translation of Orbit indicates its orbiting nature around L2. These L3s correspond to app-specific chains (appchains), each hosting smart contracts supporting specific decentralized applications.
And because these L3s leverage the security of L2, thereby using the security of L1 (Ethereum), they can be considered a collection of L2s.
Importantly, anyone can actually deploy L3 on Arbitrum as it is permissionless, meaning it doesn’t require a license or official approval.
Overall, Orbit seems poised to revolutionize Arbitrum, turning it into a payment layer comparable to Ethereum, enhancing the intrinsic value of its core chain, and solidifying the long-term scalability of the wider Arbitrum ecosystem.
zkSync
Compared to Optimism and Arbitrum, zkSync may be seen as a younger solution, its main difference being that it relies not on rollups but on zero-knowledge proofs.
zkSync is also one of the most internally focused and popular airdrop projects currently, although not yet fully operational, its TVL has surpassed 200 million US dollars. Notably, zkSync has raised an astonishing 458 million dollars from almost all major crypto VCs to date.
The architecture of zkSync aims to integrate a network of hyperchains, anchoring all these hyperchains to a central base chain. Hyperchains can be seen as zkSync’s vision for developing L3, regarded as a vast ecosystem of interconnected, customizable blockchains.
Overall, zkSync’s vision involves building a Basechain, upon which a hyperchain can be developed, inheriting the security of the Basechain. Naturally, this solution is also tightly integrated with Arbitrum Orbit, as we mentioned earlier.
Polygon
Considering the project itself, Polygon is the oldest Layer-2 project among the four, but it’s only the sixth-ranked blockchain in terms of current TVL, just ahead of Optimism, currently at 1.25 billion dollars.
Currently, Polygon is developing four main products: Polygon PoS sidechain, Supernets, zkEVM, and Polygon 2.0. Among these, the PoS sidechain is their flagship product, capable of processing 2-3 million transactions per day.
Supernets, launched last year, is a solution for developing app-specific chains (appchains). Like zkSync, its proposed solution allows for the development of appchains connected to the Polygon PoS settlement layer.
Polygon zkEVM, a ZK-rollup solution equivalent to EVM, has attracted over 177,000 unique addresses and 20,000 – 50,000 daily transactions since its mainnet launch at the end of March this year, making it quite popular.
As for Polygon 2.0, it can be directly understood as the latest version, aiming to unify all these products. Polygon 2.0 is conceptualized as a conglomerate of L2 chains supported by ZK technology, utilizing a unique cross-chain coordination protocol.
We have arranged four leading solutions in the blockchain field, each having its characteristics and strengths. But if asked to choose the most distinctive and characteristic solution among these four, I personally prefer Optimism. This is because Arbitrum, zkSync, and Polygon propose similar L3 scalability solutions, while Optimism maintains its uniqueness with the Superchain solution, where all blockchains are on the same strand.
Overall, regarding the current state of the crypto space, there are five major projects (besides the four we discussed today, there’s also Starknet) providing Ethereum-related scalability solutions for mass adoption.
This concludes our sharing on the leading Layer-2 projects with the most potential for development, considering their structures that are ready to support future scalability and building of Layer-3s. Overall, these are familiar names with the top TVLs in the Layer-2 sector. Which Layer-2 projects do you know? Which platform do you rate the highest? Share with us in the comments below.