Pepe Unchained (PEPU) is the latest meme coin to catch the attention of retail traders. PEPU’s creators aim to develop their own layer-2 network targeted at joke tokens. And with over .5 million in presale funding raised in just 15 days, the appetite for this ambitious project is strong. Pepe Unchained’s Ambitious Layer-2 Network for […]
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Developing Several Layer-2 Solutions: ‘The Real Solution’ to Ethereum’s Scalability Issue, Says Ken Timsit
The recent surge in Ethereum gas fees can be attributed to the rise in decentralized finance (defi) activity and the growing popularity of layer 2 (L2) chains such as Arbitrum and Optimism, Ken Timsit, managing director of Cronos Labs, has said. Timsit however agreed that the recent Dencun upgrade to the Ethereum network has helped […]
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Analyst Endorses MATIC, Time To Double Down On Polygon And Ethereum Layer-2 Tokens?
Ryan Sean Adams, a vocal Ethereum commentator and crypto investor, is bullish on MATIC, the native token of Polygon. Taking to X on November 8, Adams said MATIC should be a top-10 crypto asset, adding that people are asleep on layer-2s.
Polygon (MATIC) Remains In An Uptrend
When writing on November 8, MATIC is among the top 15 most valuable coins by market cap. It also remains volatile, fluctuating, and moving up and down the market cap leaderboard rankings. Even so, considering its spot valuation exceeding .3 billion according to CoinMarketCap (CMC), a crypto tracker, MATIC remains relatively liquid with a broad user base.
Etherscan data on November 8 shows that there are 629,967 MATIC holders, down roughly 2%, but the number remains higher despite the contraction following the crypto winter of 2022, which spilled over to 2023.
As of November 8, MATIC is up 60% from September 2023 lows. According to CMC, the coin is also up 13% on the last trading day, pushing weekly gains to over 27%. Looking at the candlestick arrangement in the daily chart, the uptrend momentum is strong, and buyers appear to be doubling down.
Presently, bull bars are aligned along the upper BB, suggesting that there is intense buying pressure. At the same time, MATIC is within a bullish breakout formation, breezing past August highs.
Polygon, a sidechain, is among the many scaling solutions for Ethereum. The platform is compatible with Ethereum, allowing protocols to build on Polygon while enjoying the high activity and security of the first smart contract network. Polygon is also considered a layer-2, though it isn’t technically a layer-2 since it doesn’t depend on roll-ups like Arbitrum or OP Mainnet.
Time To Double Down On MATIC And Layer-2 Tokens
In Adams’ view, considering layer-2 tokens, including MATIC or ARB, at spot levels could translate to more gains in the next bull run. Nonetheless, it should be noted that MATIC, for instance, is down 72% from 2021 highs.
Moreover, the coin is trending inside June’s bear trade range. A comprehensive close above this level may signal the end of the bear run, possibly anchoring buyers targeting .5.
In late October, Polygon Labs officially launched the POL, a token that will prime Polygon 2.0, Ethereum, signaling the first steps to see MATIC gradually phased out. POL will serve more roles in Polygon 2.0, specifically powering an ecosystem of zero knowledge-based layer-2 chains using Polygon’s infrastructure. News of this smart contract launch seemed to have catalyzed demand, driving token prices higher.
Ethereum Layer-2 Booming: Will Gas Fees Drop Even In A Bull Market?
The adoption of Ethereum layer-2s is on the rise if Token Terminal data shared on November 6 is anything to go by. According to statistics from the blockchain analytics platform shared by Erik Smith, the Chief Investment Officer (CIO) of 401 Financial, the average active addresses over the past three months has exceeded 10 million, a nearly 2X expansion from early 2023.
Related Reading: Can The ADA Price Climb Above In The Bull Market? Analyst Provides Answers
Ethereum Layer-2s Finding More Adoption
Looking at the chart, Polygon, an Ethereum sidechain, remains the most popular. At the same time, Arbitrum and OP Mainnet, which are common layer-2s adopting the roll-up technology, are actively being used.
Even so, OP Mainnet’s share is gradually dropping. Base, a layer-2 backed by Coinbase, and StarkNet are also finding adoption, expanding their share over the past three months.
In crypto, active addresses refer to the number of unique wallet addresses (sending and receiving) that have interacted with the blockchain, in this case, Ethereum, over a given period.
An uptick or contraction in the number of active addresses can be used to measure sentiment and the level of uptake. In bear markets, active addresses tend to drop, only rising when bulls flow in, pointing to a possible scramble for arising opportunities.
The recent uptrend coincides with the rapid expansion of leading crypto prices. Ethereum (ETH) prices are inching closer to the ,870 resistance level, with a breakout above this line a potential trigger for a leg up that might see the coin retest ,100 and even register new 2023 highs.
Usually, rising crypto prices tend to revive demand as the number of active addresses and, in some instances, the total value locked (TVL) in decentralized finance (DeFi), and more.
What Will Happen To Gas Fees?
Ethereum is the world’s most active smart contract platform, stretching its dominance mainly because of its first-mover advantage. The blockchain anchors more DeFi, non-fungible tokens (NFTs), and gaming activity. Deploying protocols, depending on their objectives, can either directly launch on the mainnet or layer-2s.
The mainnet is directly secured by validators, while layer-2 solutions depend on the mainnet for security but often re-route transactions off-chain. In this arrangement, more transactions can be processed cheaply and efficiently, relieving the mainnet.
Though the Ethereum base layer is secure, its peak transaction throughput remains relatively lower at around 15 TPS. This means during peak demand, gas fees tend to be higher, impacting user demand.
Still, Ethereum gas fees remain at a multi-year low at around 23 Gwei, according to trackers, as seen on the chart below. This is down from 240 Gwei recorded in February 2021 when crypto assets rapidly rose.
For now, whether gas fees will increase as the market recovers is yet to be seen. What’s evident is that as users opt for layer-2s, the mainnet will likely be relieved, keeping gas fee fluctuation low.
Celo Considers Transitioning To Ethereum Layer-2 With Polygon Chain
Celo, a blockchain platform, is exploring migrating from its standalone blockchain to an Ethereum (ETH) Layer-2 (L2) network. Originally, Celo had planned to utilize Optimism’s OP Stack, a customizable toolkit similar to Polygon (MATIC) but based on Optimism’s technology.
However, Sandeep Nailwal, co-founder of Polygon Labs, has proposed an alternative solution to the Celo community. Nailwal suggests leveraging Polygon’s Chain Development Kit (CDK), an open-source toolset that enables the creation of customizable Layer-2 chains powered by zero-knowledge (ZK) technology.
Celo’s Potential Move To Ethereum Layer-2 Via Polygon
In a recent blog post, Polygon Labs suggested Celo could consider deploying an Ethereum Layer-2 solution using Polygon CDK.
According to Polygon Labs co-founder Nailwal, this strategy would allow Celo to leverage the benefits of being an Ethereum Layer-2 platform while preserving the characteristics that have contributed to its success.
The proposal emphasizes several key advantages of adopting Polygon CDK. Firstly, it enables cross-community collaboration by integrating with an ecosystem of Layer-2 solutions powered by zero-knowledge technology.
Polygon CDK enhances compatibility with Ethereum by providing an environment equivalent to the Ethereum Virtual Machine (EVM). This alignment ensures a seamless transition for Celo, closely matching Ethereum’s technical infrastructure and tooling.
Furthermore, according to Nailwal, deploying with the protocol’s CDK offers increased security for Celo. It allows Celo to leverage Ethereum’s proven consensus layer while incorporating the security benefits of zero-knowledge proofs.
Regarding fees and scalability, Celo can benefit from low fees by utilizing the zkEVM validium architecture and off-chain data availability supported by Polygon CDK. These features contribute to cost-efficient transactions while enabling scalability for Celo’s network.
Moreover, according to Nailwal, Celo gains access to a unified Layer-2 economy by becoming a part of the Polygon ecosystem by combining Ethereum’s mainnet with Polygon’s ecosystem. This integration creates a seamless experience for developers and users, facilitating interaction with both networks.
Fast Transactions And Lower Fees?
With zero-knowledge technology, Celo users can enjoy near-instant withdrawals, faster finality times, and instant cross-chain interactivity.
According to the blog post, these features enhance the speed, efficiency, and security of transactions, ultimately improving the user experience.
Through Polygon CDK, chains can achieve near-instant cross-chain interactivity with Ethereum, leveraging the power of ZK proofs to establish a secure and interconnected network.
Overall, the proposed migration to Polygon CDK represents an opportunity for Celo to transition to an Ethereum Layer-2 solution while harnessing the advantages offered by Polygon’s ZK-powered technology. The proposal aims to initiate discussions between the Celo and Polygon communities to explore the potential benefits for all stakeholders involved.
It is important to note that no final decision has been made at this stage, and the proposal signifies the beginning of discussions between the Celo and Polygon communities.
Featured image from iStock, chart from TradingView.com
Why This Polygon Layer-2 Is Huge For Solana Developers
In what could be a huge relief for developers, the Eclipse Foundation recently announced the launch of the Polygon Sealevel Virtual Machine (SVM).
Eclipse To Release The Polygon SVM
The Polygon SVM is a roll-up platform designed for the Ethereum sidechain but is compatible with Solana. Its creators say Solana is a high throughput, fourth-generation network compatible with Ethereum.
The Polygon SVM relies on Optimistic roll-ups, a technique that bundles transactions off-chain before confirming later on the mainnet. The objective is to enhance scalability and lower transaction fees, a net positive for developers wishing to deploy smart contracts.
Developers believe the release of the Polygon SVM is to encourage Solana developers to bridge over to the Ethereum sidechain. As they do so, they won’t have to build their code to be compatible with the Ethereum Virtual Machine (EVM). Polygon is an Ethereum sidechain and is, therefore, by default, compatible with Ethereum.
The roll-up used, in this case, will be launched on Avail, which is Polygon’s general-purpose data availability layer. Avail uses KZG commitments to proof blocks and was released in June 2021. In this arrangement, Polygon will communicate directly with Solana and the Ethereum mainnet through a cross-chain bridge. Consequently, developers will have the flexibility of deploying their dApps on Polygon.
As a result, developers running Solana dApps can deploy on Polygon because the SVM provides a coding environment that allows the launching of Rust-based solutions on several blockchains, including Polygon.
To do this, Solana developers will first have to transfer their code to Eclipse, from where it will be run on Polygon. With this provision, it can be settled back on Solana, meaning there will be higher levels of security.
The Polygon SVM will release its testnet in late Q1 2023, with the mainnet scheduled in H2 2023.
The Migration From Solana
This solution comes when Solana has been under extreme pressure following the collapse of FTX, the crypto exchange, and Alameda Research, the trading wing associated with the defunct ramp. Though there was no direct connection between the FTX and Alameda Research, and Solana, the former holds millions worth of SOL, the native currency of Solana.
The subsequent devaluation of SOL, as investors feared that FTX and Alameda Research would offload their bag, impacted the Solana ecosystem.
Some projects have migrated to Polygon in the past few weeks after receiving incentives.
Here is a screenshot of our latest @y00tsNFT Discord announcement. pic.twitter.com/qWxjBsexv6
— frankdegods.eth (@frankdegods) January 6, 2023
For example, early this year, DeLabs, the creator of Y00ts, was awarded a million grant to build on Polygon.
Bitcoin Layer-2 Stacks (STX) Resumes Rally With 15% In 24 Hours, Here’s Why
Besides Ankr (ANKR), which is seeing a massive price increase due to its partnerships with Microsoft and Tencent, the Bitcoin layer-2 network Stacks is currently the hottest topic on the altcoin market. STX is up a whopping 132% in the last seven days and has seen a 15% price increase in the last 24 hours alone.
The hype around STX was sparked by the Bitcoin NFTs “Ordinals” which have caused a lot of controversy in the Bitcoin community. Stacks is different, however, as it is a layer-2 project for the Bitcoin blockchain to enable NFTs, smart contracts and dApps.
“Whatever you can build on Ethereum, Solana, you can build on Stacks L2s,” Muneeb Ali, co-founder of Stacks said recently.
Since its inception in 2017, the project has been one of the top Bitcoin L2 projects in the crypto market, though the term is actually not accurate. Technically, Stacks works a bit differently than Ethereum sidechains or rollups, which is why the developers sometimes use the term layer-1.5.
The next planned version, called the Nakamoto version, will no longer have a separate security budget from Bitcoin. Instead, 100% of Bitcoin hashpower will determine the finality of the Stacks layer. This means that in order to reorganize Stacks blocks, attackers would have to reorganize Bitcoin L1 itself.
The upcoming @Stacks upgrade this year will make it a Bitcoin L2 with 100% of BTC hash power giving finality.
The Bitcoin economy grows in layers.
— muneeb.btc (@muneeb) February 19, 2023
This Is Why Stacks Sees A Massive Hype
In addition to the hype surrounding the Bitcoin NFT project “Ordinals,” the increased developer activity on Stacks is probably primarily responsible for the rise in STX’s price. According to Stacks, there are now around 35,000 smart contracts running on the Bitcoin layer-2 network.
In addition, according to the team, more than 150 different projects are now developing applications on Stacks. DeFi is particularly promising in this regard.
According to co-founder Muneeb Ali, the goal is to “unlock 0 billion in BTC capital” by enabling sBTC for a Bitcoin-based DeFi. “sBTC can do for Bitcoin DeFi what Ordinals did for Bitcoin NFTs,” believes Ali, who further stated recently that 0 million is already in the stacking contract and 2,200 BTC have been paid out as rewards.
1/ Stacks is an open-source project started by a bunch of Bitcoin builders. The devs behind it have extensive experience in building apps & protocols on Bitcoin L1.
In 2017, after the block size wars, it was abundantly clear that the only way to scale transactions or new use… https://t.co/VyxHG7eNSP
— muneeb.btc (@muneeb) February 20, 2023
Similar to Bitcoin NFTs, however, this could be just the beginning for Bitcoin DeFi. An advantage of Stacks over Ethereum and other blockchains is also that the smart contracts can be developed for free.
The number of daily active wallets in the network is also promising. According to Messari, these are up 67.4% year-over-year. Still, with an average of just under 1,000 active wallets per day, Stacks is still in its infancy compared to Ethereum layer-2 networks. Ethereum’s Arbitrum, for example, comes in at just under 30,000 active wallets per day.
As for NFTs, the L2 also already boasts an active community of creators. There have been 650,000 Bitcoin NFTs minted on Stacks. All these NFTs are automatically hashed on Bitcoin L1 and backed by Bitcoin in a scalable way – unlike Ordinals.
The token (STX) is valuable as it is used as an incentive for miners and incentive for peg-out signers for sBTC to keep mining and signing decentralized rather than using federation.
STX Price
At press time, STX traded at .7880. Despite the massive gains in the last two weeks, the 1-week chart reveals that Stacks is still nowhere near its all-time high of .39 set on December 01, 2021.
Ethereum Layer-2 Platform, ZKSync, Releases New SDK in Swift
ZKSync, an Ethereum layer-2 platform designed to scale transaction throughput using zero-knowledge (ZK) proofs and Rollups, has released a new software development kit (SDK) in Swift.
ZKSync Releases SDK in Swift
In a tweet on January 17, ZKSync said the goal is to make their features more accessible to developers and dApps. With a Swift SDK, ZKSync would support more platforms and use cases, especially for teams building iOS and macOS applications on ZKSync 2.0.
We want to make zkSync 2.0’s features accessible to more developers and applications, so we’ve released a new SDK in Swift. #scalingthemission
1/4 pic.twitter.com/GdH8naXxHI
— zkSync (@zksync) January 17, 2023
Swift is the programming language behind iOS and Mac devices. However, Swift cloud storage software for iOS and macOS enables users to retrieve data through an API. Cloud storage is scalable and designed to store unstructured data that can limitlessly grow.
SDKs in Popular Programming Languages
Besides Swift, ZKSync also supports Python, Java, Android, Rust, and Dart programming languages. Dart, the layer-2 platform explains, is the “unofficial” open-sourced SDK in Alpha. However, the layer-2 portal plans to support more SDKs in various programming languages to cater to their expanding developer community, allowing them to build more solutions addressing multiple problems.
SDKs are critical for developers since they allow the building to be simpler, faster, and standardized. For creators to integrate into existing services, they require kits, which often include necessary documentation, code samples, libraries, APIs, and more, providing guidance when developing blockchain solutions. However, within any developer kit, APIs are critical because they act as an interface for dApps to relay information and coordinate.
Scaling Ethereum Using ZKSync v2
ZKSync layer-2 is building a solution for users to quickly transfer ethereum (ETH) and ERC-20 tokens without paying the relatively high fees in the mainnet.
Ethereum gas fees often fluctuate depending on on-chain activities. As ETH prices rally, DeFi and NFT activities often expand, leading to high gas fees. With Gas rising on a public, transparent layer, users have to pay more to transfer or execute smart contracts.
The layer-2 platform is positioning itself as a better alternative for teams and users, preferring scalability, privacy, and security. Following the launch of the ZKSync 2.0 mainnet, there is a scaling and privacy engine using ZK proofs. Earlier, Vitalik Buterin, the co-founder of Ethereum, relayed his confidence in ZK Rollups that dApps on ZKSync leverages. In the co-founder’s assessment, ZK Rollups “will win out in all use cases.”
ZKSync 2.0 Is Live on Mainnet
Users deploying on the ZKSync 2.0 mainnet, which launched in Q4 2022, enjoy low fees and faster transaction settlement. Developers are free to experiment and add more features.
For instance, ZKSync supports account abstraction for users to pay fees in other tokens apart from ETH and build smart contracts in Vyper or Solidity. The layer-2 solution also supports Atomic Swaps. It is a feature that ZKSync creators say can benefit cryptocurrency exchanges.
NewsBTC reported earlier that Optimism, a general-purpose Ethereum layer-2, and ZKSync competitor, was more Gas efficient despite revenue and assets under its management dropping.
Data Suggests Ethereum Layer-2 Tokens May Experience Explosive Upside
While the Ethereum network and its users continue to suffer from the high fees of the layer-1 blockchain, various layer-2 (L2) solutions are stepping into the spotlight to solve the problem.
As analyst Miles Deutscher explained, citing data from Dune Analytics, layer-2 scaling solutions saw monumental growth in 2022. “I expect this trend to continue in 2023 and beyond,” Deutscher commented.
Blockchain analytics firm Nansen also released data today showing the growth of layer-2 solutions. Specifically, Nansen referred to Abritrum.
“Arbitrum season is in full swing,” wrote a researcher at Nansen. According to their data, transactions on L2s are increasing significantly, while transactions on Ethereum are decreasing. A clear divergence can be seen.
Regarding Arbitrum, the Nansen researcher writes that the number of daily active addresses averaged 50,000 to 70,000 in November and December. A few months ago, from July to September, the average was 15,000 to 20,000.
With the recent Nitro upgrade, Arbitrum has once again massively lowered its average gas price for a transaction. While the average fee was .35 before Nitro, it has dropped to .08 afterwards. This represents a reduction of almost 75%.
However, although Arbitrum’s network usage is skyrocketing, there is no token yet. So far, there is also a lack of an official announcement regarding an Arbitrum token.
Rumors have it that Arbitrum will launch its token by the first quarter of 2023 at the latest. The ticker is supposed to be either ARBI or ARB.
The Leading Ethereum L2 Solution
As NewsBTC reported yesterday, Polygon (MATIC) currently holds the leading position when it comes to successful Ethereum L2 tokens. The project has entered partnerships with major brands such as Starbucks, Mercedes, Meta, Reddit, eBay, Disney, and Adobe, among others.
Sandeep Nailwal, co-founder of Polygon, revealed yesterday that the zkEVM mainnet “is coming soon”. With the implementation, Polygon will reach a massive milestone.
Once the zkEVM mainnet comes online, there could be an explosion of dApps on Polygon. Zero-knowledge cryptography will enable privacy and minimize data volumes to make transactions for smart contracts even more efficient.
BitDAO And Optimism
Another emerging L2 project is BitDAO, which is backed by the exchange Bybit. About a week ago, the project had announced the soft launch of Mantle, a modular Ethereum Layer-2 solution with separate execution, finality and data availability layers.
A public test network is scheduled to go live in 2023. It will serve as the core of BitDAO and use BIT as a token.
Optimism also has a token. The L2 Ethereum scaling solution was first introduced in June 2019, and the public mainnet was launched in December 2021.
The OP token’s airdrop took place in June 2022, with nearly 249,000 registered Optimism users receiving the newly launched token. Remarkably, the project’s mainnet is currently hosting the largest decentralized exchange, Uniswap V3.
At press time, the ETH price was sitting just above crucial support in the 4-hour chart.
Layer-2 Ethereum Scaling Solution Metis Introduces DAC Staking Program
Metis, an Ethereum (ETH) Layer-2 scaling solution powered by Rollup technology to enhance dApps, DAOs, and NFTs for the Web 3.0 economy, has deployed its Mainnet Andromeda. The launch has come after the project began as a hard fork or backward-incompatible variation of the Optimism protocol. The team has also launched a staking program.
In another major announcement, the developers noted that the Metis DAC Creation and Staking program is set to commence on Friday November 26, 2021 at 3 pm UTC. The team has shared an extensive guide on everything you need to know to take part in the staking program. They are also pleased to announce the first Metis Community DAC: Titans DAC, which will work on various community- and charity-focused initiatives.
To get things rolling, there will be a set of 15 Launch Edition NFTs. As noted in the update, holders of these non-fungible tokens, as of Friday Nov 26, 2 pm UTC, will be able to earn large boosts in mining power for the DAC staking program, Governance Rights within Titans DAC, and special privileges at Metis IRL events.
Benefits of Rollup Tech
The Metis team notes that there are certain advantages of leveraging Rollup technology, which enables Optimistic Rollups to pool together many different transactions to provide quicker, economical, and highly-scalable user experiences.
With the latest OVM 2.0 version and the documentation that the Optimism team provided, it has become clear that there have been considerable shifts in their initiative’s development roadmap: Optimism won’t provide sufficient decentralization, which is something that the project had initially set out to achieve.
Sharp Focus on Decentralization
Metis will still follow Optimism’s architecture, but will not be giving up on decentralization for a little added convenience, maintaining their commitment to offering a high level of scalability. Metis has outlined a three-pronged approach to make blockchain “accessible to everyone”
Metis intends to support a Layer-2 Ethereum Rollup solution that will facilitate faster and cheaper transactions. They will also be focused on developing a no-code middleware utility to enable quick migrations onto Metis Layer-2.
Metis is also supporting a Decentralized Autonomous Company or DAC infrastructure that’s set to go beyond the basic voting and governance of DAOs. This should allow users to deploy decentralized services on-chain, and get supported by the typical functions of a “real-world” company.
Providing Adequate Decentralization within EVM Equivalence Framework
Metis has pointed out that they will be able to achieve their goal of decentralization within the EVM Equivalence framework. They added that they have identified a way to achieve their decentralization goals while attaining EVM Equivalence. They also confirmed that this path matches the design of the Metis Ranger System (as mentioned in their whitepaper).
The extensive Andromeda structure includes the Layer-2 network. It also comes with a Multi-VM, which is a decentralized virtual machine for supporting enhanced scalability and security of Metis Layer-2 infrastructure. Transaction costs on Andromeda will fall below Ethereum Layer-1 levels, however, they will be fairly high (currently around -). Metis has also confirmed its plan to participate actively in the Ethereum Layer-2 battle with a 0 million Ecosystem Fund.
Metis is now joining a fast-growing movement, where Arbitrum and Optimism have been industry leaders. The fund will be provided and maintained through a decentralized autonomous company, named Genesi, to support initiatives that join the Metis ecosystem. Genesi will reportedly be allocated across decentralized finance (DeFi), gaming, as well as DAO-focused projects.