Note: In the context of the gradual warming of the Layer 2 war, the author Jake Pahor analyzed the development status of some Ethereum L2 projects through 7 indicators including protocol revenue, financial library, lock-up status, token function, roadmap, etc. Subjective scores were also given to related items.
I looked at some Ethereum L2 projects, both general L2 (Polygon) as well as application specific L2 (dYdX), and in order to shorten the length of this article, the article had to exclude some great projects that did not make the top 5 ( Translator’s Note : For example, general-purpose zk rollup layer 2 networks such as starknet and zksync have not yet entered the mature stage )
For this research framework, the author uses The DeFi Edge’s project evaluation method, and then, based on the analysis, provides a score for each project, so you need to read to the end to see the results.
1. How much revenue do they generate?
Token terminal provides some very interesting statistics, the total protocol revenue (fees) of these L2 projects over the past 180 days is as follows:
- dYdX $212.2 million
- Arbitrum $13.7 million
- Polygon $8.8 million
- Optimism $8.5 million
- Loopring $2.5 million
dYdX is absolutely crushing other projects in terms of protocol revenue, and taking away dYdX, you can see in the chart that Polygon has been in the lead for the past month and has a strong momentum.
2. What’s in the financial pool of the agreement?
Some important factors about the treasury pool are:
- whether they have different assets, or are mostly their own native tokens (meaning more risk);
- How big is the treasury pool and how much development can this bring to the project?
Polygon: It is difficult to find any information on the size of Polygon’s treasury pool, however, we know that Polygon has recently planned a $1 billion ZKP development fund, and we can assume that Polygon’s treasury pool is much larger than this amount.
Optimism: 30% of the initial token supply (1.29 billion OP) will be allocated to the community fund (ecological fund + RetroPGF). Based on the current market price ($2), the theoretical value of this part of the token is about $2.5 billion.
dYdX: 5% of the initial token supply (50 million DYDX) was allocated to the community treasury pool, which is roughly $113 million at current prices ($2.27).
Loopring: 20% of the token supply (275 million LRC) is allocated to the Loopring Ecological Fund, which is approximately $110 million at the current market price ($0.4).
3. Token lockup
If most of the tokens are still locked, that could create a lot of selling pressure in the future (you don’t want to be VC exit liquidity). The following charts and information are from Messari and coingecko.
Polygon: About 92% of the matic token supply has been unlocked, the last 800 million tokens will be unlocked by May 2025, the current liquid supply is about 9.18 billion of the total supply of 10 billion tokens.
Optimism: About 5% of the OP supply has been unlocked through airdrops, and the current circulation is about 215 million of the total 4.29 billion OP supply.
dYdX: About 11% of the DYDX supply has been unlocked, and the current circulation is about 112 million of the total supply of 1 billion DYDX.
Loopring: About 90% of the LRC supply has been unlocked, and the current circulation is about 1.245 billion of the total LRC supply of 1.374 billion.
4. Token functions and use cases
Polygon: MATIC tokens are used to pay transaction fees in the network. You can get rewards by staking MATIC. The role of staking is to protect the network . The solution has not been launched on the main network yet );
Arbtirum: No token has been issued yet, but the network itself has gained significant traction;
Optimism: The right to block space is a sustainable source of income that drives the OP economic model and grows with the network itself;
dYdX: Currently DYDX is essentially a governance token, and holders can also get discounts on transaction fees based on their position size;
Loopring: Protocol fees are distributed among liquidity providers (LPs), insurers, and the DAO as a whole, which incentivizes token holders to behave well.
Polygon just announced that they will implement the first EVM equivalent of ZK L2. Sandeep also plans to achieve complete decentralization of the blockchain within 2-3 years, and powerful products including decentralized digital IDs are currently under development.
Arbitrum has yet to release a full roadmap, but there is speculation that they will release the native token via an airdrop at some point.
Optimism lays out its own roadmap in the diagram below:
dYdX plans to be fully decentralized by the end of 2022 with V4, which seems to be their main focus and will be a huge milestone for the project. ( Translator’s Note: dYdX will migrate from an Ethereum L2 project to the Cosmos ecosystem and transform it into an L1 project. The biggest focus will be the empowerment of DYDX tokens )
Loopring has some major upgrades planned for 2022, including Loopring Earn and zkEVM.
6. The situation of imitators
The 5 projects on this list are all very similar in nature, with Polygon, Optimism and Arbitrum all vying to be the best layer 2 scaling solution.
At this stage, Polygon is definitely in the No. 1 position from a market cap and “moat” perspective, however, both Arbitrum and Optimism have seen widespread adoption and both are growing rapidly.
7. Team and financing
Note: The following funding statistics are from crunchbase .
The Polygon team has been fully disclosed (the main members include Anurag Arjun, Jayant Kanani, Mihailo Bjelic and Sandeep Nailwal), and the project has received support from leading investment institutions in the industry, including Alameda, Binance Labs and Coinbase Ventures. As of now, Polygon has raised a total of $451.5 million, and they recently announced partnerships with some of the biggest names (including Disney, Reddit, Meta, and Stripe), suggesting they’re on the right track.
Arbitrum also has a fully disclosed team backed by some high-profile investors (including Pantera, Alameda, Mark Cuban, and Coinbase), and Arbitrum’s parent company, Offchain labs, has raised a total of $123.7 million to date.
Vitalik himself is a big fan of Optimism and has expressed support for their new governance structure. In addition, Optimism has also received strong support from A16z, Paradigm, and IDEO. To date, Optimism has received a total of $178.5 million in financing.
dYdX has raised $87 million from well-known investors such as Hashkey, Starkware, and a16z, and their team members are also fully disclosed.
Loopring has raised $45 million in funding from Kosmos Ventures, G2H2, Neo, Fundamental labs, and Obsidian.
Based on my research and analysis, I gave each item a score (1-10) in each category, and as you can see, Polygon is the clear winner.
Polygon is also currently in the lead by market cap, and the project has indeed gained some momentum recently due to the upcoming Ethereum merger. Of course, other L2 projects are also very promising and have great potential for success in the long run.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/layer-2-summer-is-here-learn-how-to-evaluate-l2-projects-by-7-metrics/
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