Where will Layer 2 go after the merger of Ethereum?

At the 2022 Ethereum Developer Summit, co-founder Vitalik Buterin said that Ethereum is expected to merge the beacon chain with the mainnet through The Merge (merge) upgrade in August, causing Ethereum to be switched to proof-of-stake (PoS). consensus algorithm. If developers encounter some difficulties, the release may be delayed until October.

The much-anticipated ethereum merger is not only a big “exchange” for the ethereum blockchain, it could also be a watershed moment for the crypto industry, as it will greatly reduce the energy consumption problem of the second-largest blockchain by market capitalization and significantly improve Internet transaction speed.

One of the main ways to reduce Ethereum gas fees over the past few years has been a Layer 2 solution (Layer2). Polygon alone processes over 3 million transactions per day and has around 140 million wallet addresses.

Where will Layer 2 go after the merger of Ethereum?

The question is, will Layer 2 networks such as Optimism, Boba Network, Arbitrum, Polygon, etc. still be viable when Ethereum completes the merger? We spoke to industry figures to find out what they thought about the issue.

What is Layer2?

Layer is its most basic meaning of “layer”. Mainstream public chains such as Bitcoin and Ethereum that we are familiar with belong to the category of Layer1.

As we all know, due to the frequent congestion of the Ethereum network and the extremely high transaction fees, many large-scale applications cannot be implemented in the Ethereum network. For example, in the DeFi wave in previous years, the handling fee was as high as hundreds of dollars, which was very unfavorable for users. Therefore, in order to solve the performance problem of the Ethereum network, on the basis of the Ethereum main network, the concept of Layer 2 was born – an overall solution dedicated to improving the performance of the Ethereum network “outside the chain”.

If you compare Ethereum to a company, the business volume is large, which leads to low work efficiency, and many businesses are queuing during busy hours. So he opened a subsidiary (Layer 2) and handed over some business to the subsidiary, so that the burden on the parent company was reduced.

Therefore, Layer 2 processes data in a way that reduces the burden on Ethereum, and enhances the scalability of the entire Ethereum network by transferring part of the data processing of Ethereum to Layer 2. Ethereum remains the final “arbiter” when there is a dispute.

Currently, Ethereum Layer2 has several solutions, namely: Rollups, State Channels, Sidechains, Plasma, Validium, and Hybrid Solutions.

However, if Ethereum moves to PoS consensus, achieving its goals of reducing transaction fees and scaling network performance, there will be less demand for Layer 2 from users. Additionally, moving to PoS may improve the mechanisms for securing the network. Ethereum co-founder Vitalik Buterin believes that PoS can provide Ethereum with:

“More efficiency, better ability to handle and recover from attacks.”

The merged Layer2 is more efficient

The increased efficiency of Ethereum could benefit the second layer. Alan Chiu, founder of Layer2 Boba Network, believes:

“As Ethereum becomes more efficient, Layer2 will also become more efficient while maintaining its current added benefits.”

As Trusttoken Product Manager Harold Hyatt explained:

“Layer2 based on Ethereum will scale with Ethereum, so if Ethereum scales, Layer2 scales too. If Optimism is 10x faster than Ethereum mainnet, then Ethereum is 10x after sharding and Optimism is 100x .”

Significant contributors to Ethereum after mainstream adoption

Ahmed Al-Balaghi, co-founder of multi-chain relay protocol Biconomy, explained: “Even after the merger, to truly gain mainstream adoption, Ethereum still needs as many scaling solutions as possible.” It is growing in popularity, but has a long way to go before mainstream adoption, with only 4% of the world’s population owning cryptoassets this year.

As adoption increases, the demand for networks like Ethereum will grow exponentially. Poapster, a contributor to leading DeFi protocol Harvest Finance, believes:

“We’re going to see Ethereum become the universal settlement layer and all the different Layer2 and EVM compatible chains are going to be where small transactions happen.”

Therefore, the industry seems to believe that Layer 2 has a prominent role in the future of the Ethereum network. Brian Fu, co-founder of money market protocol zkLend, is very optimistic about the future of layer2.

“The Layer2 ecosystem has reached a tipping point to support transaction volume and activity, which will lead to explosive network effects…Users have started to switch to Layer2, as we’ve seen with Layer2’s lock-up value growth.”

Layer2 helps dApp usage increase

As scaling opportunities increase, Puff, a contributor to Iron Bank, a leading DeFi platform on Ethereum, believes:

“The merger will bring us one step closer to the shard chain. As shards are deployed, we expect Ethereum’s improved scalability and capacity to reduce costs and increase the accessibility of decentralized applications (dApps).”

The use of dApps will directly correlate with increased engagement on the network. A decentralized blockchain network that is scalable and enables fast transactions allows everyone to control their assets, identity and finances without the control of a centralized authority.

Thibault Perréard, head of strategy at Bifrost, believes that “the real catalyst for unlocking Ethereum’s future potential and truly realizing the DeFi vision is not PoS, but Layer 2.”

PoS is considered greener, and interestingly, Eden Network co-founder Chris said that Ethereum’s proof-of-work (PoW) may not be over:

“Calculating the proofs required for ZK Rollups requires a huge amount of computation — what happens to all the mining rigs when the merger happens? Does it just dust off, or will a miner develop a chance to repurpose their GPUs to secure these new networks market?”

Some PoW proponents believe that Layer 2 will be useless after the Ethereum merger, and that Ethereum itself will most likely fail. However, Tyler Perkins, CMO of zkSync, is not convinced that merging will affect layer2, and that “Layer2 will be positively impacted by sharding, as it will increase the amount of data storage available for Rollups, significantly increasing its throughput.”

For most of the industry insiders we spoke to, there seemed to be overwhelming support for Layer2’s future. When the merger happens this summer, we’ll see who’s right.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/where-will-layer-2-go-after-the-merger-of-ethereum/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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