In 2020, DeFi’s total value locked (TVL) soared to over $10 billion with protocols like Curve, Compound, and Yearn. In 2021, NFTs have caught the attention of the mainstream media, with projects like CryptoPunks and Bored Ape Yacht Club reaching multi-billion dollar valuations. Based on current trends and forecasts, many believe that summer 2022 will be called “Layer 2 Summer.”
Over the past few years, Ethereum has been suffering from transaction congestion. Simple actions like sending tokens or trading on a decentralized exchange can cost upwards of $50 and take hours. As a result, several projects have emerged to try to solve this scalability problem and make smart contracts available to everyone, and some of these blockchains include Binance Smart Chain, Avalanche, Fantom, and Solana.
These solutions all succeeded in making transactions faster and cheaper, and as a result attracted some users of Ethereum. However, these chains sometimes sacrifice security for speed. For example, Binance Smart Chain has only 21 validators, while there are over 200,000 validators on Ethereum, and Solana has experienced 7 outages this year alone. Furthermore, the combined value of these blockchains is in the billions, but they have never been able to replace Ethereum. Ethereum’s proven track record of decentralization and security makes it the best option for anyone concerned about potential censorship or disruption, despite its high fees.
In order to maintain the level of security and decentralization of Ethereum without sacrificing speed or cost, second layer solutions have emerged. More and more cryptocurrency exchanges are adopting and integrating the second layer.
The 2020 “DeFi Summer” began with only about $1 billion locked in DeFi protocols, a number that soared to $10 billion a few months later. The same phenomenon could happen with second-layer solutions, especially as more DeFi dApps like Aave and Uniswap deploy into their ecosystems. Also, with the Ethereum merger coming, the Ethereum blockchain will switch from proof-of-work to proof-of-stake and potentially become a deflationary asset.
A few weeks ago, Optimism announced that they would be airdropping their governance token, OP, to anyone using the platform. This caused a frenzy in the cryptocurrency community, and Arbitrum will likely soon follow suit and airdrop their own tokens. These would be the two largest airdrops in recent history, netting their recipients thousands of dollars. It will also incentivize more people to connect their funds from other blockchains to these solutions, and the second layer is expected to offer their governance tokens as liquidity incentives for their top dApps.
The increasing integration and adoption of exchanges and companies, the incentives offered by airdrops, and the hype surrounding the Ethereum merger could be the catalyst for the “Layer 2” craze. The best way for potential investors to capitalize on this trend is to compete for protocol airdrops by bridging funds and truly interacting with their ecosystem.
Most indications are that “Layer 2 Summer” will become a reality, which will benefit Ethereum and smart contracts in general.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/will-there-be-a-layer-2-boom-this-summer/
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