Natively Layer 2 - The Daily Gwei #281
Layer 1 is old news now.
One thing that I’ve been noticing more and more of lately is the trend of projects launching natively on layer 2 Ethereum protocols and bypassing layer 1 entirely. Futureswap announced the other day that they will be launching v3 of their protocol on Arbitrum, Lyra will launch on Optimism and yesterday Perpetual Protocol announced that v2 of their protocol will be launching on Arbitrum.
Source: https://twitter.com/perpprotocol/status/1410221763078807556
I believe that this trend is going to continue with many more projects choosing to go the “native layer 2” deployment route (either as new project deployments or new versions of existing projects). After all, the vision for Ethereum is that layer 1 will become the settlement layer and layer 2 will become the “user layer” so there’s not really much point in projects launching on layer 1 since most of their existing and potential users are priced out of it already anyway (even at today’s low gas prices). Though I think we’ll still see dual deployments and even deployments across multiple layer 2’s for individual projects for some time.
One big benefit for projects of just launching on layer 2 is that they can focus on what really matters to actually grow their user-base (product, marketing, business development etc) instead of having to worry about high gas fees and deal with all of the customer complaints that come with that. The expanded design space on layer 2 will also unlock additional abilities that developers can take advantage of to greatly improve both the user and developer experience. Even better, their products will probably be used by people who’ve never even interacted with Ethereum’s layer 1 before - pretty wild!
I think that all of this will also encourage users to migrate to a layer 2 ecosystem since they won’t be able to use many of the shiny new apps on layer 1 (as they won’t be deployed there). This will, in turn, push businesses like centralized exchanges to support layer 2’s more quickly in order to appease their customers. Then, this will lead to even more users onboarding to layer 2’s which will cause more developers to launch their projects purely on layer 2 and well, you can see how the snowball effect happens from there.
As I said at the start of this piece, I believe that layer 1 Ethereum will become a settlement layer (aka a home for layer 2 proofs, whales and some liquidity pools) while layer 2 will handle the “mass adoption” that Ethereum will eventually see. In saying that, layer 2 is not a silver bullet so I expect many of the major existing projects (Maker, Aave, Uniswap etc) to keep supporting and upgrading their layer 1 deployments for quite a while.
Have a great day everyone,
Anthony Sassano
Enjoyed today’s piece? I send out a fresh one every week day - be sure to subscribe to receive it in your inbox!
Join the Daily Gwei Ecosystem
All information presented above is for educational purposes only and should not be taken as investment advice.