Optimistic On Ethereum - The Daily Gwei #191
Yeah yeah, I'm full of puns these days.
March - that’s when Optimism’s Optimistic Ethereum layer 2 implementation goes live in a mainnet capacity on Ethereum. This will represent one of the biggest milestones in Ethereum’s history and I believe it will change the narrative around Ethereum just being a “whale chain” with high fees.
Now, of course, we’ve had other layer 2 scaling solutions live for quite a while now with Loopring, DeversiFi, Gitcoin’s integration of zkPay, dYdX’s layer 2 DEX and more. We’ve also had “sidechains” like xDai and Matic gain some traction over the last few months. These are all great solutions and their growth has been amazing to watch but I think Optimism will act as a “Schelling point” for scalability due to a few different reasons.
The most important reason is that Optimism will be home to a number of top DeFi applications including: Synthetix (confirmed), Chainlink and Uniswap (teased) and a bunch of other projects that are eager to get onto layer 2. This means that Optimism will be the first layer 2 to offer composability between the different apps. Though to be straight here, this doesn’t mean that the other solutions won’t continue to be valuable, but we will need to wait until the bridging technology (such as Connext Vector and Hop Protocol) are built out and deployed.
In addition to the bridging technology, the next step is for a robust market maker ecosystem to spring up to offer fast withdrawals and composability between layer 2 and layer 1. What this basically means is that there will be economic actors sitting in between layers (and sidechains) that are happy to wait however long for the layer 1 <> layer 2 withdrawal/deposit to process but will offer users instant deposits/withdrawals for a small fee. This will be critical for both composability and capital/market efficiency between layer 2’s and layer 1.
This is all very exciting, yes? After years of research and development, Ethereum is finally getting to a point where it can claim that it is actually scaling in a big way. I made a prediction at the start of the year that I believe that 2021 will be the year of layer 2’s and I’m more confident in that prediction than I have ever been. The raw talent and brain-power going into the layer 2 ecosystem is quite frankly, insane, and I am extremely excited about the fact that we all get to witness it play out in real-time.
Have a great day everyone,
Anthony Sassano
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All information presented above is for educational purposes only and should not be taken as investment advice.