Ramp On, Ramp Off - The Daily Gwei #382
The era of layer 2 Ethereum is here.
We all know that the layer 2 rollout on Ethereum is in full swing now with new solutions coming online every few weeks and users beginning to on-board. Though on-boarding is still a pain point for most users because paying layer 1 Ethereum gas fees can be quite expensive regardless of which bridge someone uses - this is why centralized exchanges will become the ultimate layer 2 on-boarding vehicle.
I’ll be totally honest - I did not expect Binance to integrate with an Ethereum layer 2 as quickly as they have (given their competing BSC ecosystem). This new integration with the Arbitrum One network means that users can now off-board to Binance from Arbitrum One without having to go through the 7 day withdrawal period or pay layer 1 gas fees. Binance also stated that they will be enabling withdrawals to Arbitrum One soon which will really kick this integration into high gear as it’ll allow people to get ETH directly from a centralized exchange and onto a layer 2 network.
I think now that Binance has made the first move, other major centralized exchanges will follow behind very soon. There has already been smaller fiat on-ramps and exchanges supporting layer 2 networks (and scaling solutions such as the Polygon PoS chain) but Binance is by far the largest to date. Coinbase also announced a few months ago that they planned to support these networks but they’ve taken longer than I thought they would to roll out their integrations. Though this is okay - we want to make sure these exchanges get the integrations right instead of rushing out something broken - but there is a massive opportunity for exchanges that move quickly to capture users who want to on/off-board to layer 2’s on Ethereum.
This really is a glimpse into the end-game of Ethereum - a network of on-ramps all around the world integrated with every popular layer 2 network to offer a seamless, gas-free experience for end-users. We’re going to be living in a world where people will never touch Ethereum layer 1 but will still be able to inherit its security and decentralization while enjoying cheap fees and fast transactions. Not only that, but layer 2’s are going to be able to offer so many products and services that just aren’t possible on layer 1 due to its constraints - I believe this will lead to yet another Cambrian explosion of innovation for the Ethereum ecosystem.
In a few short years we’ll all be looking back at our layer 1 experience with a bit of nostalgia because it’ll be a place where we rarely go to anymore. Seamless on-boarding from exchanges, cross-L2 bridging, arbitrary message relaying and rollup-pays-for-user fee models will take over and Ethereum will become the ubiquitous backbone of a new global financial system that we’ve all fought so hard to create.
We truly are all gonna make it.
Have a great weekend everyone,
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.