Scalability Now - The Daily Gwei #187

On-boarding the next billion users into Ethereum.

I believe that scalability is the number 1 thing everyone in the Ethereum ecosystem should be focused on right now for obvious reasons. Though, not every area of scalability is created equal and I think there are ways we can basically bootstrap the layer 2 ecosystem very quickly. One of those ways is what Matt points out below - get the centralized exchanges to create bridges into layer 2 asap.

Whether we like it or not, centralized exchanges and services are still the main port of entry for 99.99% of new users of crypto because they serve as the fiat on-ramps. After users purchase their first ETH or ERC20 tokens some of them will want to withdraw to their own wallet and unfortunately even doing that is expensive on Ethereum these days. Though what centralized exchanges could do here is offer the option to withdraw to either the Ethereum mainnet, a layer 2 solution like Loopring or even a sidechain like Matic/xDAI. This would bypass all of the user friction and costs of the Ethereum mainnet and greatly speed up adoption of the layer 2 ecosystem.

Now, this doesn’t come without its own challenges because we still need to build a lot more of the layer 2 ecosystem out and also need to do better at educating users about it. But what a direct on-ramp to layer 2 from CEXs does is give users a great first-time experience of Ethereum instead of scaring them with a $50 Uniswap trade. Then, if the user so chooses, they can withdraw from layer 2 to play around in layer 1 but the main point is that they’ve already had a fast and cheap experience in Ethereum so they know that it’s an option for them.

In addition to CEX on-boarding there are other ways to onboard users without requiring them to pay layer 1 fees such as direct fiat on-ramps to layer 2 (imagine buying ETH with fiat and then having it appear in your Loopring wallet automatically) and batched on-boarding where user deposits are pooled together in a trustless way so only 1 fee needs to be paid to get all of the capital onto layer 2. These solutions are coming soon but even when we have them I think they will be additive to CEX on-boarding and won’t replace it.

If you’re reading this and you work at one of these centralized exchanges or services I implore you to explore ways in which you can get the ball rolling on this in your organization. If you don’t work at one of these companies, you can still help by tweeting at or sending messages to these companies telling them that you would like them to integrate with the various Ethereum scaling solutions. At the end of the day it’s on all of us to ensure that Ethereum continues to thrive and prosper across all layers.

Have a great weekend everyone,
Anthony Sassano

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All information presented above is for educational purposes only and should not be taken as investment advice.