I’ve written about layer 2 a lot in this newsletter as it is probably the hottest and most exciting space to be diving into in Ethereum right now (yes, even hotter than DeFi and NFTs). So in today’s piece I’m going to give you all an update on where the Ethereum layer 2 ecosystem stands today and what you can expect from it in the near future.

Arbitrum @arbitrum

✅Generalized, safe L1/L2 txs & token bridging ✅BLS sigs ✅Even better EVM compatibility ✅New and improved dispute-window logic ✅Node performance optimizations New testnet just dropped. It's our mainnet release candidate 🎆 Add. Another. Zero. offchain.medium.com/arbitrum-updat…Arbitrum Updates: Buckle UpWhooo. Deep breath. We’ve been quite busy over the past few months and are excited to share our progress and roadmap with you. It’s been a wild ride, but keep your seatbelts on as we’re moving…offchain.medium.com

March 25th 2021

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Let’s start with dYdX - back in late February they announced that a layer 2 alpha version of their app was available for use and is built on StarkWare’s zkRollup technology. To access the app you need to sign up to a wait list and there’s also a limit per address on how much funds you can deposit for safety reasons. Additionally, it was also revealed yesterday that StarkWare had raised a $75 million Series B which is a massive amount of money that will go towards scaling Ethereum.

Next up we have Immutable X from Immutable - another zkRollup exchange solution using StarkWare’s technology to scale NFTs. 3 days ago, the team announced that you can now link your existing Gods Unchained wallet to Immutable X so that players are ready for when the exchange goes live. In addition to this, StarkWare announced that they were able to mint 600,000 NFTs using just 1 STARK proof which brought the effective cost per NFT to just 10 gas (over 33,000 times cheaper than mainnet).

A couple of days ago we had Uniswap detail their v3 and they finally officially announced that they’d be using Optimism for their layer 2 implementation (it was an open secret anyway). In addition to this, Synthetix released an update on how they were tracking with their Optimism implementation and why getting to the next phase of their roadmap has taken a little longer than anticipated. Unfortunately while Optimism teased an open mainnet launch in March, I do get the feeling that this might be delayed until April (and probably for a good reason, to be fair).

Next up is Hermez Network, a decentralized zkRollup focused on scaling payments, which launched its mainnet a couple of days ago and I think this one has flown under the radar a bit. The thing I really love about Hermez is that they seem to have put a lot of focus into the user experience and during my testing I found it was really simple to use. Hermez also has an interesting mechanism called “proof-of-donation” that aims to give back to the Ethereum developer ecosystem - you can read more about this on page 9 of their whitepaper here.

On the layer 2 interoperability front, we have both Connext Network and Hop Protocol building solutions to bridge various layer 2’s (and other chains) together. Connext announced a $2.2 million seed round a couple of days ago while Hop Protocol came out of stealth and detailed what their solution is all about. I believe that these interoperability/bridging solutions are going to be critical going forward because not every project is going to be on the same layer 2 so we’ll obviously need a trustless way to bridge them all.

And finally, yesterday we had Arbitrum announce that their “mainnet release candidate” is now on the Kovan testnet and ready for builders to deploy their smart contracts on and play around with. For those unfamiliar with Arbitrum, they are using optimistic rollup technology (similar to Optimism) and they promise to be fully compatible with the EVM. Given that this is their mainnet release candidate, I expect Arbitrum to ship this to the Ethereum mainnet in the very near future - the competition is certainly heating up!

I’ve probably missed some things in this piece but the above should cover most of the major activity that’s happened in layer 2 over the last few weeks (the fact that I think I’ve missed something is pretty bullish to be honest). There’s also a lot of growth with the existing layer 2 solutions such as Loopring (with their AMM and CLOB exchanges), DeversiFi (with their CLOB exchange), zkSync (particularly with its use on Gitcoin) and Polygon with their Matic Plasma chain and other layer 2 solutions coming soon. And if that wasn’t enough for you, there’s a Scaling Ethereum ETHGlobal hackathon taking place on April 16th (more info here).

The future of Ethereum’s layer 2 ecosystem has never been brighter.

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.