The Layer2 battle is about to begin, organizing the latest developments of the top 11 Layer2 networks.
The Layer2 battle is starting soon, summarizing the latest developments of the top 11 Layer2 networks.
The encrypted data platform Rootdata has included 77 Layer2-related network infrastructures, and the market competition has become very intense.
Author: Grapefruit
With the approaching of the Cancun upgrade, Layer2 networks have become the hottest narrative track in the second half of 2023. Since July, the Layer2 layer’s total value locked (TVL) has often remained above $10 billion.
Recently, several well-established public chains have announced their transition to Layer2, and some have even obtained large financing.
On July 17th, cLabs, the development organization of Celo, proposed to transform Celo from an independent EVM compatible Layer1 blockchain into an Ethereum Layer2 based on the OP Stack.
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On July 12th, Manta Network, a ZK-based Layer1 public chain, announced the launch of the Manta LianGuaicific Layer2 network based on the OP Stack, specially designed for zero-knowledge proof (ZK) applications. Subsequently, on July 19th, its developer p0x labs completed a $25 million Series A financing with a valuation of $500 million, led by Polychain Capital and Sequoia Capital China.
In addition to well-established Layer1 networks transitioning to Layer2, native Layer2 networks are also taking frequent actions and constantly releasing news.
Among them, representative networks of the Rollup family such as Arbitrum, zkSync, and StarkNet have successively announced the launch of open-source toolkits for building corresponding Layer3 networks; the MetisDAO Foundation, a forked project of Optimistic Rollup, released its incubated Hybrid Rollup project ZKM; Loopring, the Loopring protocol, announced the construction of its own Layer3 layer based on the zkEVM Layer2 network Taiko, and so on.
Clearly, the Layer2 market has entered a white-hot competition stage. According to the data from the encrypted data platform Rootdata, there are already 77 recorded Layer2-related network infrastructures, including modular blockchains, zkRollup, Optimistic Rollup, application chains, etc.
Currently, the Layer2 market is mainly dominated by the two mainstream scaling solutions, Optimistic Rollup and zkRollup. So, what are the representative networks of the Optimistic Rollup and zkRollup families? How are they progressing? What opportunities are there for users to participate?
1. Optimistic Rollup family: Arbitrum, Optimism, Metis, Boba, Mantle
Arbitrum’s on-chain TVL has exceeded $6 billion, ranking first in the Layer2 track
As of July 20th, the value of encrypted assets locked on Arbitrum’s chain is approximately $6.09 billion, ranking first among many Layer2 projects, with a market share of 59.78%. The native token ARB was officially listed for trading in March this year and is currently priced at $1.26, with a market capitalization of $1.6 billion, ranking 36th among encrypted assets.
In addition, Arbitrum’s on-chain deployed ecosystem applications, prosperity, and activity are far ahead of other Layer2 networks.
According to the official ecosystem portal page Arbitrum Portal, there are 559 included projects in the Arbitrum ecosystem, covering applications in various sectors such as wallets, cross-chain bridges, DEXs, lending, gaming, and NFTs. Among them, the main representatives include well-known applications such as Uniswap, Aave, Curve, and 1inch that have migrated from external sources, as well as native decentralized perpetual contract GMX, full-chain lending Radiant, native DEX Camelot, and metaverse game ecosystem Treasure.
Arbitrum is a Layer 2 scaling solution built on the Arbitrum Rollup (an improved version of Optimistic Rollup) technology and was launched on the mainnet in August 2021.
Currently, the Arbitrum ecosystem mainly consists of three networks: Arbitrum One, Arbitrum Nova, and Arbitrum Orbit.
Arbitrum One: It is the core Rollup chain of the current Arbitrum ecosystem, and all transaction data is stored on the Ethereum mainnet. The L2 and on-chain ecosystem applications we usually refer to run on this mainnet. It is worth noting that Arbitrum Nitro is an upgraded version of Arbitrum One, and the name of the mainnet Arbitrum One has not been changed after the upgrade.
Arbitrum Nova is a new network built on the AnyTrust technology, designed for gaming, social applications, and high-throughput DApp use cases. The transaction data of this network is stored off-chain and managed by a Data Availability Committee (DAC). Compared to Arbitrum One, which is secured by Ethereum, Arbitrum Nova has lower security, but its gas fees are 90% lower than Arbitrum One. It is particularly suitable for applications such as games and social platforms with high-frequency transactions and low fees. The Reddit community points system (such as MOON) is built on this network and supports developers in building games, social, and other applications that use Reddit tokens. OpenSea and TreasureDAO have also launched their NFT markets on Arbitrum Nova.
Arbitrum Orbit: It is an open-source toolkit for building L3 networks, supporting developers to deploy and create their own chains. Developers can use the Orbit toolkit to build their own Rollup and AnyTrust chains (L3) and choose either Arbitrum One or Arbitrum Nova as the settlement layer to achieve scalability. Choosing between Rollup and AnyTrust represents a trade-off between decentralization and performance.
Currently, multiple applications have partnered with Arbitrum Orbit to create their own L3 networks. AltLayer, an Ethereum scaling service platform, already supports Arbitrum Orbit, allowing users to launch Arbitrum’s L3 application chain in minutes using a no-code tool. In June, Xai Network, designed for gaming, announced the launch of an L3 blockchain specifically tailored for the gaming industry using Arbitrum Orbit technology. In the same month, DeFi derivatives trading platform Syndr announced the launch of Syndr Chain based on Arbitrum Orbit. The testnet is already live and is currently in the beta testing phase, requiring application for access. Recommended reading: “Layer2 Upgrade: Is it necessary for Arbitrum and zkSync to push for Layer3?”
Regarding the incentives in the Arbitrum ecosystem, on July 20th, the Arbitrum Foundation announced that it will provide grants to eligible dApps and infrastructure in Arbitrum Nova and Arbitrum One to promote the development of the ecosystem.
Optimism: Towards the Kingdom of Superchains
Optimism is a Layer2 scaling solution built on Optimistic Rollup. Currently, the total value of locked assets on the chain is 2.42 billion US dollars, accounting for 24.2% of the market share, making it the second largest Layer2 network. Its native token OP is currently priced at $1.48, with a market capitalization of $950 million, ranking 45th among cryptocurrencies.
Compared to Arbitrum, Optimism’s on-chain ecosystem is slightly less prosperous. According to DeFiLlama data, there are currently 153 Optimism ecosystem applications.
However, Optimism has embarked on the path to the kingdom of superchains with the OP Stack components, carving out its own path in the Layer track.
OP Stack is an open-source modular toolkit launched by Optimism, covering data availability layer, execution layer, settlement layer, governance layer, etc. Developers can use the OP Stack toolkit to assemble a customized Layer2 network according to their specific needs and scenarios.
Because of this, OP Stack introduces the concept of a superchain for Optimism. A superchain refers to a group of Layer2 blockchains (also known as OP chains) built on top of OP Stack.
However, a superchain is different from a multi-chain architecture. The current multi-chain architectures (such as Cosmos) actually introduce new consensus algorithms on each chain, requiring the launch of new validator sets whenever a new chain is activated, and the security and information cannot be shared between chains. In contrast, superchains are standardized, with consistent consensus algorithms and security guaranteed by the Layer1 blockchain (Ethereum mainnet). Furthermore, due to the standardized architecture, resources and information can be shared between chains.
For example, in a superchain, if A Layer2 and B Layer2 networks have the same standard, wallets, applications, and tokens on both chains can directly communicate and interact with each other. At this point, users no longer need to focus on the concept of A or B chain and can regard them as a single unit, the “superchain”. This also allows developers to build applications targeting the entire superchain.
On June 24th, Optimism blockchain announced its rebranding as OP Mainnet, to distinguish OP Mainnet from the Optimism ecosystem chain built on OP Stack. OP Mainnet is just one of the basic chains among many Layer2 superchain networks. Currently, in the Optimism ecosystem, OP Mainnet and several other L2 networks built on OP Stack together form the Optimism Kingdom of Superchains.
Currently, there are dozens of Layer networks built on OP Stack.
Among them, in the first half of July alone, three projects announced the launch of related Layer2 networks based on OP Stack.
On July 16th, cLabs, the development organization of Layer1 blockchain Celo, proposed to transform Celo into a Layer2 based on OP Stack;
On July 12th, Manta Network, a Layer1 blockchain based on ZK, launched a Layer2 network called Manta LianGuaicific, which is designed specifically for zero-knowledge proof (ZK) applications and is based on OP Stack. Manta Network also renamed its Layer1 network to Manta Atlantic, and in the future, the Manta ecosystem will consist of Manta Atlantic and Manta LianGuaicific.
On July 7th, Public Goods Network (PGN), supported by Gitcoin, also built on OP Stack.
Before that, several well-known Web3 companies had deployed Layer2 networks based on OP Stack.
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Base—Coinbase announced the launch of the Layer2 network Base based on OP Stack, which has now opened the mainnet for developers and supports deploying applications. It is expected to be open to the public in early August;
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opBNB—BNB Chain launched the Layer2 testnet opBNB based on OP Stack, and is expected to launch the mainnet in Q3 2023;
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Magi—a16z announced the launch of Magi, a Rollup client solution based on OP Stack, in April;
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Worldcoin ID announced the construction of an application chain based on OP Stack, focusing on the ecological construction of on-chain identity systems.
There are also many games and NFT projects choosing to build their own networks based on OP Stack.
Zora Network—NFT trading market Zora announced the launch of the Layer2 network Zora Network based on OP Stack.
Loot Chain—Loot ecosystem project Adventure Gold DAO built the Layer2 network Loot Chain using OP Stack and uses its native token AGLD as a Gas Token;
OPCraft—Lattice, an on-chain game developer, created a dedicated on-chain virtual world game using OP Stack.
In terms of network performance, Optimism has been continuously optimizing and improving. In June of this year, Optimism announced the completion of the mainnet upgrade Bedrock, further reducing transaction fees, shortening deposit confirmation times, and improving performance. According to Dune data, since the completion of the Bedrock upgrade, the average transaction gas fee of Optimism has decreased by about 75%. Among them, the Optimism mainnet has become the cheapest Ethereum L2 network for token exchanges, with an average transaction gas fee of about $0.1.
Optimistic Rollup Fork Project Metis Network
Metis Network (referred to as Metis) was originally built on Optimistic Rollup technology as a Layer2 scaling network. Due to adjustments and improvements made to Optimistic Rollup, the issue of delayed asset withdrawals from Layer2 to Layer1 has been addressed, with asset withdrawals now taking only a few hours or minutes. Therefore, Metis is also considered a fork project of Optimistic Rollup, and its mainnet is called Andromeda.
On July 13th, MetisDAO Foundation officially announced the launch of its incubated project ZKM (formerly known as Project M), and upgraded the existing Optimistic Rollup to Hybrid Rollup. ZKM will launch its testnet before the end of the year.
ZKM is a Layer2 scaling solution using the Hybrid Rollup mechanism. Hybrid Rollup combines Optimistic Rollups and ZK Rollup, forming a single Rollup protocol that takes advantage of their respective strengths. The ORU architecture provides developers with an easy-to-code environment, while providing users with the finality, security, and decentralization that ZKRU can provide, ensuring timely withdrawals while maintaining security.
In fact, as early as March, MetisDAO stated on its blog that it is developing a hybrid rollup that combines Optimistic Rollup (OPR) with zero-knowledge proof ZK Rollup, combining the scalability of Optimistic Rollups with the security of ZK Rollup. This will be an important task on the roadmap of Metis mainnet Andromeda in 2023.
Currently, Metis has a TVL of 88.97 million US dollars on-chain, ranking 8th among many Layer2 networks. Its mainnet Andromeda uses METIS tokens as a means of paying on-chain gas fees, with a gas fee of 0.0064 US dollars per transaction. METIS is currently priced at 17 US dollars with a market capitalization of 74.3 million US dollars.
According to DeFiLlama data, Metis has 40 on-chain ecosystem applications, including mainstream DeFi applications such as Aave, SushiSwap, and Stargate.
Multi-chain Layer2 scaling solution Boba Network
Boba Network is also an Ethereum Layer2 scaling solution built on Optimistic Rollup technology, created by the Enya team, core contributors to the OMG Foundation. In April last year, Boba Network completed a Series A financing of 45 million US dollars with a valuation of 1.5 billion US dollars. This round of financing had over 400 participants, including well-known cryptocurrency exchanges such as Crypto.com, Huobi, and BitMart.
Unlike other Layer2 solutions, Boba Network is a multi-chain Layer2 scaling solution that not only supports scaling of Ethereum but also can scale all EVM-compatible Layer1 blockchains and become their Layer2 networks. Currently, Boba L2 has been deployed on networks such as Moonbeam, Fantom, Avalanche, and BNBchain.
Currently, Boba Network has a TVL of only 9.75 million US dollars on-chain, with 24 ecosystem applications, including SushiSwap, OolongSwap, and lending application Bodh Finance.
Mantle Network, a Layer2 network backed by Bybit
Mantle Network is a modular Layer2 scaling solution incubated by BitDAO and based on Optimistic Rollup. It launched its testnet in January this year. As BitDAO is a decentralized autonomous organization initiated by centralized exchange Bybit, Mantle Network is also considered a Layer2 network supported by Bybit.
At the EthCC conference in Paris on July 17th, Mantle Network announced the launch of its mainnet Alpha version.
Unlike Arbitrum and Optimism, the Mantle architecture adopts a modular design, which means that the core operations of the blockchain (such as execution, consensus, settlement, and data availability) can be split and executed on specialized layers to improve network efficiency. In Mantle, Optimistic Rollup is combined with a data availability solution to ensure its ability to inherit the security of Ethereum while providing cheaper and easier access to data availability.
In Mantle, the mainnet provides the execution layer, and consensus and settlement are done on L1 Ethereum. Data availability (data storage and data publishing) is handled by a specialized service provider called Eigenlayer, which improves on-chain formation and provides new possibilities for scalability.
In June, BitDAO announced the merger of BitDAO, Mantle, and the BIT ecosystem into Mantle. The MNT token will serve as the unified token of its ecosystem, and the BIT token can be converted to MNT at a 1:1 ratio.
Currently, Mantle Network has deployed 89 DApp applications, covering DeFi, infrastructure, and gaming products, but there are no Ethereum mainstream applications migrated and deployed.
2. zkRollup comprises 6 networks: ZkSync, Starknet, Polygon zkEVM, Linea, Scroll, and Taiko
Currently, zkRollup networks are mainly focused on compatibility with Ethereum EVM. According to Vitalik Buterin’s blog post “The different types of ZK-EVMs,” the compatibility can be divided into four types: fully equivalent to Ethereum, fully equivalent to EVM, nearly equivalent to EVM, and equivalent to advanced procedural languages.
Among them, Taiko zkEVM belongs to the first type (Type-1) and is fully equivalent to Ethereum without changing the Ethereum system design. ZK proofs take a long time (several hours) to generate. Polygon, Linea, and Scroll belong to the third type (Type-3) and are nearly equivalent to EVM, making some concessions in terms of equivalence, shortening the proof time, and simplifying EVM development. Their goal is to become the second type of fully equivalent EVM. zkSync Era and StarkNet belong to Type-4, which uses their own high-level programming language, has short verification time, but poor compatibility.
Compatibility means whether developers can provide the same development experience as on Ethereum and the ease of deploying applications. Proof verification time means the time required for user funds to be bridged back from L2 to L1. If proof generation takes several hours, it means that users cannot bridge their funds back to L1 during this period.
ZkSync introduces zkStack, a development component for building L2 or L3
ZkSync is a zkRollup scaling solution developed by the MatterLabs team based on zkSNARK (non-interactive zero-knowledge proof). In February last year, ZkSync announced that its zkSync 2.0 network was renamed zkSync Era, and zkSync 1.0 was renamed zkSync Lite. The former, zkSync Era, is a ZK Rollup project based on zkEVM, which is compatible with EVM; the latter is not compatible with EVM and mainly focuses on the payment field.
Currently, the TVL of zkSync Era is 524 million USD, ranking third among many Layer2 networks, and it is the leading project in the zkRollup network.
In June, zkSync officially announced the launch of ZK Stack, a modular open-source component for building custom zkRollup networks. Developers can use this toolkit to build custom L2 and L3 (also known as HyperChain) networks within the zkRollup system.
On July 16, zkSync Era announced the airdrop of LIBERTAS OMNIBUS series NFT to randomly selected 10,000 users out of approximately 180,000 active community members. However, some users later discovered that the so-called random selection was actually the project team sorting the strings of the 180,000 addresses and airdropping the NFT to the top 10,000 users. Later, the official stated that the initial NFT distribution addresses were inaccurate and will restart the LIBERTAS OMNIBUS NFT issuance in the coming weeks.
In addition, on July 17th, zkSync Era announced the upgrade of the new proof system Boojum, transitioning from zkSNARK to zkSTARK-supported proof system.
Starknet launches application chains
StarkNet is a zkRollup-based scaling network developed by StarkWare using zkSTARK. Among them, StarkWare’s scaling solutions mainly include StarkNet (Layer2 scaling network) and StarkEx (scaling technology), with the former mainly targeting user-oriented Layer2 networks and the latter mainly providing scaling solutions for Ethereum applications. The initial dYdX, DeversiFi, Immutable X, etc., are all based on StarkEx.
Currently, the most widely used and mentioned is StarkNet, with an on-chain TVL of 112 million USD, making it the second-largest zkRollup-based network. However, StarkNet is not compatible with Ethereum EVM.
In terms of compatibility with Ethereum EVM, StarkNet plans to achieve this through two projects in its ecosystem: kakarot and Warp. Among them, Kakarot is a zkEVM implemented in Cairo language on StarkNet, belonging to Type-2.5. In June of this year, Kakarot just received pre-seed financing from StarkWare, Vitalik Buterin, and others, and is expected to go live on the testnet soon; Warp is a transpiler that converts Solidity code into Cairo code to achieve compatibility with Ethereum EVM, belonging to Type-4.
From this perspective, Warp provides compatibility at the high-level language level, while Kakarot provides compatibility at the EVM level.
On July 19th, Eli Ben-Sasson, co-founder of StarkWare, announced at the EthCC conference in Paris that StarkNet will soon launch StarkNet application chains (Appchains). The StarkNet stack allows applications to launch customized StarkNet application chains. On July 21st, the encrypted liquidity platform LianGuaradigm incubated a decentralized perpetual derivative Layer2 application chain called LianGuaradex on StarkNet.
Polygon zkEVM becomes one of the many ZK-based networks in Polygon 2.0
Polygon zkEVM is an Ethereum Layer2 zkEVM scaling solution built on ZK Rollup technology. The testnet of Polygon zkEVM was launched on March 27th. Polygon zkEVM is now almost completely equivalent to EVM and is striving to become a fully equivalent version of EVM.
In June, Polygon announced the launch of Polygon 2.0 upgrade. Polygon PoS will be upgraded to zkEVM Validium to make it compatible with ZK technology. Polygon 2.0 is a L2 layer multi-chain network ecosystem driven by ZK technology, including zkEVM, PoS, Supernets, and other sub-networks. In fact, as early as March of this year, Immutable X, a Layer2 network focused on gaming scenarios, announced its collaboration with Polygon to launch a new zkRollup scaling solution called Immutable zkEVM; zkMeta, a Web3 game infrastructure developer, stated that it is working with Polygon to create a game-specific zkRollup.
In July, the official proposal for Polygon 2.0 upgraded the original MATIC token to POL and released the POL whitepaper. POL tokens will operate within all Polygon ecosystem networks, with an initial supply of 10 billion and a 2% annual issuance rate. The Polygon PoS chain will use POL as a means of paying gas fees, while other chains can choose POL or issue their own native tokens. In addition, Matic is currently priced at $0.76, with a market capitalization of $7.15 billion and ranking 12th.
On July 13th, the Polygon team announced its plan to create a new governance framework for Polygon 2.0. The new governance model will consist of “three governance pillars,” including an extended Polygon Improvement Proposal (PIP) framework, the introduction of an ecosystem council for smart contract upgrades, and community treasury governance to provide funding for promising ecosystem projects.
Currently, the TVL (Total Value Locked) on the Polygon zkEVM chain is $54.49 million, with 19 deployed DApps. Among them, 9 are data infrastructure and cross-chain bridges, and other applications include the stablecoin QiDao, DEX platforms Quickswap and Leetswap, lending protocol 0vix, NFT trading platform Zionic, and yield farming pool AntFarm.
Linea, an Ethereum Layer 2 solution by ConsenSys
Linea is an EVM-compatible Zk-rollup Layer 2 scaling solution developed by ConsenSys, the parent company of MetaMask.
On July 18th, at the EthCC conference, ConsenSys announced the official public launch of the Linea zkEVM mainnet alpha and airdropped related NFTs to participants of the Linea Voyage event.
According to Rootdata, the Linea ecosystem has a total of 71 projects, including deployed lending application LineaBank, DEX platform FWDEX, cross-chain exchange aggregator XY Finance, cross-Rollup chain Owlto Finance, NFT marketplace Zoni, and mainstream DeFi applications undergoing migration and deployment such as Aave, Airswap, Sushiswap, and LianGuaincakeswap.
Currently, the TVL on the Linea chain is $11.99 million.
Regarding whether Linea network has its own token, the official response is that the Linea network currently uses Ethereum directly bridged from the Ethereum mainnet as its ecosystem token. However, many users still hope that the Linea network will issue a new governance token and airdrop it to users, similar to Arbitrum and OLayer2 networks.
Scroll
Scroll is also a zkRollup-based scalability solution for Ethereum. It launched the Scroll Alpha testnet on Goerli in February this year and is still in the testnet phase.
Similar to Polygon zkEVM, Scroll is also striving to achieve full EVM compatibility.
In April, Sandy Peng, co-founder of Scroll, stated at a conference that the mainnet would go live in the next three to four months. However, as of July 21st, there is no public information on the progress of the Scroll mainnet.
Taiko developed by Loopring Protocol
Taiko is a zkRollup-based scaling solution (zkEVM is a Type-1) created by members of the Loopring Protocol team. Later on, Taiko separated from Loopring and developed independently.
According to the crypto data platform RootData, on June 8th, Taiko completed a total of $22 million in two rounds of seed funding. The first round raised $10 million, led by Sequoia China, which ended in the third quarter of 2022. The recent second round of funding raised $12 million, led by Generative Ventures.
On July 18th, Taiko announced the launch of the Alpha-4 testnet (Eldfell L3), which aims to test the performance of deploying the L3 network based on Taiko, making Taiko the settlement layer of the L3 network. In fact, as early as the beginning of July, the veteran zkRollup-based scalability solution Loopring announced the official launch of its L3 network on the Taiko zkEVM Alpha-3 testnet, an application-specific layer tailored for DeFi and NFT applications.
During the same period, Taiko announced the launch of a community funding program, aiming to discover and support innovative projects being built and developed on the Taiko ecosystem, and provide them with economic incentives and developer resources. All grants will be awarded in the form of Taiko’s native token TTKO in the future.
According to data from Taiko’s official website, the current amount of ETH deposited is approximately 730,000, worth about $130 million.
