Top 8 Layer 2 Crypto Projects to Watch in 2024
Digital Currencies and Blockchain Technology have emerged as disruptive forces in the financial world, paving the way for decentralized and more efficient systems.
However, as the adoption of cryptocurrencies grows, so does the need for scalable and faster blockchain solutions.
Layer 2 protocols are designed to address the scalability issues of Layer 1 blockchains like Bitcoin and Ethereum, offering improved transaction speeds and reduced fees.
In this article, we will explore the top Layer 2 Crypto Projects that are poised to make a significant impact in the year 2024.
1. Optimism
Optimism is a Layer 2 scaling solution built on Ethereum, designed to reduce costs and latency while maintaining strong security guarantees.
It functions as an extension to Ethereum, enabling users and developers to benefit from Ethereum’s security guarantees at a fraction of the cost.
Optimism uses a technology called Optimistic rollups, which bundle large amounts of transaction data into digestible batches, making transactions much cheaper compared to the Ethereum mainnet.
It is the second-largest Ethereum layer 2 with a total of $313 million locked into its smart contracts, and it is home to various protocols such as Synthetix, Uniswap, and Velodrome.
Optimism is more than just a blockchain; it is an experiment in sustainable ecosystem funding fueled by protocol revenue, aiming to build a sustainable future for Ethereum through retroactive public goods funding.
The live price of the native OP token can be tracked on platforms like CoinMarketCap. Optimism is open-source and MIT-licensed, and its specification is designed to align with Ethereum, allowing developers to innovate on Optimism without having to learn new programming languages or overhaul code
2. Polygon (MATIC)
Polygon (MATIC) is the native cryptocurrency of the Polygon network, a layer 2 platform created in 2017. Originally known as the Matic Network, Polygon allows developers to create and deploy their blockchains compatible with the Ethereum blockchain with a single click.
It also enables other Ethereum-based projects to transfer data and tokens between one another using the MATIC sidechain.
Polygon is a scaling solution and framework for building Ethereum-compatible blockchains. It addresses challenges related to scalability, high transaction fees, and latency by providing a way for decentralized applications (dApps) to run on side chains connected to the main Ethereum blockchain.
The $MATIC token plays an increasingly important role in securing the system and enabling governance.
It is an ERC-20 token running on the Ethereum blockchain and is used for payment, staking, and governance.
Polygon has a large and thriving ecosystem, with over 28,000 total contract creators, 219.11 million unique addresses, and 2.44 billion transactions.
It offers fast transactions at near-zero gas fees and aims to increase throughput without sacrificing decentralization
Polygon (MATIC) is a significant player in the blockchain space, providing solutions for Ethereum scalability and infrastructure development, with its native token serving various functions within the network.
3. Arbitrum
Arbitrum is a suite of Ethereum Layer-2 scaling solutions that can be used to build decentralized apps (dApps). It is a Layer 2 scaling solution for the Ethereum blockchain that powers fast smart contract transactions while reducing transaction costs.
Arbitrum uses optimistic roll-up technology to bundle multiple transactions into a single batch that is then compressed and submitted onto the base layer as a single transaction. It is designed to increase scalability and reduce transaction costs.
The Arbitrum Rollup is an Optimistic roll-up protocol that inherits Ethereum-level security. It allows users to enjoy faster speeds and cheaper transaction costs when interacting with web3 dApps. The Arbitrum ecosystem comprises many different elements, including Arbitrum One, Nitro, Nova, AnyTrust, and Orbit.
ARB is its native token and its current use cases include governance. Developers have flocked to Arbitrum to build decentralized applications (dApps), and it is now ranked the seventh biggest blockchain by total value locked (TVL).
Arbitrum has the potential to drive significant growth and innovation in the blockchain space by providing faster transaction times, lower gas fees, and improved scalability.
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4. Shibarium (SHIB)
Shibarium is an upcoming layer 2 scaling network designed to house the entire Shiba ecosystem, including the SHIB metaverse and a stablecoin called SHI. It is built on top of Ethereum’s layer 1 network to meet the computational and memory demands of the fast-expanding Shiba ecosystem.
Key Features and Developments
Layer 2 Ecosystem: Shibarium aims to provide a layer 2 ecosystem on Ethereum, offering scalability and efficiency for the Shiba Inu network.
SHIB Metaverse: The official launch of the SHIB metaverse is contingent on the deployment of Shibarium, which will host the entire ecosystem and the stablecoin SHI.
Real-world Impact: Shibarium is expected to facilitate real-world activities, such as the fundraising and operational activities of the Manny Pacquiao Foundation, showcasing its potential for scalability and impact.
Security and Deployment
Decentralization: Shibarium is envisioned to be more decentralized than other layer 2 solutions, with plans to use BONE as its primary pair token.
Launch Status: Developer announcements indicate that Shibarium is set to launch “soon,” although a specific date has not been specified.
Market Availability
Token Purchase: Shiba Inu (SHIB) can be purchased on various exchanges, including Binance, Huobi, Coinbase, Gate.io, Uniswap (V2), and OKEx.
5. zkSync (ZKS)
zkSync (ZKS) is a Layer-2 protocol that scales Ethereum using zero-knowledge rollup (ZK-rollup) technology. It aims to increase Ethereum’s throughput while preserving its foundational values of freedom, self-sovereignty, and decentralization at scale.
Here are some key points about zkSync
Technology: zkSync is a trustless protocol for scalable low-cost payments on Ethereum, powered by zkRollup technology. It uses zero-knowledge proofs and on-chain data availability to keep users’ funds as safe as though they never left the mainnet.
Airdrop: zkSync does not yet have its own token, but it is likely to do an airdrop to reward early users. The protocol has raised significant funding and is expected to airdrop $ZKS tokens to its early users.
Price: The current price of the ZkSync Token (ZKS) is approximately $0.2177, with a market cap of $22 million.
Ecosystem: zkSync has an ecosystem of DApps, including Curve (a stablecoin exchange), Yearn Finance (a yield optimizer), ZigZag (a non-custodial exchange), Mute.io (an AMM exchange and launchpad), and Taker Protocol (DAO-based).
zkSync aims to resolve scalability issues on Ethereum without compromising security, offering faster and cheaper transactions while maintaining the safety of the Ethereum network. It is part of a group of Layer 2 solutions called rollups, specifically a ZK rollup, which utilizes zero-knowledge proofs to enable near-frictionless transfers between Layer 1 and Layer 2.
The protocol has garnered attention for its potential airdrop and its mission to scale Ethereum with cutting-edge ZK technology. While there has been no news regarding a planned airdrop or snapshot for the network’s native token, ZKS, users can potentially qualify for the zkSync Airdrop by following specific steps once it is announced.
zkSync is a significant project in the Ethereum ecosystem, offering a promising solution to Ethereum’s scalability challenges while maintaining the security and values of the network.
6. Loopring (LRC)
Loopring (LRC) is an Ethereum-based cryptocurrency token that is part of the Loopring protocol, an open protocol designed for the building of decentralized crypto exchanges.
Loopring aims to incentivize a global network of users to operate a platform that enables the creation of new types of decentralized exchanges. LRC is used as a utility token to incentivize protocol use and prevent malicious behavior.
Loopring operates a layer 2 technology that improves transaction fees and congestion on the Ethereum blockchain. Loopring’s native token is LRC, an ERC-20 token that provides holders with the opportunity to stake their tokens, thereby earning a percentage of the protocol’s fee revenue.
LRC can be purchased from exchanges such as Uniswap or Binance. Loopring has a range of products and services, including the Loopring Wallet app, an Ethereum L1 & L2 social recovery smart wallet, the Loopring Layer2 Decentralized Exchange (DEX), a non-custodial order book & AMM-based zkRollup L2 DEX.
7. Hermez Network (HEZ)
Hermez Network (HEZ) has been a cryptocurrency that is designed for scalable payments. It is an open-source ZK-Rollup optimized for secure, low-cost, and usable token transfers on the wings of Ethereum.
After Hermez Network merged with Polygon, the HEZ token was indexed to the MATIC token. The current price of Hermez Network is $4.73 per (HEZ/USD) as of November 16, 2023.
The trading volume of Hermez Network (HEZ) is $44,289.07 in the last 24 hours, representing a 105.20% increase from one day ago.
The highest price paid for Hermez Network (HEZ) is $10.30, which was recorded on Dec 26, 2021, and the lowest price paid is $1.81, which was recorded on Oct 16, 2020.
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8. StarkWare
StarkWare Industries is an Israeli software company that specializes in cryptography and develops zero-knowledge proof technology that compresses information to address the scalability problem of the blockchain and works on the Ethereum platform.
The company’s technology called STARK (Scalable Transparent Argument of Knowledge) improves the scalability of the blockchain by batching thousands of transactions in a single batch, away from the basis layer of Ethereum.
StarkWare first offered its technology in the form of StarkEx, a proprietary scaling engine that was launched on Ethereum in June 2020 and is used by Sorare, Dydx, Immutable X, the web browser Opera, and DeversiFi.
In June 2021, StarkWare launched its second platform: StarkNet, which is permissionless and any developer can use it to build their scalable decentralized applications. StarkNet is a Layer 2 network built over Ethereum, but it is different from other Layer 2s built on the model of the Ethereum. The company’s systems are programmed in the CAIRO language, Turing complete programming.
Conclusion
Layer 2 solutions hold immense promise for addressing the scalability concerns of blockchain networks while enhancing transaction speeds and reducing fees. The projects mentioned above showcase innovative approaches to scaling Ethereum and offer a glimpse into the future of Layer 2 technologies.
As the demand for faster, more efficient, and cost-effective blockchain solutions increases, these Layer 2 crypto projects are expected to play a pivotal role in shaping the crypto landscape in 2024 and beyond.
FAQs (Frequently Asked Questions)
Can Layer 2 solutions be used with other blockchains apart from Ethereum?
Yes, Layer 2 solutions can be implemented on other blockchains, although Ethereum is currently the most prominent platform for Layer 2 development.
How do Layer 2 solutions improve scalability?
Layer 2 solutions achieve scalability by processing transactions off-chain and then settling the final result on the main blockchain, reducing the burden on the Layer 1 network.
Do Layer 2 solutions compromise security?
Layer 2 solutions are designed to enhance scalability while maintaining a high level of security. They leverage different techniques such as optimistic rollups and zero-knowledge proofs to ensure the integrity of transactions.
Are Layer 2 solutions compatible with the existing Ethereum infrastructure?
Most Layer 2 solutions are designed to be compatible with the existing Ethereum infrastructure, allowing for a seamless transition between decentralized applications and protocols.
How do Layer 2 solutions impact transaction fees?
Layer 2 solutions can significantly reduce transaction fees by processing multiple transactions off-chain and then settling them on the main blockchain with a single proof, thus reducing gas costs.
