StarkWare
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StarkWare

A Thundering Herd: The Rise of L2-Native dApps

Unleashing L2’s Computational Richness

TL;DR

Introduction

L1 gas limits shape L1-native dApps

The rise of L2-native dApps

DeFi

  • Oracle price updates: Such updates typically include dozens of prices and signatures from various sources to calculate a median. A Validity Rollup provides exponential scaling of the price oracle logic (signature verification and calculation of the median price) — without reporting that witness data to L1. Compare this to dYdX’s L1 implementation, where every price oracle update cost about 300K gas and was, therefore, limited in its frequency and the size of the set of price reporters.
  • Leverage: An accurate price feed allows dYdX to estimate the risk of a position in real-time and offer higher leverage for users. Thanks to the improved oracle price updates, dYdX increased leverage from x10 on L1 to x25 on L2.
  • Cross-margin: With dYdX on L2, market makers can put long/short orders on many assets using the same collateral. The average settlement on dYdX’s L2 involves positions with more than 10 different synthetic assets! By comparison, having this cross-margin ability on L1 would have more than doubled the on-chain gas cost.

Gaming and Generative Art

What’s next?