Conquering Ethereum's Limitations: Crypto's Top 4 Layer 2s

Undoubtedly, Ethereum is the biggest ecosystem. But it’s SLOW And expensive. And generally just crappy to use. And that’s why Layer 2 solutions exist for Ethereum.

Whether we like it or not, most of the growth and most of the innovation for EVM is happening at the Layer 2 level. It’s not a bad thing as long as you find a good one that meets your needs. So today, 4 of our top ETH Layer 2 solutions and why we like them so much over most of the others out there.

1) ImmutableX (IMX)

First today we have ImmutableX. Now our other 3 choices are more or less “general purpose” Layer 2 chains. That means they are set up for whatever type of app or protocol you have.

But we believe the most successful Layer 1s and Layer 2s going forward, other than a couple on this list, will be specific purpose chains. Or appchains. ImmutableX is a Layer 2 appchain. And its specialty is games. We’ve talked about appchains a lot here like in this video about Injective, a financial appchain.

Appchains make their tradeoffs in the blockchain trilemma with their specific needs in mind. So for ImmutableX, what does it need to be a great appchain for games?

  • Speed.
  • Scalability.
  • Low Costs.
  • Security.

And which of the big 3 in the trilemma is less important for games? Decentralization. Most games are centralized by the studio that makes them anyway so they don’t care. So IMX built out its chain with these needs in mind. And even if you are not a gamer, many of the top games on ImmutableX will be names that you recognize. Games like:

  • Gods Unchained.
  • Illuvium: Beyond.
  • Guild of Guardians.

All call IMX home. But that’s not all. One of the genuine criticisms of IMX used to be that its restricted supply was creating artificial buying demand. But now that’s no longer true. Almost 70% of the total supply of 2 billion is circulating now. This number still could be higher. But it used to be dangerous when this % was in the 20s.

Now it looks like a normal project and demand for $IMX is real, not artificial. As web3 games grow again, IMX will grow too. It’s a full 400% off of its bear market low and looks like a good value at its current price of $2 each.

2) Polygon (MATIC)

You don’t have to have been here long or watched many of our videos to know we are big fans of Polygon. For many of us here at Altcoin Buzz, it’s our personal EVM of choice. It has fast, secure transactions, low costs, and a token we want to hold in $MATIC, soon-to-be $POL.

Polygon’s innovations to help EVM transactions are many but the most recent from the last 6-9 months is its zk-EVM. This is an EVM-compatible network that’s a rollup with zero knowledge protections for privacy.

Polygon is making its zk-EVM a plug-and-play system. As this tweet says, you can deploy the same code as on Ethereum here. Then, you get both the EVM coverage from Polygon you expect and the enhanced security of the zero-knowledge features. It’s on the Cardona testnet now. And it’s growing in Games too. The top 4 games in Polygon have grown their number of unique active wallets by 183%, 165%, 100,000%, and 8700% just in the last 30 days.

This tells us big launches are happening on Polygon as well as fast growth. Three games have completed more than 2 million transactions in the last 30 days, and Smart Cats did 9 million in the last 30 days. That’s some serious testing of a chain’s capabilities, speed, security, and total satisfaction.

And Polygon is succeeding in all those areas. Which Layer 2 do you use the most? Is it one of these? Or maybe Stacks? Let us know in the comments below.

3) Optimism (OP)

Third on our list is Optimism. We have one specific thing we like about Optimism compared to the other L2s. It’s becoming the home of the “create your own Ethereum L2”. Especially for exchanges. One of the profitable ways forward for centralized exchanges will be decentralized chains.

Coinbase is already doing it with a Base built on Optimism. Binance is too with its opBNB for BNB Chain. Also built on Optimism. Whether it is due to increased regulations, outlawing, or costs of compliance. All exchanges know that decentralized versions are the long-term answer. And these L2s are starting to earn some good money for their parent exchanges.

Four of the top 9 in total daily transactions throughout January are ETH Layer 2 solutions. And of the 4, 2 are Optimism-based. Both Optimism and Base are at #8 and #9. Optimism knows it’s becoming “THE” place to build out L2s. So news like this where they are open-sourcing even more tools means this trend will only continue to grow.

As Base in particular becomes more successful, more exchanges and other projects too will build out their L2s using Optimism tools.

4) Arbitrum (ARB)

Arbitrum was one of the big L2 stories of 2023. Mostly because it was in 2023 they finally released their $ARB token. And with that, ARB is now the #41 project by market value on CoinGecko. So that’s A LOT of value unlocked for users.

Although Arbitrum is more “general purpose” in its Layer 2 focus than ImmutableX, unlike Polygon and Optimism, it does tend to specialize. Mostly in DeFi, trading, and games. Arbitrum is crushing in TVL compared to its peers. Especially when you take out holding the native token as you see here.

We know part of this is that DEXes and especially perp DEXes for trading are one of the specialties of Arbitrum. For more than 2 years, GMX traded as a proxy for the Arbitrum ecosystem. It’s still by far the largest protocol using Arbitrum and it’s still a top 150 project today.

With Hegic and Lyra, you can access options almost as well as futures and perps for trading. Almost everything you need for a professional trading setup on EVM can be found in Arbitrum. And for games, TreasureDAO and other marketplaces are linking up the growing game sector here too.

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Disclaimer
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted levels of risk tolerance of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.

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