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The Blocks report on second layer solutions; The seventh part: Information about such layer 2 solutions

اطلاعات آنچین راهکار های لایه ۲

The upcoming article is the seventh part of The Blocks report about Ethereum second layer solutions which was compiled on the order of Paligan. Layer 2 solutions are provided to solve Ethereum’s scalability problem and other problems of this blockchain. In this report, an attempt has been made to examine the information of such layer 2 solutions such as the total locked value, active addresses, daily transactions and average transaction fees. We at Blockchain Homeland have decided to cover The Blocks report in parts and in a series of articles titled The Blocks report on second layer solutions. Stay with us for the seventh episode of The Blocks report, statistics about The information of such layer 2 solutions to gain.

Checking the information statistics of such layer 2 solutions

The Blocks report on Ethereum's second layer solutions
Source: TheBlockResearch.com

Although layer 2 ecosystems are still in their early stages, by analyzing their blockchain data we will definitely get more complete information about the relative level of adoption and growth status of layer 2s. In this section, the statistics of four indicators of such layer 2 solutions are presented:

In general, these indicators measure relative user adoption and provide information about user experience on different networks.

Total Value Locked (TVL)

The amount of total locked value of layer 2 solutions is almost equivalent to the total amount of funds that have been bridged from layer 1 networks to layer 2 networks. As shown in the chart below, the Arbitrum network has the largest locked value of all Scaling Solutions by a large margin, with a total locked value of approximately $4 billion. It is worth noting that the gross amount of funds transferred from Ethereum (ETH) to Layer 2 solutions is still relatively small compared to the $30 billion bridged from Ethereum to Layer 1 blockchains.

Total value locked in Ethereum layer 2 solutions
Source: TheBlockResearch.com

Ethereum Layer 1 is constantly processing approximately 1.3 million transactions per day. The StarkEx Scalability service provided by StarkWare processes approximately 100,000 to 1,000,000 transactions per day. The number of daily transactions processed by Arbitrom and Optimistic are both in the range of 10,000 to 100,000. The Boba network also processes approximately 1,000 to 10,000 transactions per day.

Review of daily network processing index in layer 2 solutions
Source: TheBlockResearch.com

Number of active addresses

The Active Addresses index indicates the number of addresses that have had at least one transaction (either as a source or a transaction destination) on a given day. In fact, the index of active addresses shows user interaction. The number of daily active addresses in the Optimistic Ethereum and StarkX networks since launch has been in the range of 1,000 to 10,000 and 10,000 to 500,000, respectively. Ethereum is in first place with approximately 600,000 daily active addresses.

Checking the information of such layer 2 solutions and the number of active addresses
Source: TheBlockResearch

Average fee per transaction

Layer 2 scaling solutions reduce transaction fees by around 75-95% compared to Ethereum’s Layer 1 transactions. At times when demand for Ethereum’s Layer 1 network is high, this cost savings is even greater. Although Tier 2 platforms reduce costs more compared to Ethereum Tier 1, they are relatively more expensive compared to alternative Tier 1 platforms and sidechains. However, Layer 2 transaction fees continue to decrease. The Ethereum Network Improvement Proposals (EIP) are optimizing the network for rollups and therefore expected to reduce the cost of sending transaction data to Layer 1. In addition, organizations developing layer 2 can lower transaction fees by fine-tuning their network technologies and increasing efficiency.

Transaction fees in layer 2 solutions
Source: TheBlockResearch

Ecosystem data

While such data shows the “in-chain performance” of Layer 2 networks, ecosystem data estimates the relative size of the ecosystem. The Developer Time Index is a valuable resource. If the interaction of the network developer is at a high level, this is a positive sign of the community’s confidence in the project’s prospects. In addition, this indicator indicates that the project offers more features or improvements. Discord is an online chat room. Platform engineers and community members participate in this space to discuss protocol technology, network operator coordination, support users, and provide news and announcements. As shown in the chart below, most Tier 2 developer communities had 20,000 to 40,000 members at the end of March 2022 (April 1401).

Developer time index in second layer chains
Source: TheBlockResearch

Social media followers

Using trends in community data is a useful tool for estimating the relative size and growth of platform ecosystems. The number of social media followers of any platform will more closely scale with the size and growth of that platform over time. In other words, the number of followers reflects the size of the project. In addition, social media is a place to promote ecosystem growth innovations, publish educational content, and make announcements.

Social networks of two projects
Source: TheBlockResearch

As shown in the chart above, the number of Twitter followers of most of the layer 2 networks is between 100,000 and 300,000 people. Polygon leads the way with 1.3 million followers.

Native Tokens

Token is the main axis of blockchain-based ecosystems. Regarding layer 1 platforms, tokens are usually used to create network security through staking (depositing), paying transaction fees, providing income from transaction fees to network participants, and granting sovereign rights to holders. Among the 6 layer 2 networks discussed in the previous sections, only the Boba and Polygon networks currently have native tokens.

Token of layer two projects
Source: TheBlockResearch

MATIC and BOBA tokens

The BOBA token, which is the native token of the BOBA network, was awarded to OMG (Omisego) token holders by an airdrop. Omisego is a Plasma-based scaling solution for Ethereum. The BOBA token is supposed to be used as a governance token and the holders of this token will have the right to vote in BOBA DAO. Additionally, a portion of network transaction fees and newly issued BOBA tokens will be awarded to BOBA stickers as rewards.

Polygon introduced its native network token called MATIC at the end of 2019 (2019) at the same time as Polygon’s Proof of Stake (PoS) sidechain was launched. The MATIC token is used for staking, governance and payment of transaction fees in Polygan’s proof-of-stake chain. Recently, MATIC was accepted as the native token of Polygon Hermez. After Polygon bought the Hermes network, it merged the HEZ token with MATIC. When Polygon’s layer 2 scaling solutions are implemented, the MATIC token will be used as a native token in all these networks.

Future tokens of layer 2

While many Layer 2 developer organizations have yet to issue any native tokens, these networks are likely to launch tokens for a number of reasons. Many developer organizations have implicitly referenced token launches when discussing decentralized governance and ordering. Carrying out competitive activities increases the probability of launching native tokens of these networks, and finally, the launch of tokens creates liquidity for investors of venture capital institutions (VC).

Decentralized Sequencing

Thanks to Ethereum’s security of networks, Layer 2 developer organizations have also implicitly valued the decentralization and subsequently security offered by Ethereum. Given that developer organizations are the only sequencers of their networks, developer organizations are important participants who create flexibility risk for their platforms. For this reason, the possibility of launching a token with the aim of facilitating widespread participation in the network and reducing the risk of their networks is not far from expected.

The documentation from Offchain Labs, Optimism PBC, and StarkWare includes topics related to “staking,” “decentralized governance,” and “fully decentralized and permissionless networks,” all of which are signs of token issuance by these developer organizations. Matter Labs The developer organization zkSync has officially announced that it plans to launch its native token, but no exact details about the token’s launch date have been provided yet. This token is supposed to be used for the staking mechanism in the zkPorter data access solution.

In Layer 1 networks, block-proposing validators lock “native tokens” to participate in consensus. the door Layer 2 A similar thing happens. Layer 2 networks Native tokens are also likely to be used to facilitate the selection of the block proposer and create incentives for working time. It is predicted for Optimistic Rollups Native co-tokens should be sent by the arrangers as a bond (Bond) so that, on the one hand, there will be an incentive for the validators to monitor the network status, and on the other hand, the incentive for the arrangers to send incorrect transaction batches will be lost.

Most alternative Layer 1 networks require users to pay transaction fees with their respective tokens. (For example, SOL token for Solana network or Avax token for Avalanche network). But it seems unlikely that native layer 2 tokens will be used to pay transaction fees, because the user will incur the cost of purchasing a native layer 2 token in addition to the cost of bridging assets.

Competition among layer 2 networks

Alternative Layer 1 blockchains have paved a significant part of the growth path by offering explicit rewards and encouraging developers and users to adopt their technologies. In many cases, native tokens in the treasury are used to provide financial incentives.

Accordingly, networks that launch their own tokens and have liquid capital to invest in the ecosystem are superior to networks without native tokens. In vampire attacks, a protocol that has released a new token tries to steal a share from a rival protocol that does not have a token by offering explicit financial rewards. This type of attack is a prime example of how token incentives can change the competitive landscape.

Creating liquidity for venture capital (VC) investors.

Tier 2 developer organizations have raised significant capital from venture capital institutions. Liquidity events (such as capital acquisition, initial public offering or similar) are unlikely in the short to medium term. Hence the allocation of blockchain liquidity tokens to venture capital (VC) investors and employees of developer organizations, access to the most important early supporters. Layer 2 networks It makes cash flow shorter and faster.

What are the risks of launching a token?

Although the launch of the token helps a lot to achieve the goals of the developer organization, it also brings risks and dangers. The most obvious one is regulatory risk. In the United States, the Securities and Exchange Commission (SEC) still has no guidelines for Layer 2 tokens has not been issued, as it is mostly associated with blockchain-based tokens. In general, the market tries to predict the future direction by combining the previous positions of the SEC. However, there is a broad consensus within the Securities and Exchange Commission that many digital assets are eligible to be accepted as investment securities. Based on this, how to distribute the token, how to structure the tokennomics and how to decentralize their network are important points for developer organizations when launching native tokens.

final word

In the seventh part of the series of articles “The Blocks report on second layer solutions” The information of such layer 2 solutions We checked Layer 2 solutions are still in their infancy and we have to wait for their growth and development. But check Such data Like the total value locked, number of active addresses and daily transactions, the average fee per transaction helps us have a better understanding of their future growth prospects. Also, ecosystem data, community and social media followers, native token launch status, and network dynamics and competition provide us with more detailed information about these networks. In your opinion, what other indicators show the performance of layer 2 solutions? Will layer 2 solutions lead the cryptocurrency market?

TheBlockResearch

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