Lưu trữ cho từ khóa: Layer 2

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What is layer-2 in crypto? What is a layer-2 blockchain?

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A blockchain contains three main tiers: keeping safety as the top priority, making sure everything works all the time, and letting everyone participate in how a blockchain works.

However, when many people use a blockchain at the same time, it slows down. That’s where layer-2 comes in, which can be considered an upgrade to layer-1 blockchains. Layer-2 makes blockchains scalable, faster, and less crowded while keeping everything governed and safe. 

In this article, we will discuss what is layer-2 blockchain, the different layers of blockchain, and specifically what are the key differences between layer-1 vs layer-2 blockchains.

What is layer-2 blockchain?

As the name suggests, layer-2 in crypto has come after layer-1 and is built on top of layer-1 to improve its performance and scalability.

The core problem for layer-1 protocols is their high fees and slow transaction speeds, especially during a volatile market and peak usage. Layer-2 blockchains have come up with sidechains, state channels, and rollups, among other solutions that enhance the underlying layer-1 blockchain in terms of faster transaction times and lower fees. 

Understanding the layers of the blockchain 

Layer-1 (L1) also known as the base layer of a blockchain network oversees fundamental functions that include consensus mechanisms such as the Ethereum (ETH) proof-of-stake or Bitcoin’s proof-of-work and transaction settlements, among other key functions. Despite, decentralization and security being a top aspect of L1s, bottlenecks like poor transaction speeds and expensive fees sometimes plague them.

Layer-2 (L2) blockchains are built right on top of layer-1 blockchains to address the underlying problems. Layer-2 blockchains use techniques like rollups, sidechains, and state channels, which in turn, reduce the transactional load and enable quicker and less expensive transactions without sacrificing security.

L2 blockchains have come a long way and solved many problems in L1 and the overall blockchain ecosystem, however, additional optimization is required to enhance interoperability, user experience, and particular application features. This is where layer-3 (L3) blockchains come into the picture.

L3 blockchains are specialized in creating specific protocols for applications in web3 sectors including but not limited to NFTs, DeFi, and gaming. In simpler words, L3 blockchains facilitate cross-chain functionality across different blockchains so that any end-user can access multiple blockchains at a single time, which improves accessibility and interoperability. 

These three blockchain layers described above, combine to create a complete stack that guarantees blockchain technology’s future scalability, security, and accessibility.

Layer-1 vs layer-2 blockchain

Layer-1 and layer-2 blockchains differ primarily in their functions inside the blockchain ecosystem. Consensus mechanisms and autonomy are at the core of layer-1 blockchains. Bitcoin and Ethereum are two of the popular layer-1 blockchains that are autonomous in how they operate as they record and verify transactions on-chain. However, as mentioned before, when there is significant volatility in the market, layer-1 blockchains experience critical scalability issues which have a direct impact on spiking fees and delaying transactions.

Layer-2 blockchains are developed on top of layer-1 protocols with a specific mission in check, which is to improve the scalability and performance of L1 blockchains over time. There are many techniques that L2 blockchains use to make L1s efficient, but the most common ones are the combining of several transactions into one, and processing transactions off-chain that directly lowers the protocol’s workload without much negative impacts.

Rollups, state channels, and sidechains are some of the many solutions L2 blockchains offer that combine to allow for quicker and less expensive transactions and reduce congestion on the underlying L1 protocols.

In the long run, both layer-1 and layer-2, team up to produce an effective system: layer-1 offers the security and decentralized consensus that form the basis, while layer-2 enhances scalability and user experience, making blockchain technology more viable for common use cases like gaming and decentralized finance (DeFi).

List of layer-2 blockchains

There are over 100 layer-2 blockchains with more blockchains developing now and then. Here we will mention the top three layer-2 blockchains so far:

Polygon (POL)

Polygon is a layer-2 blockchain, also referred to as ‘sidechain’, which is a scaling solution operating on the Ethereum blockchain. Cryptocurrency projects use Polygon to enhance the scalability, flexibility, and autonomy of their platform. POL (previously known as MATIC) is the native token of Polygon and is used for governance and network transaction fees on the Polygon blockchain.

Optimism (OP) 

Optimism is a layer-2 blockchain that uses optimistic rollups to scale the Ethereum ecosystem. This layer-2 platform runs on a community-driven governance model to benefit the ecosystem in the long run.

The Optimistic Rollup protocol is at the center of Optimism, as it helps take the load off Ethereum by executing transaction data outside Ethereum and then periodically posting it onto the Ethereum blockchain. This whole process helps in reducing transaction costs and enhances the performance of the Ethereum blockchain and more projects can build on Ethereum by using the Optimisim L2 blockchain.

Arbitrum (ARB)

Arbirtum is a layer-2 blockchain that also uses optimistic rollup for storing off-chain data which reduces the traffic on the Ethereum blockchain. It offers web3 apps and smart contracts that offer lower and faster transactions as compared to using Ethereum alone as a blockchain.

Benefits and challenges

By now you have understood why layer-2 blockchains are a critical part of the entire web3 ecosystem. However, it doesn’t mean they do not face any challenges. In this section, we will briefly discuss the benefits and challenges offered by layer-2 blockchains. 

Benefits:

Scalability 

Processing transactions off-chain is the key feature of L2 blockchains which has a direct impact on increasing scalability, as the congestion on the underlying L1 blockchain is significantly reduced. 

Lower Transaction Costs 

New users and projects are attracted to shift from web2 to web3 because layer-2 blockchains reduce transaction costs dramatically thanks to it off-chain transaction processing feature described above. 

Faster Transactions 

When transactions are processed off-chain, not only is the fee reduced, but also the time it takes to get from point A to point B. L2 blockchain bundles multiple transactions together which makes their speed faster and in turn ensures improved user experience while maintaining security as well. 

Challenges:

Security Dependencies 

L2 blockchains do not share the autonomy and high level of security as compared to the layer-1 blockchains. There are still vulnerabilities and failures associated with L2 blockchains that are being resolved by blockchain developers. 

Complexity and Adoption 

Not everyone can integrate their layer-2 project into the layer-1 protocols as it may require specific infrastructure knowledge of both L1 and L2 blockchains. This means that many users and new projects may face a steep learning curve to adopt this layer-2 technology. 

Interoperability Issues 

Performance and fast transactions are a big benefit of layer-2 blockchains, however, the interoperability issues is still there. This issue is resolved by the introduction of L3 blockchains which enhance cross-chain functionality across different blockchains as explained in section 2 of this article.

The future of layer-2 blockchains

Layer-2 blockchains in crypto will continue to solve the scalability issues that are currently being faced by layer-1 blockchains, such as Bitcoin and Ethereum. With an increasing number of adoption for decentralized technology, cost-efficient blockchain technology is going to be the top requirement and this is where layer-2 blockchains can manage this incoming traffic without compromising on decentralization or security.

It is also expected that interoperability between layer-1 and layer-2 blockchain will continue to be improved. This will help in creating a unified ecosystem that will provide more accessibility to assets and data across all blockchains. In simpler words, user experiences such as blockchain wallet integrations, transaction throughput, and other key metrics that determine blockchain performance will be enhanced, which in turn will encourage mass adoption.

Other important expectations from layer-2 blockchains are that the innovation sector, which includes rollups, zk-proofs, etc., will continue to advance as new cryptocurrency startups continue to build on this blockchain technology. It is also possible that the layer-2 blockchain solution may overshadow other blockchain layers and become the future of a decentralized economy.

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Saving Ethereum from itself: Experts weigh in on Vitalik Buterin’s ‘alignment’ plan

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Will fragmentation tear Ethereum’s booming ecosystem apart? Vitalik Buterin urges “alignment,” but is it too late? Experts share their insights.

Buterin suggests ‘alignment’

Over the past few years, Ethereum’s (ETH) ecosystem has expanded rapidly. As of 2024, there are over 4,000 decentralized applications and dozens of layer 2 solutions built on Ethereum, each with a unique team and vision.

However, this diversity creates a challenge: fragmentation. How can such a large, decentralized ecosystem work together toward common goals without losing its unique identity?

The risk of fragmentation is already becoming apparent. Take, for instance, layer 2 solutions like Arbitrum (ARB) and Optimism (OP). While they aim to scale Ethereum by offloading transactions from the main chain, they operate somewhat independently. This raises concerns about how well these L2s will be able to cooperate in the long run.

Vitalik Buterin, Ethereum’s co-founder, recently addressed this issue, calling for ‘Ethereum alignment’ to unify the various projects and teams within the ecosystem.

The core problem lies in ensuring that all these independent efforts — whether by L2 teams, wallet developers, or community groups — contribute to a cohesive whole. 

Without alignment, Ethereum risks becoming a collection of isolated projects that don’t integrate well, undermining its strength as a decentralized network.

Buterin has advocated for establishing clear metrics to evaluate how well individual projects align with Ethereum’s broader goals, thus reducing the risk of social layer capture — where success is based more on personal connections than on actual contributions to the ecosystem.

Let’s dive deeper into how the metrics Buterin suggests can help Ethereum grow without losing its core values.

Three pillars of Ethereum alignment

Ethereum alignment rests on three core types:

  • Values
  • Technological
  • Economic

Each type serves as a guiding principle for ensuring projects contribute meaningfully to Ethereum’s long-term success.

Values alignment

The first pillar of Ethereum alignment is values. Ethereum was founded on the ideals of openness, decentralization, and public goods, and these values must be shared by all projects within the ecosystem.

Open source is a crucial part of this. In an ecosystem driven by transparency and trust, code that is proprietary or hidden from public view signals a red flag.

Ethereum’s base layer software, such as Geth and Prysm, is fully open-source, allowing anyone to inspect and contribute to the code. However, this standard needs to extend beyond the base layer. 

Buterin argues that all core infrastructure projects should adhere to the Free Software Foundation’s and Open Source Initiative’s definitions of open-source software.

Consider the DeFi space: projects like Uniswap (UNI) are open-source, which is a major reason behind their strong community support. As of Oct. 10, the total liquidity in Uniswap hovers around $3.4 billion, and its success isn’t just due to being a great protocol — it’s because anyone can build on, fork, or improve it.

On the other hand, projects that prioritize profits over public goods—those that introduce proprietary elements — risk creating fragmentation. For instance, Polygon’s (POL) ZK rollups, while a major step forward in scaling technology, still operate largely within a centralized framework.

Proprietary code or closed projects can become single points of failure, undermining decentralization and introducing unnecessary risks. Values alignment means that as these technologies evolve, they must remain open and accessible to all, reducing the risk of centralization creeping back into the system.

Technological alignment

Ethereum’s technological backbone relies on shared standards. Without these, the network would devolve into a fragmented collection of incompatible solutions. Technological alignment ensures that projects are not only innovative but also interoperable.

Take the ERC standards as an example. The ERC-20 token standard is widely adopted, making it easy for wallets, exchanges, and applications to interact with any token built on Ethereum. As of 2024, over 500,000 ERC-20 tokens exist, showcasing the power of shared standards. 

Similarly, ERC-721 has become the foundation of the NFT ecosystem, enabling the creation of unique digital assets across multiple platforms.

However, Ethereum’s technology is evolving rapidly. L2 solutions, account abstraction (ERC-4337), and cross-chain bridges are becoming more prominent, and it’s crucial that these innovations adhere to open standards.

For instance, cross-L2 transfers need to work seamlessly for users moving assets between chains. Currently, this process remains clunky and expensive.

The ecosystem also faces challenges with newer technologies like ZK-rollups. While ZK-rollups offer enhanced scalability and privacy, they introduce technical complexities that require careful standardization.

To avoid fragmentation, projects must collaborate to establish new ERCs and protocols that ensure these innovations are fully integrated into Ethereum’s broader ecosystem rather than siloed off.

Economic alignment

The third pillar of alignment is economic. Ethereum’s economy is anchored by ETH, and economically aligned projects should prioritize using ETH as the native token wherever possible.

As of Oct. 10, the DeFi ecosystem holds over $81 billion in locked assets, with ETH serving as the backbone for many protocols. 

Projects like MakerDAO (MKR) and Aave (AAVE) rely on ETH collateral to secure loans, reinforcing its position as the most trusted asset within the Ethereum ecosystem. This network effect drives further adoption and strengthens the broader Ethereum economy.

However, economic alignment extends beyond simply using ETH. Buterin suggests that projects should contribute to public goods—initiatives that benefit the entire ecosystem, not just individual projects.

Gitcoin, for example, has raised over $50 million to fund open-source development, supporting infrastructure that helps the entire Ethereum network thrive.

Yet, challenges remain. Many projects, particularly those handling high transaction volumes, increasingly rely on stablecoins instead of ETH. This trend risks fragmenting Ethereum’s economic model, as ETH becomes less central to the network’s daily operations.

Ultimately, economic alignment means ensuring ETH remains the core unit of value across the ecosystem while contributing to Ethereum’s long-term success through reinvestment in public goods.

Metrics to measure alignment

To avoid making “alignment” a vague or abstract concept, Buterin proposes using specific metrics to track how well projects align with Ethereum’s values, technology, and economics. Let’s dive into the four key metrics he suggests:

Open source adoption

The degree to which a project adheres to open-source principles can be measured by how much of its code is available for public inspection. 

Projects that score highly on this metric follow the OSI and FSF definitions of open-source, ensuring they remain transparent and collaborative.

For example, fully open-source projects like Aave allow anyone to review their smart contracts and verify security, aligning closely with Ethereum’s core ethos of decentralization and transparency. 

In contrast, projects with closed-source code risk creating centralized control points, which run counter to Ethereum’s vision.

Standards compliance

Standards compliance measures how well a project follows established Ethereum standards. Projects that adopt standards like ERC-20 or ERC-721 ensure seamless interaction with other dApps and tools in the ecosystem.

This metric also considers how actively projects contribute to new standards via Ethereum Improvement Proposals. Projects contributing to such initiatives show a high level of technological alignment.

Decentralization and security

The walkaway test is a simple but effective metric: if a project’s team disappeared tomorrow, would it continue to function? Decentralized exchanges typically pass this test with ease because their smart contracts operate autonomously without needing a central authority.

Additionally, the insider attack test evaluates a project’s vulnerability to internal exploitation. Projects heavily reliant on centralized control score poorly here, as they are more susceptible to insider attacks. 

In contrast, projects resilient to such risks—due to decentralized governance—demonstrate a strong commitment to Ethereum’s decentralized vision.

Positive-sum impact

This metric assesses how much a project gives back to the Ethereum ecosystem and beyond. Projects that use ETH as their primary token, contribute to open-source development, or donate part of their revenue to public goods score highly in this area.

Experts weigh in

As Ethereum pushes toward greater scalability through L2 solutions, the balance between decentralization and efficiency becomes more delicate.

The key question is how much decentralization can be sacrificed without compromising Ethereum’s core values, and whether innovation in L2 technology risks fragmenting the ecosystem.

To explore this critical intersection, crypto.news consulted leading industry experts, whose insights reveal that Ethereum is still facing uncharted challenges—and that the future may demand trade-offs that challenge the network’s founding principles.

Ulyana Skladchikova, Head of Product at Blockscout, recognizes the realities of Ethereum’s evolving ecosystem. She sees Ethereum’s current state as one of rapid experimentation, where decentralization and scalability are constantly tested against each other.

Decentralization is a process—it’s constantly evolving. Right now, we’re in a phase where L2 solutions are launching frequently, testing different hypotheses, and iterating based on what works. There are trade-offs happening as we balance efficiency with Ethereum’s core decentralization goals, but transparency must remain non-negotiable.

Yet, while Ethereum’s decentralized identity is being tested, the journey toward full decentralization is far from complete. 

We’re still years away from fully decentralized systems like sequencers and fraud-proof submissions. It’s not just about technology—it’s also about community engagement. We need more active participation. Decentralization can’t be driven by a small group of super-users; it requires a much broader base to ensure its success.

Roy Hui, Co-Founder and CEO of LightLink, offers a more pragmatic perspective. While he values decentralization, he argues that not all projects need to pursue it with the same intensity.

The importance of decentralization depends on what goals a project is aiming for. Gaming chains, for example, don’t need the same level of decentralization as financial applications. At LightLink, while efficiency might take precedence in some areas, we make sure user autonomy is never compromised. Users should always be able to control their assets, even when some trade-offs around centralization are made.

Hui agrees that decentralization remains the ultimate goal—it’s just not something that can be achieved overnight.

Decentralizing a chain is like trying to rebuild an airplane mid-flight — it’s incredibly challenging. By aligning with Ethereum’s security standards and decentralizing processes like fraud-proof submissions, we’re finding a balance between performance and decentralization without sacrificing either. It’s a gradual journey, but we’re getting there.

Both Skladchikova and Hui also raised the issue of fragmentation within Ethereum, particularly with respect to L2-L2 bridging. As Skladchikova points out:

The biggest blind spot right now is L2-L2 bridging. Without secure and transparent bridges, we risk creating isolated ecosystems where different L2s don’t communicate well with each other. This could lead to fragmented solutions, where L2s aren’t working as part of the broader Ethereum ecosystem. Bridges need to be secure and transparent, or else the entire network could face serious fragmentation risks.

While Skladchikova focuses on structural risks, Hui highlights the user experience, arguing that the complexity of cross-chain asset transfers needs to be simplified to minimize friction.

Cross-chain ownership and asset transfers are primarily a UX challenge now. Users shouldn’t need to think about the complexities of which chain they’re interacting with. The process should be seamless and intuitive. Users should be able to move assets without worrying about the underlying technicalities.

As Ethereum continues to grow, both experts also expressed concerns about social capture—the risk of power and influence becoming concentrated in the hands of a few insiders, rather than being evenly distributed across the ecosystem.

“Ethereum’s community is still relatively small, and early relationships play a big role in what gets built and promoted,” Skladchikova explains. 

But as the ecosystem matures, projects built on favoritism will begin to fall away. Innovation will ultimately win out, but we need to ensure the system remains open and transparent to prevent social capture.

Hui and Dan Enright, Ecosystem Lead at LightLink, are actively working to prevent social capture within their own platform.

We’re forming a DAO that will oversee decision-making and resource allocation. By decentralizing governance, we’re making sure influence within LightLink is distributed fairly. It’s not just about who has early access—it’s about creating opportunities for everyone to participate.

Enright adds:

Our goal is to make governance accessible, so it’s not dominated by insiders. We’re working to empower independent developers and give them the tools they need to bring their projects to life. The future should be about merit, not connections.

Experts acknowledge that decentralization remains the ultimate goal, but the road forward will require compromise, innovation, and a firm commitment to keeping Ethereum an open, fair, and transparent ecosystem.

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Simplifying UX in a fragmented blockchain world | Opinion

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When Vitalik Buterin, co-founder of Ethereum (ETH), announced the completion of the long-awaited Merge in September 2022, efficiency was the name of the game for blockchain innovation. In recent years, scalability has overtaken efficiency as the most pressing issue among the ‘big five’ challenges currently facing web3. 

Prominent layer-1 chains are now giving way to a wave of emerging layer-2 solutions, which promise to propel the blockchain ecosystem to new heights. Dissimilar from the consolidated efforts that drove the Merge, though, this latest stage of blockchain development—coined “The Surge” in the Ethereum space—has given rise to a suite of issues. A new scalability paradigm, spearheaded by a constantly expanding galaxy of L2s, has led to a fragmented blockchain ecosystem characterized by multiple chains, each with its own rules, tokens, and transaction fees.

For some, participating in capitalism means believing that competition breeds success. But when it comes to blockchains, more isn’t necessarily better. Just as the tech shortcomings of the early internet made it challenging for newcomers to navigate websites, the complexity of managing multiple blockchain layers presents significant challenges for users. 

If we are to steward web3 to mass adoption, the time has come to ask: how many layers are too many?

Challenges of a fragmented blockchain ecosystem

As we stack more layers onto our proverbial blockchain cake, challenges for both users and developers continue to arise in the form of hampered usability and stifled innovation. Although the Wild West of L2s feels like a net positive, as more complexities are piled on top of user experience, we risk our blockchain cake becoming nearly impossible to slice through.

Onboarding into web3 can be a daunting task in and of itself, so juggling various wallets, tokens, and fee schedules across chains to perform simple tasks leads to subpar or even arduous user experience. For many, a fragmented ecosystem makes the barrier to entry that much higher.

And the struggle faced by developers is quite similar. The complexity of working across multiple layers can mean slower build times and increased development costs. The lack of interoperability between an always-increasing number of chains further complicates project scopes, especially for teams endeavoring to build cross-chain applications. In the current L2 sector, progress is easily hindered when developers feel forced to navigate a convoluted landscape.

Layer 2s: A potential that’s lacking

Of course, this layer cake approach to scalability isn’t without its merits. There’s a rhyme and reason to the current disjointed system of L2 constellations dominating the blockchain sector.

On paper, L2 solutions offer substantial benefits, including enhanced scalability and speed. Offloading transactions from an L1 to an L2 means increasing the overall volume of transactions that can be processed by said L1. Following the reaction further, L2s can lead to faster and more cost-effective operations, enhanced security, and an extra layer of protection for sensitive transactions.

However, these benefits, as we’ve seen, may only outweigh the disadvantages for so long. Fragmentation creates a complex web that can feel overwhelming, especially as the landscape of L2 solutions continues to expand and a clear solution remains elusive.

A unified approach

Fortunately, there is a promising solution to the challenges presented by the L2 race—chain abstraction. By removing the complexities and overarching technicalities of the blockchain that regularly interfere with usability, chain abstraction can help maintain the broader benefits of decentralized technology while also lowering the barrier to entry to general consumers.

A solution that many proponents of mass adoption are already in support of, chain abstraction allows us to create a unified layer that communicates with multiple blockchains and simplifies user interactions. This approach allows users to manage their assets and execute transactions without needing to understand the intricacies of each underlying layer.

Of course, chain abstraction doesn’t simply exist on its own, which is where omnichain infrastructure comes into play. As a practical application of chain abstraction, omnichain infrastructure takes the concept further by empowering the creation of a cohesive, interoperable ecosystem that facilitates seamless interactions across various blockchains.

By powering fragmentation solutions such as seamless cross-chain transactions and secure and efficient verifications while incentivizing developer flexibility, omnichain infrastructure makes a simplified user-centric design possible and blockchain interactions more intuitive and efficient.

Multichain today, omnichain tomorrow

So, where do we go from here?

While it’s true that the proliferation of L2s has ushered web3 into an era of fragmentation, complexity still exists throughout the blockchain. Layers are to be found everywhere, both within and beyond the L1 and L2 paradigms. Ultimately, this convolution only becomes more rampant as legacy institutions and consumer interests lead to bursts of new innovation, new platforms, and new needs.

This is where our initial question comes back into view. Because for the majority of new users, anything beyond a single integrated layer might simply be too many.

If scalability is as important as most devs make it out to be (and spoiler alert, it is), we cannot glaze over the potential of omnichain infrastructure to aid in our mass adoption journey. By interconnecting products and blockchains, uniting data to create seamless experiences, and making the power of web3 easily accessible, we can fuel even the most ambitious endeavors.

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Optimism token price is at risk of a bearish breakdown

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Optimism token remained in a deep bear market as the recent rally of most cryptocurrencies stalled. 

Optimism (OP), a leading layer-2 token, was trading at $1.5140 on Oct. 10, down 70% from its highest point this year.

One reason Optimism has retreated this year is that the network has continued to lose market share in the industry.

It has been overtaken in key areas like decentralized finance by layer-1 networks like Avalanche (AVAX) and Sui (SUI). It has also been passed by popular layer-2 networks like Base and Arbitrum.

Optimism’s total value locked in the DeFi industry has dropped to $627 million, down from its year-to-date high of $1.04 billion. Additionally, the volume of stablecoins in its ecosystem has fallen from the year-to-date high of $1.35 billion to $1.17 billion.

Furthermore, its role in the DEX index industry has diminished, with weekly volume declining by 24% to $503 million, while Sui’s and Base’s volume has jumped by 51% and 5%, respectively, during the same period.

OP’s price retreated after developers unveiled its fifth airdrop, unlocking 10 million OP tokens to 54 million.

It now has 500 million OP tokens remaining for future airdrops, meaning existing holders can expect further dilution.

Most of this dilution will occur because Optimism has a circulating supply of 1.25 billion tokens against a maximum supply of 4.29 billion. According to Defi Llama, the network unlocked 49.19 million tokens in September, with the final unlock scheduled for 2026.

Meanwhile, Optimism’s volume in the futures market has also declined. Data shows that futures open interest dropped to $104 million on Oct. 10, down from the year-to-date high of $327 million.

Optimism token is at risk of more downside

Optimism price chart | Source: TradingView

On the daily chart, the OP token has been in a strong downtrend since peaking at $4.86 in March.

It has remained below the 50-day and 100-day Exponential Moving Averages. Additionally, the Relative Strength Index, which measures the rate of change, has pointed downwards.

Optimism has also formed a bearish flag pattern, suggesting the potential for a bearish breakout. If this occurs, it could drop and retest the support at $1.06, its lowest point in August.

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UNI jumps 11% as Uniswap debuts its own layer-2 solution Unichain

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Decentralized exchange Uniswap has entered the layer-2 solution landscape with its new initiative to “accelerate Ethereum’s scaling roadmap.”

Uniswap, one of the largest decentralized exchanges by trading volume, has unveiled Unichain, a new open-source Ethereum-based layer-2 network designed to enhance transaction speed, reduce costs, and improve liquidity across decentralized finance.

In a press release shared with crypto.news on Oct. 10, Uniswap Labs stated that the product, powered by the Optimism Superchain, seeks to address the scalability challenges that have hindered Ethereum’s broader adoption.

“After years of building and scaling defi products, we’ve seen where blockchains need improvement and what’s required to continue advancing Ethereum’s roadmap.”

Hayden Adams, Uniswap Labs CEO

Adams added that Unichain will deliver the speed and cost savings already enabled by other rivals in the layer-2 space “but with better access to liquidity across chains and more decentralization.”

Uniswap to launch Unichain mainnet later in 2024

According to the network’s technical description, Unichain will initially feature one-second block times, with ambitions to optimize to 200-250 milliseconds, although a timeline for this enhancement remains unclear.

Additionally, Unichain aims to focus on cross-chain interoperability, facilitating liquidity access across various layer-2 networks on Optimism and beyond. It also plans to implement the proposed ERC-7683 standard for improved transaction support across all blockchains.

With the private testnet now live and a public mainnet launch on the horizon, it remains uncertain whether Uniswap Labs will introduce a separate token for the network. Following this announcement, the price of (UNI) surged by 11%, reaching $8.05.

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Put developers at the center of web3 | Opinion

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Web3 development has stalled. The concepts that have dominated the current crypto cycle—L2s, DeFi, RWAs, gaming, and prediction markets—originated in the previous cycle. We’re not growing, and we’re not innovating—we’re stuck. 

The web3 dev community has done historic work, but that community is vanishingly small—approximately 22,000, less than 0.1% of the estimated 27 million developers worldwide. We can’t onboard “the next billion users” until we onboard the first million devs. To get them, we need to empower devs by treating them as not just builders but creatives, embracing AI dev tools, and fostering a culture of developer collaboration.

In his keynote address at the recent Token2049 extravaganza in Singapore, Ethereum (ETH) co-founder Vitalik Buterin outlined his vision for the future of blockchain: finish building the “durable digital structures” that comprise the network’s ecosystem, work toward making crypto faster, cheaper, and easier to use; and preserve the aspirational qualities of blockchain tech that differentiate it from the traditional financial system.

It’s an inspiring vision. But who’s going to do all this building and all this work? Where are all the ideas to realize this vision supposed to come from? As we often say in web3, “Devs, do something!”

The numbers keep falling 

Yet, in 2023, the overall number of blockchain devs fell by more than 10%, driven by an exodus of “newcomer” devs (those with less than one year of experience in blockchain), whose numbers dropped over 50% year-over-year. Even with last year’s milestone rollout of Ordinals, Bitcoin (BTC) lost 19% of its devs, leaving only 1,000 BTC builders. 

The number of web3 developers is decreasing; we need this number to increase. So, instead of saying, “Devs, do something!” we need to say, “Do something for devs!” To make web3 a more appealing home for developers, we need to let them cook. Here’s how.

Devs are creatives, so treat them that way. Devs are innovative and innovation is creative, so devs are creatives. Creativity is messy, non-linear, and doesn’t always happen on schedule. Let’s stop treating devs as if their role is to compile pre-existing blocks of code into pre-designed Lego towers, because it’s not. Let’s give devs the support they need to create, test, and build new ideas. 

AI is a part of coding now, so embrace it. AI is not a dev replacer; it’s a dev enhancer. AI is a dev mech suit. AI is how Gen Z will learn and write code, massively accelerating the learning curve for newer devs. Junior devs will be able to focus on mastering concepts rather than trying to piece together incomplete documentation or wading through thousands of lines of code for that one missing semicolon.

And AI isn’t just for beginners. Experienced devs are already using AI-powered tools to reduce time to deployment and assist with increasingly important audits of increasingly complex smart contract protocols.

My company, Cookbook, offers ChefGPT, an AI chatbot that can help spark ideas, search smart contract libraries for templates, troubleshoot problems, and more. For devs, this means it’s faster and easier to plan, build, and deploy projects onchain. For developer relations reps, this means devs get answers faster in every language and time zone.

AI dev tooling has a key role to play in the future of web3. Let’s make these tools available to as many devs and students as possible. 

The need for a community

Devs work best when they work together, so help them collaborate. We talk about community a lot in web3, but our web3 dev community is fractured and isolated. Web3 devs are a small community that should be closer. There are nearly ten times as many members in the BAYC Discord (still) than there are web3 devs. Web2 devs are far more collaborative than web3 devs. 

That could be attributed to the still-emerging status of the web3 industry, where devs often are also owners, executives, investors, or otherwise have direct interests in the success of their protocol. Consequently, they may feel they have competing interests against others’ success. But that doesn’t fully explain the lack of collaboration among web3 devs.

Web3 is tribal. Bitcoin vs. Ethereum vs. Solana, and so on, has sometimes felt like a religious war unfolding on crypto Twitter. But the reality is that we are now, and have always been, moving toward a multi-chain universe where different blockchains serve different use cases with increasing degrees of interoperability. So, while fun is fun, the idea that we need to shred each other over different VM structures as human sacrifices to the Twitter algorithm is dumb. Vitalik is a Bitcoiner. Anatoly ♥️ ETH. Less bickering, more building.

That means less forking and reskinning of others’ projects. It also means more communication and cooperation with other devs. Messageboards and virtual meetings are OK, but much of the real relationship-building has to occur—gasp—in real life. 

It’s a truism going back to Steve Jobs and Pixar—or even WWII-era Bell Labs—that random interactions between creative people tend to spark creative ideas. Web3 needs that energy. And we know that people are less inclined to drag each other online when they have to see each other in person. So, let’s meet up. 

One simple way to facilitate these IRL interactions is to create more shared workspaces like the House of Web3 in San Francisco. We’re fortunate to have strong global crypto communities—in San Francisco, New York, Lisbon, Zug, Singapore, Buenos Aires, Lagos, Sydney—so let’s activate them. Let’s get in some rooms with some whiteboards and design the future together. 

Web3 has made enormous progress in its mission to build a more open successor to Web2. To regain the momentum that we had before 2022, we need to do more for devs. Don’t just give devs work. Let devs cook. 

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Theo Crypto News

DeFi

The future of DeFi is Bitcoin, and developers can’t afford to miss it | Opinion

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The financial industry is at a tipping point, with DeFi leading the charge. While Ethereum (ETH) has long dominated the DeFi landscape, Bitcoin (BTC) —the original and most trusted cryptocurrency—remains underutilized and is well-positioned to unlock its untapped potential. Historically regarded as ‘digital gold,’ Bitcoin is on the verge of proving its far-reaching capabilities in DeFi, and it’s about time developers, investors, and institutions woke up to its immense potential.

The undervalued giant in DeFi

Bitcoin is far more than a store of value—it’s the bedrock of the cryptocurrency movement, and it’s absurd that it has been overlooked as a serious DeFi platform. As the most trusted and widely recognized cryptocurrency, Bitcoin dominates the landscape. Yet, despite its widespread adoption and liquidity, its role in DeFi has remained limited—not due to its potential, but rather its design. Bitcoin wasn’t initially built for smart contracts or dApps, giving Ethereum the early advantage in DeFi development.

But the tide is turning. With technologies like Taproot and the Lightning Network now in full play, Bitcoin is fully equipped to outpace any other blockchain in handling complex transactions with speed, security, and cost-efficiency. Frankly, it’s shocking that Bitcoin’s potential in DeFi has been ignored for this long. While Ethereum has pioneered decentralized applications and smart contracts, its challenges with gas fees and scalability remain. Bitcoin, with its advancements like the Lightning Network and Taproot, is addressing scalability differently, offering faster, more cost-effective solutions. Developers who fail to recognize this are missing out on the opportunity to build the future of DeFi on the most trusted and secure blockchain.

From digital gold to DeFi leader

Bitcoin’s reputation as a secure store of value is well-established, with a market cap exceeding $1 trillion and accounting for approximately 54% of the total crypto market. However, the idea that Bitcoin is only good for “holding” is outdated. The real game-changer is the series of upgrades that have made Bitcoin a viable and powerful platform for DeFi. For far too long, Ethereum has been the default choice for dApps and smart contracts, but that era is ending.

Advancements like the Lightning Network and Taproot are not minor tweaks—they are innovations that will catapult Bitcoin into the DeFi mainstream. Lightning enables near-instant Bitcoin transactions with nearly negligible fees, while Taproot vastly improves Bitcoin’s smart contract capabilities, making it more secure and scalable than Ethereum or any other blockchain. If you think Bitcoin is still just digital gold, you’re living in the past. It is now ready to take center stage as the true DeFi leader, offering solutions to the very problems that other blockchains continue to face.

The uncapped potential of crypto’s true titan

Bitcoin’s newfound capabilities are opening the door to a host of DeFi services, from lending and trading to asset management and governance. More importantly, Bitcoin’s integration with cross-chain platforms and scalability solutions like the Lightning Network means that it can now seamlessly interact with assets from other ecosystems like Ethereum and Stacks. The Lightning Network alone has been instrumental in enabling faster, low-fee transactions, proving Bitcoin’s capacity for handling both microtransactions and more complex DeFi operations. This isn’t just an incremental step forward—it’s a giant leap that proves Bitcoin’s growing dominance. For example, exchanges like Bitfinex have integrated the Lightning Network to facilitate instant Bitcoin deposits and withdrawals with significantly reduced fees, showcasing Bitcoin’s ability to handle high-throughput financial operations.

The days of Bitcoin being just a simple store of value are over. It’s now a multi-chain powerhouse, capable of integrating assets like Jettons, ERC20 tokens, RGB, Runes, and Taproot Assets into decentralized fundraising and governance platforms.

Opinion: Runes is making Bitcoin fun and accessible again 

The growing institutional interest in Bitcoin is another sign that its future in DeFi is bright. Recent reports indicate that Bitcoin DeFi has a total value locked of around $1.2 billion, which is still a small fraction of Bitcoin’s overall market value but highlights significant growth potential​. Even if a fraction of Bitcoin’s estimated $1 trillion capital were to be unlocked for DeFi, the impact would be massive​.

Companies like MicroStrategy and Fidelity have expressed confidence in Bitcoin’s long-term value, and their exploration of Bitcoin-backed financial products signals growing institutional involvement. As DeFi matures, institutions are likely to follow. Platforms that integrate Bitcoin with DEXs are already enabling seamless trading across multiple blockchains like Ethereum and Stacks. Auction-based token sales and new funding models are making it clear that Bitcoin’s place in DeFi is not just growing—it’s surging.

Why Bitcoin is the future of DeFi

Let’s be clear: as DeFi continues to expand, the need for security and scalability will only grow. Bitcoin offers both in abundance. Ethereum’s issues with high gas fees and network congestion are well-known, but Bitcoin’s infrastructure, boosted by layer-2 solutions like Lightning and Taproot, is now proving itself to be the far superior choice.

Bitcoin’s support for multi-chain compatibility and cross-chain interoperability is solidifying its position as a leader in DeFi. The ability to integrate multiple blockchains into a cohesive ecosystem is something that no other platform can do as effectively as Bitcoin. If Ethereum was the starting point for DeFi, then Bitcoin is the destination.

As the market continues to mature, Bitcoin’s integration into the DeFi ecosystem will accelerate at a pace that will leave its competitors scrambling to catch up. DeFi is ready for Bitcoin—and Bitcoin is more than ready to lead.

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Theo Crypto News

DeFi

Ethereum’s lowered yield might signal a paradigmatic shift in the ecosystem | Opinion

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In mid-August 2024, Ethereum (ETH) gas fees dipped to 0.6 gwei—a record low since 2019. While some see this as a concerning drop, it is symptomatic of broader, healthier shifts within the ecosystem. 

Lower gas fees reflect decreased mainnet transaction volume, which has, in turn, led to reduced staking yields for validators. Simultaneously, the slow adoption of Ethereum exchange-traded funds in the US adds to the market’s uncertainty. These recent events have prompted some to question Ethereum’s viability and long-term future. But rather than signaling a crisis, these developments point to a new chapter in Ethereum’s evolution—one that marks a transition to a more mature and sustainable ecosystem. 

The reduced yields should not be viewed as a sign of diminished activity or liquidity but as a result of Ethereum’s success in scaling and distributing its load across layer-2 solutions. This shift, alongside new investment vehicles like spot ETH ETFs, is creating a more efficient and accessible market, bringing long-term benefits to Ethereum and decentralized finance as a whole.

Ethereum’s paradoxical growth

Ethereum is currently experiencing what can best be described as paradoxical growth. On the one hand, its mainnet is seeing reduced transaction activity and lower yields. On the other hand, L2 solutions—designed to reduce transaction congestion—are flourishing. Daily transactions across L2 ecosystems surged to an all-time high of 12.42 million in mid-August, coinciding with the lowest gas fees seen on the Ethereum mainnet in years. These dynamics reveal that rather than a slowdown in the ecosystem, Ethereum is shifting its activity to more scalable, efficient layers.

The lowered staking yields for validators, which many are concerned about, are a natural consequence of this migration of activity from the mainnet to L2s. Over time, Ethereum’s mainnet may evolve into a settlement layer reserved for high-value transactions, allowing the bulk of lower-value activity to be handled by L2s. This isn’t a sign of decline but of a maturing market capable of meeting the demands of a growing user base while optimizing costs and efficiency.

Instead of focusing narrowly on the mainnet’s yield, stakeholders would do well to consider Ethereum’s ecosystem as a whole. Attracting more users to the protocol, enhancing accessibility, and rolling out initiatives like incentivized airdrops and points systems could help Ethereum further solidify its position as the go-to platform for decentralized applications and DeFi innovations.

The expanding influence of DeFi

Ethereum’s role as the foundational layer of DeFi continues to shape the broader blockchain space. Despite current concerns, Ethereum’s growth remains a powerful driver of innovation, and this evolution is crucial for the future of decentralized finance. 

On the protocol level, Ethereum’s continued development and expansion create a more competitive and accessible network for users and developers alike. As Ethereum scales, its capability to support new dApps and financial products increases, further contributing to DeFi’s success. This, in turn, drives network effects, where increased participation enhances security, utility, and, ultimately, adoption. 

Ethereum’s influence is also spreading to traditional finance, most notably through the introduction of spot ETH ETFs, which provide a more familiar and regulated entry point for institutional and retail investors alike. These ETFs lower the entry barrier for those unfamiliar with blockchain technology but eager to invest in the space. By offering a regulated framework and a product perceived as safer than direct token purchases, spot ETH ETFs are attracting traditional investors to the Ethereum ecosystem. This not only expands Ethereum’s reach but also positions ETH as more than just a tech-driven asset—transforming it into a recognized store of value. 

As this trend continues, we can expect further integration between Ethereum and real-world assets, enhancing the network’s utility and long-term potential.

Supporting ecosystem transitions

As Ethereum navigates this paradigm shift, it’s important to recognize that these changes are a natural part of the ecosystem’s evolution. Lowered staking yields and gas fees are not indications of failure but reflections of Ethereum’s capacity to adapt and scale. Supporting this transition is crucial for the network’s long-term success, and this can be achieved through initiatives that prioritize user engagement and developer incentives.

For instance, platforms like Base—an L2 solution—handled over 109 million transactions in the past 30 days compared to Ethereum’s 33 million. This is a clear sign that L2s play a critical role in the network’s growth. However, acknowledging this shift isn’t enough; the ecosystem must prioritize collaboration among DeFi protocols to build dApps that maximize Ethereum’s potential. This is the only way for Ethereum to achieve its actual goal of serving the masses with decentralized technology.

A new dawn for Ethereum

The Ethereum mainnet’s lower yields and gas fees may appear to signal a slowdown, but they are, in fact, signs of Ethereum’s growing scalability and efficiency. As L2 networks take on more transaction activity and new financial products like spot ETH ETFs open the door for traditional investors, Ethereum is evolving into a more robust and versatile platform.

The ebbs and flows of market dynamics—like the recent yield reductions—are part of a larger shift that strengthens Ethereum’s role as the backbone of DeFi. The future of Ethereum lies in its ability to scale, integrate real-world assets, and foster a thriving community across its ecosystem. Far from being a calamity, the lower yields signal a new dawn in which Ethereum continues to lead the way in decentralized innovation.

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Theo Crypto News

Công nghệ

Ava Protocol set to power Sony’s new blockchain, Soneium

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EigenLayer Actively Validated Service Ava Protocol will power automation for Sony Block Solution Labs new layer-2 blockchain, Soneium.

According to the protocol’s press release, Ava Protocol will deploy its event-driven automation infrastructure to power the Soneium Spark incubation program.

By doing so, creators and developers have the chance to monetize as well as manage their work on Sonieum using Ava Protocol’s intent-based, no-code automation.

Speaking to crypto.news, founder of Ava Protocol Chris Li explained that Ava Protocol benefits from lower computation and storage costs, surpassing even the traditional layer-2 solutions.

“Our technology provides creators and developers with the tools they need to be truly empowered when it comes to their assets,” said Chris to crypto.news.

Regarding the debate between layer-1 and layer-2 solutions, Li remarked that Ava Protocol’s solutions “allow users to bridge assets across layer-2s and layer-1s with a single click.”

“With this collaboration, we’re taking a significant step toward our vision of being the leading solution for smart contract automation on Soneium,” said Li to crypto.news.

Li also clarified that the launch of Ava Protocol’s native asset will not affect the Soneium integration as they are viewed as “two separate events”.

Creators on Soneium can also use Ava Protocol to tokenize real-world assets, opening up opportunities for users to monetize art, intellectual property, and physical goods through decentralized marketplaces.

Soneium was designed to be an open-source, all-purpose blockchain that serves the needs of users across all platforms. Through this partnership, Ava Protocol will be able to execute transactions and smart contracts on Soneium based on specific conditions like price changes, time, or events.

It supports recurring payments, stop-loss orders, and yield harvesting, as well as NFT updates and minting.

Previously, Ava Protocol launched an AVS on the Ethereum restaking protocol EigenLayer, achieving the total value locked of $3 billion. So far, more than 35 ecosystem dApp developers have used its automation technology.

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Theo Crypto News