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Best Layer 2 Cryptos

Best Layer 2 Cryptos

In this guide, we overview the best investable Layer 2 solutions in the crypto ecosystem. Find out why L2s are the most sought-after investment theme for 2023.

Summary: Layer 2 solutions have catalyzed significant progression in blockchain scalability, especially within the Ethereum network. These solutions expedite transactions and cut costs by enabling off-chain processing while preserving the security of the foundational blockchain.

In this blog post, we explore the top five Layer 2 solutions shaping the Ethereum landscape. These choices have been carefully assessed on factors like transactional throughput, security robustness, and decentralization level.

  1. Arbitrum (ARB) - Best Overall Layer 2
  2. Optimism (OP) - Best Optimistic Rollup Layer 2
  3. Polygon (MATIC) - Best Multi-Scaling Layer 2
  4. METIS (METIS) - Best DeFi Layer 2
  5. Immutable X (IMX) - Best Layer 2 for Gaming
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Content Guide

Finding the Best Layer 2 Networks

In our search for the best Layer 2 networks, we carefully looked at over 15 different EVM and non-EVM layer chains that are launched on mainnet. We took into account important factors such as network security & validator distribution, the range of supported applications, user-friendliness, scalability, fees, and more. After thorough evaluation, we've put together a list of the top five Layer 2 platforms that stand out in the blockchain community.

1. Arbitrum

As an Ethereum Layer 2 solution, Arbitrum outshines others in scalability and efficiency, enhancing the Ethereum network's capabilities. By bundling transactions for Ethereum's mainchain, it enables speedier, more cost-effective operations. Arbitrum stands as the top Layer 2 solution on Ethereum, boasting robust security, full smart contract support, and a vibrant DeFi ecosystem.

With over $2.3 billion locked on the network, it's the most trusted and utilized Layer 2 platform. This high Total Value Locked (TVL) exemplifies widespread trust and usage. Further, leading applications such as GMX, Radiant, Camelot DEX, and Gains Network are adopting Arbitrum, underscoring its legitimate and growing prominence in the Ethereum community.

Arbitrum Best Layer 2

2. Optimism (OP)

As a prominent Ethereum Layer 2 scaling solution, Optimism employs optimistic rollups to amplify the scalability and efficiency of the Ethereum network. By bundling several transactions into one for processing on the Ethereum mainchain, it significantly reduces the load, facilitating quicker and more affordable transactions.

Marked by robust security, extensive smart contract support, and a thriving DeFi ecosystem, Optimism is an exemplary Layer 2 solution. With $1 billion locked on the network, it showcases an active DeFi ecosystem.The anticipated Q2 2023 update, Optimism Bedrock, is expected to further elevate performance, cementing Optimism's position as a highly scalable Layer 2 platform, second to Arbitrum.

Optimism Layer 2

3. Polygon (MATIC)

Polygon is an open-source Layer 2 scaling solution for Ethereum that aims to address the scalability and high cost challenges faced by the Ethereum network. It utilizes a network of Ethereum-compatible PoS (Proof-of-Stake) sidechains that can process transactions in parallel with the Ethereum mainchain, thereby reducing the load on the mainchain and enabling faster and cheaper transactions.

Polygon's technology and focus on scalability and security have made it a promising player in the Layer 2 space for Ethereum with over 37,000 applications on the platform. Its Ethereum compatibility and ability to process transactions faster and at a lower cost have attracted top brands such as Nike, Stripe, Adidas, and Starbucks to build on the platform. Polygon is currently the 5th largest chain by TVL with over $1.2 billion in assets locked on the platform.

Polygon L2

4. METIS

METIS is a relatively new layer 2 that was a fork of the Optimism codebase and is focused on building an ecosystem of decentralized finance applications. Although only launching in late 2022, it has amassed over $148 million in total value locked, making it one of the fastest growing layer 2 rollups on Ethereum.

METIS’ primary feature is its ability to offer high-speed transactions and low fees that are anchored to the Ethereum mainchain. This makes it an ideal platform for DeFi applications such as lending, decentralized exchanges, and synthetic assets. The network also has a staking program with rewards of up to 11% APY for users who hold the METIS token.

METIS

5. Immutable X (IMX)

Immutable X is a decentralized exchange platform for buying, selling, and trading non-fungible tokens (NFTs) built on top of the Ethereum network. As a Layer 2 zk-rollup based scaling solution, it offloads the processing of transactions from the Ethereum main chain to a separate layer, which helps reduce the strain on the Ethereum network and improve its scalability.

In terms of Web 3 gaming, Immutable X provides a solution for the increasing demand for NFTs in gaming and other applications, as it offers fast and secure trading of NFTs, which is critical for creating a seamless user experience in a gaming environment. Additionally, the use of blockchain technology on Immutable X ensures that NFT ownership is transparent and cannot be manipulated, providing a fair and trustworthy gaming environment.

Immutable X Layer 2

What is a Layer 2 Blockchain?

Layer 2 blockchains are secondary networks enhancing an existing blockchain's scalability and performance. They support off-chain transactions and data processing, boosting speed while leveraging the security of the primary blockchain.In conventional blockchain networks, the main blockchain houses all transactions, which may strain scalability. Layer 2 solutions manage this by offloading some transactions to a secondary layer, improving efficiency.

Two common Layer 2 strategies are zk (Zero Knowledge) Rollups and Optimistic Rollups. zk Rollups enable faster, private transactions using zero-knowledge proofs, whereas Optimistic Rollups foster greater Ethereum compatibility. Both methods expedite transactions by reducing main blockchain load.

Is Solana a Layer 2?

No, Solana is not a Layer 2 solution. Solana is a high-performance blockchain network in its own right, designed to provide a scalable and efficient platform for decentralized applications. It uses a unique consensus mechanism called Proof of History, which helps to speed up transactions and reduces the cost of transactions on the network.

While Solana is not a Layer 2 solution, it can still be used as a scaling solution for other blockchain networks. For example, projects can use Solana as a layer for hosting decentralized applications, which can help to offload some of the processing and data storage from the main blockchain network, thus improving its scalability and performance.

Bottom Line

In closing, Layer 2 solutions such as Arbitrum, Optimism, Polygon, METIS, and Immutable X are revolutionizing scalability within the Ethereum network, each offering unique benefits. From robust security and DeFi support to gaming and multi-scaling advantages, these solutions are enhancing transaction speed and reducing costs. The choice of solution depends on specific needs and contexts. The evolution and growth of these solutions will be crucial in shaping the future of the Ethereum network and blockchain technology.

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