More layer-two driven networks are emerging with Ethereum transaction fees already elevated.
As the Ethereum network struggles to keep up with its success, the number of decentralized exchanges operating layer-two solutions increases.
As high Ethereum gas costs continue to obstruct smaller network transfers and activities, as layer-two usage grows, the number of quicker and cheaper alternatives continues to grow. Layer-two solutions, rather than the few processed on layer-one, can handle thousands of transactions per second.
After it introduced permanent contracts four weeks ago, the LeverJ decentralized market has seen a surge in trade volumes. Across 26,600 sales, about $75 million was traded, losing just under $600 in overall petrol fees. Commented by industry analyst ‘Defi Dad’;
“Only in Defi 2021 could you miss these monster numbers trading on an Ethereum DEXâ€”built on L2.”
While these numbers can sound tiny relative to Defi giants like Uniswap, when the technology is much important, they reflect a boom in layer-two adoption. In order to process data and transactions quicker and more cost-effectively, layer-two scaling means taking jobs off the root chain.
Synthetix’s Defi protocol is also poised to deliver its Confidence layer-two staking update called Castor at 23:00 UTC later today, January 14.
Castor is the result of four months of testing that started by providing bonuses to test net participants in its native SNX token in late September.
A new SNX escrow contract that supports L2 is converted to the Defi standard, which provides synthetic assets monitoring the ownership of real-world assets. The update also includes two smart contracts that support layer-one deposits and layer-two withdrawals using optimistic roll-ups.
The developers hope that staking on layer-two would boost the user interface with quicker handling of transactions and lower gas costs. Minting, gambling, and claiming weekly prizes often cost more than $100 a trade for its sophisticated smart contracts, which will now be a thing of the past.
Market capitalization has reached $3.2 billion, according to the Synthetix tracker, while SNX rates have risen 26 percent over the past seven days to hit an all-time high of $16.
For its native coin, LRC, Decentralized Trading Loopring is also gaining momentum with new changes and layer-two liquidity mining rewards.
Its new feature is the ability to submit to any Ethereum-based L1 account from a Loopring L2 account without the recipient ever having to be on L2.
“This means you can send a fast, cheap (gas-free) payment on L2 to your friend that has never even heard of L2, all you need is their Ethereum address (or ENS name),”
The number of layer-two networks and exchanges increases, but when will the most common DEX, Uniswap, start its L2 upgrade?
According to bitinfocharts.com, average Ethereum transaction rates have withdrawn a little from their record peak of more than $16 on January 11, but they are still economically unviable for many consumers at over $5.