Crypto Analyst at FinancialCentre reports Top 5 Ethereum Layer 2 Projects for Lucrative Investments


London, UK — Layer-2 is a collective word used to refer to solutions created to help an application by increasing its speed and reducing fees. Layer-2 networks are attached to Ethereum’s core, i.e., the layer-1 chain. The layer-2 solutions offload the traffic while maintaining the same security measures and decentralization as layer-1.

The current network’s capacity of Ethereum is more than 1 million transactions per day. Due to blockchain trilemma, layer-1 (Ethereum Mainnet) is being replaced by layer-2 scaling solutions. According to the blockchain trilemma, a blockchain architecture can only achieve two out of three (decentralized, secure, scalable) desirable properties. None of these properties can be compromised, so layer-2 solutions have been quite famous, which help layer-1 Ethereum achieve all of the three properties.

The demand to use Ethereum is high. The capacity of layer-1 can process roughly 15 transactions per second, so its high demand causes high traffic in the network, which increases the transaction fees to an extent the users cannot afford.

In contrast, Layer-2 solutions offload the traffic, so the network runs smoothly and makes it affordable. This has prompted many significant names in layer-1 protocols to convert from layer-1 to a cost-efficient layer-2 as it provides all three desirable properties of the blockchain. According to Sofia Castle, a crypto analyst at FinancialCentre, Layer-2 cryptos provide great investment potential due to their increased demand and efficiency over layer-1 projects.

So if you are interested in investing in layer-2 projects, we have listed some of the top Ethereum Layer-2 Projects in 2022!

  1. Polygon
  2. Loopring
  3. Arbitrum
  4. Skale
  5. ZKSwap
  6. Immutable X
  7. xDai Chain
  8. OMG Network

Top 5 Ethereum Layer-2 Projects:

  • Polygon (MATIC): 

Polygon, formerly called Matic, is the most adopted layer-2 solution powering Ethereum infrastructure development. Polygon can execute up to 7,000 TPS. It is listed on Coinbase under the MATIC token to verify transactions. MATIC token holders earn a cut whenever a transaction occurs. Through this process, also known as staking, Polygon offers scalable transactions. MATIC holders are known as delegators because they can also earn indirectly by delegating their MATIC stash to trusted validators.

Polygon provides lending, borrowing, and blockchain gaming services to NFT marketplaces via decentralized applications. The worth of MATIC tokens is linked with the use of these applications, aka DApps.

Polygon is cost-effective compared to Ethereum and has already been used by projects like Chain Game, Quickswap, etc. It has a tradition of partnering with web3 companies.

Polygon has 100 active validators, along with 13,000 delegators on PoS. It is currently ranked #17 with a live market cap of $5,132,951,328. The circulating supply of MATIC coins is 7.95 Billion, with a maximum of 10,000,000,000 MATIC coins. There have been 1.6 Billion total transactions so far, with approximately 4 Billion MATIC staked.

  • Loopring (LRC):

Loopring is a layer-2 scaling solution that provides a payment or transfer facility and DEX (decentralized exchange). Loopring has LRC as its token and uses zkRollups to power exchange. ZK (zero-knowledge) rollups differentiate Loopring from other layer-2 projects. Rollup is the compacting and feeding back the data from layer-1 by layer-2 networks.

Loopring provides a private approach to not revealing the identity during transactions, which helps reduce the transaction volume. Loopring provides a cheaper and faster payment platform, which enables users to send and receive ETH for free.

Loopring aims to provide a hybrid platform of combined features of a centralized and decentralized exchange. It enables Loopring to focus on the merits of decentralized exchanges, cutting out its demerits through hybrid solutions.

According to Coinbase, the market capitalization of Loopring is $787.1 US Million with 1.3 LRC circulating supply, with a current price of $0.589, chat is 97% of the total supply. Its current ranking is #66.

  • OMG Market (OMG):

The OMG Market or Network, formerly known as OmiseGo, is a layer-2 solution that uses plasma-based architecture to provide high-speed transactions with guaranteed security for third parties. The OMG network allows users to exchange value all over the world, asset types, and applications.

The OMG Network scales ETH blockchains to thousand(s) TPS to reduce the fees without compromising security. It uses processing of the transaction only for the final settlement outside the ETH Layer-1. This process is efficient and requires fewer resources.

The OMG Network has implemented More Viable Plasma (MoreVP) to overcome the scalability issue of ETH and increase transaction fees. The OMG Foundation uses a bundling technique that allows thousands of transactions in a second. In this technique, transactions are bundled and compressed in a single transaction to be verified on the OMG Foundation child chain.

OMG Network uses OMG as its native token and is based on the ERC-20 standard. It is ranked #105 with a $353.4 US Million market capitalization. Its circulating supply is 140.2M OMG coins, which is 100% of its total supply, with the current price of $2.51!

  • SKALE (SKL):

SKALE is a layer-2 leaderless scaling solution that acts as an ETH token that enables the Skale Network. SKALE uses elastic chains to avoid processing off layer-1 (mainnet) and provides open-source security and working. The high-performance side chains that run up to 2,000 TPS per chain make up the SKALE Network.

SKALE provides speed with high performance without compromising decentralization or security. The SKALE Network can support all subtypes of independent blockchains, even in thousands!

The SKALE uses SKL as its token, which provides many users with the right to participate as a network validator. It also enables them to skate as a delegator, including the access to share the network resources as a developer.

The current rank of SKALE is #141, with a market capitalization of $298.0 US Million. The circulating supply is 3.5 Billion SKL coins, which makes up 50% of the total supply.

  • Immutable (IMX):

Immutable X is the first sidechain layer-2 solution that specializes in NFT trading. With instant confirmation, it has an incredible transaction speed that measures up to 9,000 TPS with a near-zero gas fee! It has become the go-to L2 network for NFT marketplaces as users can easily create and trade NFTs without having to worry about their asset’s security.

Immutable X uses Zero-Knowledge Rollup to provide scalability to its users facilitating 9,000 transactions in a single second. Immutable X provides a platform to buy and sell NFTs on any marketplace build in.

Immutable X has attracted users as well as major partnerships recently. StarkWare, GameStop, and even TikTok are among its partners that use the L2 protocol for NFT marketplaces. Its user-friendly feature has made users opt for it as they do not have to go through extra steps to access integrated platforms.

Immutable X has the token IMX and is currently ranked #327. The live market capitalization of IMX is $218.0, US Million. Its current market price is $0.92. There are 235.3 Million IMX coins in circulation, which makes up 12% of the total supply.

Disclaimer: Our content is intended to be used for informational purposes only. It is very important to do your own research before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find in this article and wish to rely upon, whether to make an investment decision or otherwise.

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