Author: Ming Xi
Produced by: Benz Finance
As of 17:00 on February 3, the QKL123 market showed that Ethereum broke through 1,500 US dollars, reaching a maximum of 1,568.42 US dollars in 24 hours, an increase of more than 60% in the past 30 days, and an increase of more than 300% in the past three months.
As the second largest blockchain network in the world, Ethereum is also the largest and most widely used smart contract. In the past year, ETH has even outperformed BTC. Recently, there have been frequent positive news about Ethereum. According to the Chicago Mercantile Exchange (CME), Ethereum futures will be launched on February 8, 2021, which will continue to drive market attention and confidence in Ethereum.
Although the market is performing well, the capacity and efficiency issues of Ethereum have made this avenue of the blockchain world congested and difficult, making blockchain developers who use Ethereum smart contracts and related tools miserable. This leads to another problem. Transactions on the Ethereum chain require high gas fees. With the explosive growth of DeFi in 2020, transactions on the Ethereum network often cost tens of dollars, or even hundreds of dollars. Hyden Adams once said on Twitter: "I want to state the fact that on UNISWAP, we will waste 420k dollars per day on gas fees for transactions, and this means that 150 million dollars will be wasted on gas a year, which is unacceptable LOL, it's true." These pain points have seriously affected the comprehensive development of the Ethereum ecosystem.
Therefore, the market's voice for Ethereum 2.0 is very high. At 20:00 on December 1, 2020, Ethereum 2.0 launched the genesis block. According to OKLink data, as of 14:00 on February 3, the Ethereum 2.0 mortgage contract has received more than 2.9 million ETH, worth about 4.5 billion US dollars.
In fact, the blockchain industry still needs to wait for Ethereum 2.0 to get on the right track, improve block packaging speed, transaction speed, reduce miner fees and transaction fees, and solve network congestion problems. While waiting, the market has explored and explored a solution that can effectively solve the current problem-Layer 2.
In October 2020, V God, the founder of Ethereum, released the "Ethereum Roadmap Centered on Rollup" document. The expansion of the Ethereum base layer will mainly focus on the expansion of how many data blocks can be expanded. Ethereum 2.0 will be based on Reimagined around rollups, a single high-safety execution shard that everyone can handle, and a scalable data availability layer.
It can be seen that Vitalik attaches great importance to Layer 2, and the ecological development of Ethereum requires Layer 2 solutions to handle hundreds of thousands or even millions of transactions per second. Huang Han, special consultant of Coin World Research Institute, said: Technically, as the development focus of the Ethereum technical team shifts to rollup, the layer 2 field will become a new outlet and hotspot in the market.
What is Layer 2?
The essence of Layer 2 is a general term for a certain category of expansion solutions. It mainly completes the migration of calculations, transactions, and other services outside Layer 1 for execution, and realizes the interaction between Layer 2 and Layer 1, so that the transaction trust of Layer 2 is transferred to Layer 1. The main function is to greatly reduce the burden on the main chain, increase the processing speed and throughput of the main chain, increase the transaction speed and throughput, and greatly reduce the Gas fee for Ethereum network transfers.
The picture below shows the four types of Layer 2 technical solutions compiled by the reporter of FinaceRun. Plasma has major shortcomings, and Rollup is a promising solution for the market.
It should be emphasized that there are two Rollup solutions on the market, one is Optimistic Rollup and the other is ZK Rollup.
It is understood that ZKSwap, an AMM decentralized exchange based on ZK Rollup expansion technology, is expected to launch the Ethereum mainnet before February 8. After the mainnet goes live, ZKSwap will further develop a distributed zero-knowledge proof network and Layer2 privacy payment tools (the first to support USDT's layer2 privacy payment).
Layer 2 focuses on investing in the track
The expansion solution of Ethereum is imminent. The new roadmap of Ethereum 2.0 is the "executable PoS beacon chain + data fragmentation + Layer 2" framework. In order to realize the thousands of times the throughput brought by Ethereum in advance, Layer 2 will promote the The pace of Fangfang 2.0 being put into use.
LRC, the token of Layer 2 representative project Loopring, has increased by more than 1,700% in the past year, and SNX, the token of Synthetix, a leading DeFi synthetic asset project, has increased by more than 1,400% in the past year. The market has proved that Layer 2 represents projects that are being valued and favored. In 2021, Ethereum Layer 2 will become one of the key investment tracks in the encryption industry.
2020 is called the "first year of DeFi". The decentralized exchange Uniswap has surpassed the established exchanges. As of February 1, the value is 5.5 billion US dollars. The lending agreement Compound has surpassed the existing banking system in terms of transparency and interest rates. , DeFi has a good performance in every track. Industry professionals estimate that in 2021, the locked-up amount of DeFi is expected to exceed 100 billion US dollars, which will put forward higher requirements on the performance of the Ethereum network. In terms of expansion, the improvement of Layer 2 to the Ethereum network will bring more benefits to DeFi projects. Unpredictable value and benefits.
Loopring COO Jay said on Twitter: Now all ERC20 should consider using Layer 2.
This is just the right time for the industry as a whole to understand and embrace Layer 2.
