Layer 2 The cusp of summer

Here's how I think about it:

Ethereum was an early version of Disneyland, it was a central hub, and when you go to Ethereum, you go to the same place as everyone else, and everyone is trying to go to the same rides.

There's only so much you can do because congestion limits the park's functionality (imagine Disneyland in 1955, but with a 2020 population).

It's a really fun place, but the fast track lines are still too long because the whales are taking the same rides over and over.

Ethereum Land needs more rides, so how does it do it?

It made more parks!

Different teams have been building on top of the Ethereum main hub to create a cool new park that all main chain visitors can try out to avoid the main rides and attractions.

Polygon was launched a few months ago.

Arbitrum was released last Friday.

Optimism is also coming soon.

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speculative growth

To keep the California theme going, one of the greatest immigration events in human history was the California Gold Rush.

In 1848, news of the discovery of gold in California led to the emigration of some 300,000 people from other parts of the United States and abroad. The sudden influx of gold into the money supply has revived the U.S. economy and is one reason why California is one of the most sophisticated regions in the world.

Speculators learned that there was wealth to be had, and the need to acquire wealth caused people to leave their homes, move west, and speculate in gold.

Here’s what’s about to happen (or has already happened!) as these Layer 2 networks come online.

But this gold rush happens twice:

• First is the developer.

• Then there are users.

developer land

When Polygon, Arbitrum, Optimism, Hermes, or any other Ethereum L2 opens, they release free land to the world. But it's just the land, and they're fertile, but there's nothing on these lands.

The first race is for DeFi applications to build infrastructure on this land! DeFi apps are the new rides and attractions that will finally draw folks from Ethereum's main park to L2 and check out all the fun stuff going on.

What Layer 2 creates is land, but DeFi applications need to claim these lands.

The first gold rush was for DeFi applications. This is why Arbitrum does not allow any DeFi application to "lead" the other.

Arbitrum released the "developer mainnet" last Friday, but it did not grant any DeFi applications in advance, it maintained credible neutrality, and did not allow any DeFi applications to start building infrastructure first.

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Layer 2 Gold Rush

Here comes the fun, and I’ll explain why I’m speculating on DeFi summer: Layer 2 releases are coming.

The DeFi apps want you to use their apps on the new Layer 2 network, they just built your favorite rides on the main Ethereum park, but now there's no waiting and next to no fees. They want you to use these DeFi applications instead of choosing competitors to grab as much land as possible.

So what are these Layer 2 networks going to do? Tokens of course!

Liquidity mining! Yield Farming! They will do what DeFi applications do best, which is to incentivize usage by issuing tokens.

We've seen this with Polygon, which has had great success. If you provide liquidity on SushiSwap on the Polygon network, you can be rewarded with SUSHI and MATIC tokens.

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Polygon has done this with MATIC with a lot of success.

• Using Aave’s deposit and borrow functions in Polygon, you can get MATIC tokens;

• You can earn MATIC tokens by using SushiSwap’s trading, lending functions, and providing liquidity on Polygon;

• Using PoolTogether in Polygon, you can earn MATIC tokens;

Layer 2 needs to compete for users like DeFi apps! They also need to distribute their tokens to a large user base, so how do they do that?

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It's time to settle in a new land.