7 things you can do on Layer 2
Dear Bankless Nation,
If you haven’t caught on from this week, Ethereum is scaling today.
Optimism, ZK-Rollups, Starkware….there’s more and more Layer 2 options to help you go bankless without sacrificing the security guarantees of Ethereum’s base layer.
There’s already billions locked on Ethereum L2s and they’re used everyday by crypto natives who are getting faster transactions, cheaper fees, and saving a lot on gas.
Just a reminder: like everything in this new frontier, it’s still early. There’s a lot of work required before these solutions scale for the world.
But we’re headed west. We are the pioneers. This is the time for us to start exploring Layer 2—it’s here and it’s showing promise.
See for yourself.
Here are 7 things you can do on it today.
- RSA
P.S. Dharma’s fully redesigned wallet is 🔥🔥🔥. Go from dollars to DeFi in one tap. Direct deposit from your U.S. bank account to 14% yied. Just one tap! Get the Dharma app!
THOUGHT THURSDAY
Bankless Writer: William M. Peaster, Bankless contributor & Metaversal writer
7 Things You Can Do on Layer 2 Today
Ethereum is the premier infrastructure for global, open applications. Unfortunately, because of Ethereum’s unique tradeoffs, it can be pricey and slow to use the evolving network during times of high demand—there’s only so much blockspace to go around after all.
That said, Ethereum will eventually scale on the base layer through Eth2 which will improve its transaction throughput considerably. The good thing is that we don’t have to wait around for Eth2 to scale.
The immediate answer is Layer 2 (L2) scaling solutions.
Layer 2 solutions are built on top of Ethereum (off-chain to mitigate congestion on the main chain) but directly rely on Ethereum’s security and finality to offer near instant and affordable Ethereum transactions—namely things like transferring, trading, or staking tokens.
These L2 systems aren’t just theorized either. Multiple L2 solutions are already live and new L2 projects and integrations are seemingly arriving every day now. At the time of writing, there’s over $300M of crypto secured by the two reigning L2 models: ZK Rollups and Optimistic Rollups.
The era of L2 scaling solutions is here, and it’s only just beginning. If you’re the pioneering type, now’s an awesome time to try out some of the best L2 possibilities available to us today. So you might be asking: what are the top L2 services currently live?
Here are 7 great Layer 2 opportunities to get you started! 👇
1. Borrow & Lend on Polygon with Aave
Earlier this year, Matic—a scaling project that trailblazed work around the Matic Plasma Chain and the Matic PoS sidechain—rebranded to Polygon as part of a pivot toward becoming “Ethereum’s Internet of Blockchains”.
As a part of the rebrand, the team would now be embracing optimistic rollups, ZK rollups, and beyond.
Not long after, popular DeFi lending protocol Aave announced New Frontiers, a campaign that will see the project adopt a range of scaling solutions so its users could enjoy options. In that same announcement, Aave revealed the first integration of the scaling campaign would be with Polygon’s PoS sidechain.
It’s important to highlight this sidechain doesn’t directly inherit Ethereum’s security guarantees like most L2s, but it does offer L2-like throughput power. And from the New Frontier campaign, it seems highly likely that Aave and Polygon will be coordinating further on rollups integrations going forward.
In the meantime, you can cheaply handle your Aave borrowing and lending on the Polygon sidechain. First, make sure the Polygon network is added to your MetaMask wallet, and then head over to Aave and click on the “Polygon” market tab to see the available market opportunities.
2) Trade Decentralized Perpetuals
dYdX is a decentralized exchange, or DEX, that’s made a name for itself by providing decentralized margin, spot, and perpetuals trading on Ethereum.
Traders want to trade as rapidly and affordably as possible though. Fortunately dYdX just announced the launch of L2 perpetuals trading courtesy of StarkWare’s StarkEx scalability engine.
StarkEx is notably both powerful and flexible, capable of supporting on-chain data availability via ZK rollups or off-chain data via Validium. However you want to slice it, the engine is taking the UX around dYdX’s perpetuals trading to the next level. The perpetual products already live on the DEX’s L2 integration include:
- ETH-USD
- BTC-USD
- LINK-USD
- UNI-USD
- AAVE-USD
So if derivatives are up your alley, consider heading over to dYdX’s Perpetuals dashboard. There, you can easily deposit into the DEX’s L2 system and start trading away!
Bankless Resources on dYdX:
3. Earn SNX Staking Rewards
Synthetix is DeFi’s leading derivatives project. If an asset exists, whether it be on any blockchain or in the real world, it can be traded as an on-chain synthetic through Synthetix.
At the heart of this powerful protocol is staking, where users supply Synthetix’s native token (SNX) to the protocol for pooled collateral. In exchange for this service, SNX stakers earn inflationary SNX rewards along with trading fees. This is the core incentive behind staking SNX!
The cool thing? You can now handle your SNX staking on L2! At the start of 2021, SNX staking went live on the Optimism team’s eponymously named Optimistic Ethereum (OΞ) L2, which as the name suggests, is underpinned by optimistic rollups technology.
If this novel way of staking piques your interest, you can migrate and stake your SNX through OΞ using the official Synthetix staking dashboard. It’s still early for Synthetix and OΞ—trading synths and other core protocol functionality still needs to be integrated.
Additionally, they face withdrawal periods of around 7 days. In other words, don’t deposit in anything you can’t wait a week to access!
It’s still early but it pays to be a pioneer in the wild west of DeFi!
Bankless Resources on Synthetix:
4. Yield Farm LRC Rewards
Yield farming has been all the rage in DeFi since the phenomenon took off last summer. The idea? You provide liquidity and thus help bootstrap young projects in exchange for token reward (i.e. the yield)
Yet when things are congested, yield farming on Ethereum can be pricey. All the approval, deposit, staking, and withdrawal transactions can add up quickly!
But yield farming doesn’t have to be a pain. A prime example of that is Loopring’s L2 yield farms right now. Loopring is an exchange and payments protocol powered by ZK-Rollup tech, and the project’s builders have created Loopring Exchange to offer users an automated market maker (AMM) experience with L2 advantages.
Since AMM’s depend on liquidity to thrive, Loopring currently holds liquidity mining rounds to attract liquidity providers. Anyone who LPs for Loopring can farm rewards denominated in the project’s native token, LRC, accordingly.
If you’re hyped on the future of L2 scaling and think Loopring could have a big role in that future, these LRC farms are certainly ones to consider. You can start by navigating over to Loopring, depositing into their L2 wallet, and then depositing assets to your pools of choice!
Bankless Resources on Loopring:
- 📄 How to avoid gas fees on Loopring
- 📺 How to make instant payments with Loopring Pay
- 📺 Bankless AMA with Matthew Finestone of Loopring
5. Trade DeFi Tokens on DeversiFi
Powered by StarkWare’s StarkEx scalability engine, DeversiFi is an efficient, one-stop decentralized exchange offering a range of services, including decentralized limit orders, OTC trades, and free transfers.
This naturally makes the dapp fantastic for trading popular DeFi tokens, like UNI, MKR, and AAVE.
Of course, the aforementioned Loopring AMM can be used to trade DeFi tokens, too, so it’s not like this is only the domain of DeversiFi.
Advanced traders may enjoy DeversiFi as it offers more trading features than standard AMMs, so if you’re looking for L2 apps that are trading-centric, this is certainly one worth exploring.
6. Donate to Ethereum Projects on Gitcoin
So much that we know and love around Ethereum and DeFi comes to us through the hard work of open-source software (OSS) builders. That’s why a rising star in the crypto economy is Gitcoin, a platform that’s made it easier than ever for OSS creators to get paid working around Ethereum, DeFi, and beyond.
Gitcoin is best known for its Gitcoin Grants rounds, where projects crowdsource fundraising and benefit from quadratic funding (QF) and matched donations. Yet notably projects can receive donations at any time through Gitcoin, and what’s awesome is the platform recently integrated support for zkSync so users can save via L2 donations whenever they want.
The process is simple. Add a project or projects to your cart, go to checkout, and select the “Checkout with zkSync” option. At this point you’ll be taken to a dashboard where you can deposit funds into the L2. From there you can enjoy huge gas savings while you support the Ethereum ecosystem in style.
Unsurprisingly, the functionality is already proving quite popular. For example, in the latest Gitcoin Grants Round 9, over 80% of all donations were facilitated by zkSync!
Bankless Resources on Gitcoin:
7. Stream Money on Superfluid
Superfluid is a money streaming protocol. It lets anyone open up a payment stream to which sends money in real time. The protocol leverages two different scaling solutions—xDAI and Polygon—so users have options depending on what flavor you’re into.
If you’ve ever dreamed of DAOs that can handle multiple incoming streams of value and reward their contributors with a portion of these streams or NFTs that represent music rights with royalties paid every second to the NFT holder, Superfluid is the application that it enables this.
What’s cool about Superfluid is that streams aren’t locked. They can still move freely between accounts!
You can slice and dice your stream however you want—meaning if you’re receiving a stream of tokens, you can forward it on to another recipient in any amount of your choice, and so can the recipient. This effectively creates a network of interconnected wallets exchanging value in real time!
It’s programmable money 2.0 and the birth of real-time finance and an application that crypto natives have always dreamed about too. And it’s only possible because of Layer 2!
Bankless Resources on Superfluid
Conclusion
A golden age of L2 activity is just beginning. The ecosystem is set to ramp up further from here as top L2 solutions continue to rapidly innovate, iterate, and deliver powerful and workable solutions that projects want to use.
The zkSync team just announced zkPorter, an unprecedented scaling system that has non-trivial chances of becoming the preferred scaling architecture in the Ethereum ecosystem in the years ahead.
You also have major Ethereum apps, like Uniswap, that are rolling out their flagship L2 integrations any day now.
Add on top of all that usability solutions like Connext’s Vector that can serve as a connector hub for Ethereum and all its L2s, and it’s clear that scaling woes are soon to be a thing of the past.
Ethereum is scaling, and it’s doing it today.
Action steps
- Experiment with the projects on L2 that you find interesting!
- Level up your L2 game with the resources mentioned in this article