Vitalik Advocates the Layer 2 Route: What Is the Competitive Landscape of L2 Projects?

KEYTAKEAWAYS

TABLE OF CONTENTS

• KEY TAKEAWAYS
• VITALIK DISCUSSES ETHEREUM SCALING STRATEGY: COMMITMENT TO L2 AND FUTURE
• OPTIMISTIC ROLLUPS AND ZK ROLLUPS: CORE TECHNOLOGIES OF ETHEREUM’S LAYER 2
• STATUS OF MAJOR LAYER 2 PROJECTS
• MNT AND ARB LEAD LAYER 2 PROJECTS BY MARKET CAP
• DISCLAIMER
• WRITER’S INTRO

CONTENT

Vitalik Discusses Ethereum Scaling Strategy: Commitment to L2 and Future.Optimistic Rollups and ZK Rollups: Core Technologies of Ethereum’s Layer 2. Base and Arbitrum On-Chain TVL Exceeds $3 Billion. MNT and ARB Lead Layer 2 Projects by Market Cap.

VITALIK DISCUSSES ETHEREUM SCALING STRATEGY: COMMITMENT TO L2 AND FUTURE

January 24, 2025 – Ethereum co-founder Vitalik Buterin published a blog post on Ethereum’s scaling strategy. He outlined Ethereum’s vision as a global, censorship-resistant, permissionless blockchain platform. After a decade of development, Ethereum has evolved beyond infrastructure to provide valuable services with global scaling potential.

Vitalik emphasized three key focus areas for Ethereum’s future: technical optimization, social attributes, and practical application scaling. He addressed critical short and medium-term challenges, including improved data availability (through enhanced blob storage), stronger interoperability and security, and economic efficiency in scaling.

Layer 2 (L2) solutions currently face scaling challenges and heterogeneity challenges. While increasing L1 gas limits directly might seem appealing over L2, this could compromise Ethereum’s social structure – fundamental to its diverse ecosystem. Vitalik maintains commitment to L2-based scaling while ensuring these technologies deliver on their promises.

Source: X

He highlighted “native Rollups” – an early-stage scaling technology. Despite requiring substantial development, native Rollups show significant flexibility potential. Vitalik encourages developers to optimize native Rollup precompiles for broader application compatibility.

The post presents a clear vision for Ethereum’s scaling strategy and ecosystem development. Community unity and continuous innovation remain essential for Ethereum’s L2-focused future expansion.

OPTIMISTIC ROLLUPS AND ZK ROLLUPS: CORE TECHNOLOGIES OF ETHEREUM’S LAYER 2

Layer 2 solutions address Ethereum’s performance bottlenecks by moving computation and storage off-chain. These projects are rapidly evolving, attracting significant developer and user attention as key drivers of Ethereum’s future.

Ethereum’s Layer 2 ecosystem relies on two core technologies: Optimistic Rollups and ZK Rollups.

Optimistic Rollups, as a mature L2 technology, maintains transaction data off-chain and uses fraud proofs for security. It offers high compatibility and lower development barriers for seamless Ethereum integration. Notable projects include Arbitrum, Base, and Optimism, which have successfully attracted numerous DeFi protocols and users.

ZK Rollups validates transactions using zero-knowledge proofs, balancing security with speed. While offering superior scalability for large-scale applications, it involves higher technical complexity. Leading projects include zkSync Era, Polygon zkEVM, and StarkNet, which continue optimizing performance and user experience.

Ethereum’s Layer 2 ecosystem advances scalability through diverse technical approaches. Whether using Optimistic Rollups or ZK Rollups, each project uniquely addresses performance, cost, and scalability challenges. As technology matures and ecosystems expand, Layer 2 remains crucial for Ethereum’s development.

STATUS OF MAJOR LAYER 2 PROJECTS

As Ethereum expands, Layer 2 solutions address high fees and low throughput. Key projects include:

1. Base

• Status: Coinbase’s Ethereum L2 network with $3.67b TVL, ranking first among L2s. Targets retail and enterprise users with accessible, efficient scaling. 
• Ecosystem: Strong Coinbase integration, supporting exchange functions, DeFi, NFTs, and Web3. Partners include Uniswap and Aave.

2. Arbitrum

• Status: Leading L2 using Optimistic Rollups, $3.05B TVL (second largest). Popular for low fees and high throughput. 
• Ecosystem: Supports major DeFi protocols (Uniswap, Curve, GMX). Launched Arbitrum Orbit for enhanced development.

3. Optimism

• Status: Optimistic Rollups-based L2, $690M TVL. “Superchain” vision enables network synergy. 
• Ecosystem: Growing steadily, partnered with Coinbase for Base network.

4. zkSync Era

• Status: ZK Rollups solution with EVM compatibility for easy migration. 
• Ecosystem: Expanding in DeFi and cross-chain projects, excelling in payments.

5. Polygon zkEVM

• Status: Combines ZK Rollups efficiency with EVM compatibility. Focuses on user-friendly scaling. 
• Ecosystem: Active in DeFi, NFTs, Web3, integrated with Polygon ecosystem.

6. StarkNet

• Status: Uses Cairo language, enables large-scale dApp development via StarkWare technology. 
• Ecosystem: Strong in GameFi and computation-heavy applications, continuing technical exploration.

MNT AND ARB LEAD LAYER 2 PROJECTS BY MARKET CAP

Currently, many Layer 2 projects using ETH for gas fees face limited token utility scenarios, affecting their value dynamics and market cap, as seen with MATIC.

Most mainstream Layer 2 projects (Arbitrum, Optimism, zkSync Era, Polygon zkEVM) maintain close Ethereum ties, using ETH for gas fees to ensure consistent user experience. However, some projects (Polygon PoS, Metis, Boba Network) employ hybrid payment models or rely entirely on native tokens for gas fees.

This distinction stems from project design goals and economic models:

• ETH Usage: Prioritizes Ethereum ecosystem compatibility and user-friendliness
• Native Token Usage: Focuses on building independent economic systems and token holder value

In Layer 2 projects, only MNT (Mantle) and ARB (Arbitrum) exceed $3B market cap, entering crypto’s TOP 50. OP (Optimism) and IMX (Immutable) form the second tier at ~$2B. Other notable performers include IMX, STRK, and MATIC.

Source: CoinMarketCap

Ethereum Layer 2 projects show rapid growth, with market value and TVL reflecting competitive dynamics. Arbitrum and Optimism lead in TVL and users through mature Optimistic Rollups, while zkSync Era and Polygon zkEVM demonstrate potential in performance and innovation. Mantle and Arbitrum lead market caps as flagship representatives. Base’s DeFi growth merits special attention.

Layer 2 projects advance Ethereum’s scalability through diverse solutions. Whether using Optimistic Rollups (Arbitrum, Optimism) or ZK Rollups (zkSync Era, Polygon zkEVM, StarkNet), each uniquely addresses performance, cost, and scalability challenges. As technology matures and ecosystems expand, Layer 2 remains crucial for Ethereum’s development.

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