The number of decentralized exchanges running Layer Two solutions is increasing as the Ethereum network struggles to keep up with its own popularity.
As excessive Ethereum gas prices continue to hamper small transactions and operations on the network, the number of faster and cheaper options continues to increase as Layer Two adoption increases. Layer two solutions have the potential to process thousands of transactions per second, rather than the handle processed on layer one.
The decentralized exchange LeverJ has seen an increase in trading volumes since the launch of perpetual contracts four weeks ago. About $ 75 million was traded over 26,600 transactions, which is just under $ 600 in gas fees. Industry Observer ‘DeFi Dad’ commented;
“Only in DeFi 2021 could you miss these monster numbers traded on an Ethereum DEX – built on L2”
While these numbers may seem small compared to DeFi giants like Uniswap, they represent an increase in Layer Two adoption at a time when technology is needed most. Essentially, Layer Two scaling involves removing root chain work in order to process data and transactions faster and more cost effectively.
DeFi Synthetix Protocol is also set to launch its Layer Two Optimism Upgrade Upgrade called Castor later today on January 14 at 11:00 p.m. UTC.
Unfortunately, we had to delay the release of Castor by about 10 p.m., and it will now be deployed at 11 p.m. UTC on Thursday, January 14. Https://t.co/nlbgvZ99pI
– Synthetix ⚔️ (@synthetix_io) January 13, 2021
Castor is the result of four months of testing that began at the end of September by offering incentives in its native SNX token to testnet participants.
The DeFi protocol, which offers synthetic assets to track the value of real-world assets, migrates to a new SNX escrow agreement that supports L2. The upgrade also includes two smart contracts allowing deposits on layer one and withdrawals on layer two using optimistic rollups.
The developers expect that the implementation of layer two will improve the user experience with faster transaction processing and lower gas costs. With its complicated smart contracts, hitting, staking, and claiming weekly rewards has sometimes cost over $ 100 per trade, which will now be a thing of the past.
According to the Synthetix dashboard, market cap hit $ 3.2 billion as SNX prices jumped 26% in the past seven days to an all-time high of $ 16.
Decentralized exchange Loopring is also gaining traction with new updates and incentives to extract layer two liquidity for its native token, LRC.
His last feature is the ability to send from a Loopring L2 account to any Ethereum based L1 account without the recipient ever needing to be in L2.
“This means you can send a fast and cheap (no gasoline) payment on L2 to your friend who has never even heard of L2, all you need is their Ethereum address (or ENS name),”
The number of Layer two-based networks and exchanges is growing, but the big question remains when the most popular DEX, Uniswap, will launch its L2 upgrade?
Average Ethereum transaction prices fell slightly from their record high of over $ 16 on Jan.11, but they are still economically unsustainable for many users above $ 5 according to bitinfocharts.com.