Layer 2 Solutions Are Opening Blockchain to the Masses

Blockchain has always had an adoption problem. A fragmented series of walled gardens between different exchanges and dApp platforms creates an environment that can seem intimidating to newcomers. It’s somewhat ironic that in a system that aims to promote open finance and decentralization, it’s taken so long for there to be a sea change in how platforms interoperate.

The current generation of blockchain platforms seeing the most success are the ones that offer compatibility and/or interoperability with other chains. There are standalone systems like Binance Smart Chain and Polkadot, but there are also the layer 2 platforms.

Layer 2 solutions are currently gaining rapid traction among users and developers alike, offering close compatibility with Ethereum while providing high throughput with low fees. It’s a "best of both worlds" solution that’s proving to be a hit. So much so, that even Vitalik Buterin himself thinks "power users" of Ethereum should take advantage of their capabilities.

Polygon, recently rebranded from Matic Network, has gained rapid traction over recent months, which has only accelerated in the last few weeks. Since launching on mainnet in summer 2020, several flagship DeFi apps have migrated to operate on Polygon, evidently deterred by Ethereum’s high fees and slow throughput. In contrast, Polygon can handle up to 65,000 transactions per second on its Plasma-enabled PoS second layer.

As such, Polygon is attracting migratory apps such as Aave, Curve Finance and Augur. The platform’s inherent compatibility with Ethereum makes it an easy choice. However, this also stands true for new apps such as QuickSwap or Trace Network, which can also tap into the ERC-20 economy.

Thanks to its adoption momentum, the Polygon (MATIC) token has recently hit astonishing highs, with the token entering the top 15 by market cap globally. According to dApp aggregator dApp Radar, the platform gained over 75,000 active users in the week leading up to May 17.

Celer Network has made its name as a fast, secure and low-fee layer 2 platform, supporting apps on Ethereum and Polkadot. However, the project recently made a big announcement about its plan to launch a "public transportation system" for DeFi, which it calls Layer2.Finance.

Layer2.Finance is a DeFi aggregator based on Celer’s rollups technology. The project uses an elegant analogy of DeFi as a city, with various shops (dApps) in which you can park your money to earn returns. The only issue is that the luxury limo service (fees) you need to access the shops will wipe out your opportunity for any gains by the time you get to any of them.

Therefore, the mission behind Layer2.Finance is to enable mass adoption of DeFi by making transaction fees affordable and dApps easy to navigate with a single solution. It allows anyone to access all existing DeFi protocols in the same way that a public Metro system connects the shops and areas of a city – and just as accessible.

Like Matic Network, OMG Network was also founded in 2017 with the vision of making Ethereum more scalable using a variation on Plasma technology, called More Viable Plasma. It offers full interoperability with ERC-20 tokens, as well as faster throughput of thousands of transactions per second, but at lower fees than on Ethereum.

OMG Network recently confirmed a partnership with Enya, a provider of software frameworks for privacy-preserving computation. The pair have teamed up to launch OMGX, a platform for Ethereum Virtual Machine-compatible smart contracts, token staking and streamlined cross-chain liquidity. The overall idea is to provide a platform that doesn’t just scale Ethereum but also enhances it with the capacity for additional, more complex computations.

OMGX is currently in testnet, open to developers wishing to start building.