The present state of L2s, Edition #3

Layer 2 M

May 21, 2023

Good Morning Saints,

I hope you’re having a wonderful weekend.

If you’re reading this, you’re always one of the chosen Saints and special.

Here’s what we’re covering today:

Optimism Bedrock to Mainnet is already planned
Arbitrum DAO revenue distribution and Delegation week
StarkNet updated goals and roadmap
Linea Voyage: A 9-week odyssey event
The DeFI Saint Recap

The present state of L2s

~Optimism Bedrock to Mainnet~

Optimism Bedrock upgrade to Mainnet is set to launch on 6th June, and what does this mean for Optimism?

L2s are set to scale Ethereum to increase Txn throughput and reduce fees drastically up to 10x or more.

This sounds good, but that’s not the case most times, we have also seen in some cases where these L2s behave much like Ethereum Mainnet whenever there are lots of activities in the network.

This leads to network congestion that results in slow Txn processing and most times Insane surges in gas fees

Arbitrum equally experienced this during the Odyssey event which led to their upgrade to arbitrum nitro which will reduce fees drastically and increase Txn throughput.

Now, as we can see from L2Fees, Arbitrum has cheaper fees than Optimism.

Optimism Mainnet’s upgrade to Bedrock will reduce its fees drastically and also increase its Txn output making it to be able to strongly compete against Arbitrum.

Here are the important facts to know about the upgrade to Bedrock:

Set to happen on 6th June 2023 (16:00 UTC).
2-4 hrs downtime on OP Mainnet
Bedrock upgrade will bring a 47% fees reduction (protocol’s cost and security fees)
Bedrock upgrade will introduce a two-step withdrawal to OP Mainnet bridge to improve security and make exploits much more difficult.
Bedrock upgrade still achieves EVM-Equivalent
Bedrock upgrade will set room for OP Superchain advancement, so more chains like Base can build on Optimism easily.

~Arbitrum DAO revenue distribution and delegation week~

Arbitrum has proven to be unstoppable and wants to show why it should be the clear winner of the L2s war.

Arbitrum is not the first protocol to transform into a DAO and neither will it be the last, but what we’re about to witness on Arbitrum hasn’t been done by any other L2 chain.

Before we dive into this discussion, let’s look at the current growth of Arbitrum since after its Airdrop.

Arbitrum still remains the leading chain with a combined TVL of 5.7B and a market share of 66%

Arbitrum processed more Txn than Mainnet and Optimism and also has had more active addresses than Optimism

According to Token terminal, Arbitrum accrues a fee of $11.4m and a revenue of $1.6m

Now, Arbitrum DAO is taking a bold step to be the first rollup chain to distribute its revenue generated to different DAO in the Arbitrum Ecosystem.

The revenue distribution is generated from Txn fees users pay when interacting with the network which comes from:

L1 fee to cover for cost on Ethereum
L2 fee to cover for cost on Arbitrum

you can read more on the fee distribution here.

Tally Delegation week is starting on the 22nd of May in which DAO protocols can participate and will enable token holders to delegate their tokens.

Arbitrum DAO is participating in the delegation week which is a 5 days event, now $ARB token holders can delegate/re-delegate their votes and wallets with more than 40 $ARB tokens will be eligible for a free delegation Txn on tally during the delegation week.

So keep an eye on this.

~StarkNet updated goals and roadmap~

The current state of StarkNet as we know doesn’t behave like an L2, ETH Mainnet itself sometimes shows much more performance than StarkNet except for fees.

When it comes to fees, StarkNet is the most expensive L2 to use in its current form.

So, in terms of overall UX, performance and fees, StarkNet doesn’t come any close to other L2s and this is now a very huge barrier to the future of StarkNet.

StarkNet’s main goal is to improve its network performance so as to support more users and developers.

In this Q2 2023, StarkNet plans to increase its Throughput and latency by releasing a new version Starknet v0.12.0.

This version will include Starknet’s transition to Rust-Cairo VM, as we know Starknet has been using Cairo language and not Solidity which makes Starknet not an EVM- Equivalent chain thereby not giving developers an experience as it is like building on Ethereum which other zkEVM chains aim to achieve. But this is not our main focus here.

This transition will also reduce block execution time and will increase throughput.

In Q3 and in the next version, Starknet aims to reduce its Txn cost drastically by introducing volitions and will also

leverage on EIP 4844 AKA Proto-dank sharding which will introduce Shard Blob transaction to Mainnet itself thereby reducing the cost of fees already which is as a result of the data cost.

Volition is a solution developed by Starkware which helps developers/builders to switch easily btw a zk rollup and a validium.

This will leverage Data availability as in a zk rollup the data is available on-chain while that of Validium, the data is stored off-chain.

Data availability being on-chain can be of disadvantage to privacy and efficiency, so Starknet’s volition solves this.

The last two goals on Starknet’s roadmap which are coming in Q4 2023 focus on Introducing a fee market and shorter and fixed block intervals (to achieve faster finality).

The fee market will allow efficient allocation of Starknet’s limited resources, based on users’ willingness to pay for a transaction, and not merely on its place in line.

This will only happen whenever there’s congestion in the network.

~Linea Voyage~

This is a 9-week odyssey event organized by Linea so as to onboard users into their Ecosystem in preparation for their Mainnet Launch.

This project is a sleeping dog, Mark this Quote.

Keep your eye on Linea testnet and its Mainnet Launch

Linea is a zk rollup/zkEVM chain by Consensys, Consensys is the team behind Metamask and Infura.

To know more about the event, here’s a detailed guide

I didn’t pay attention to this event earlier and the first and second week is gone, but if you followed up from the beginning, Kudos to you.

If you didn’t, it’s never late.

Linea is currently in week 3 which is ending today by 11:59 EST.

Here’s an alternative link to get the $ETH faucet for the network if you can’t from other sources.

The DeFI Saint Recap

Account Abstraction might be one of the least narratives you think will ever come, but I see it coming soon.

Currently the chains leveraging AA are:

Ethereum
zkSync
Starknet

Do you think that’s all?

No, just wait till other chains start seeing its benefit, I expect to see it expanding to other several chains, more wallets will adopt it, and more protocols will implement it as well.

What do you think will happen to protocols already leveraging this, they’ll see the first mover advantage.

For a narrative to brew, it just has to start with one announcement.

My favourite protocols/wallets already leveraging this are:

Kromatika DAO
Plena wallet
Argent X wallet
Safe

To read more on AA, here’s my thread on that

Do you still remember how $VELA migrated from Metis to Arbitrum and pulled 33x?

It’s not over until I say it's over.

we’re still in the bear market and it’s important to keep your eyes on strong projects and teams, Vela’s beta phase was closed due to unforeseen circumstances in which the team had to tackle the issue and refund all VLPs.

Missed what happened, here’s a recap