We are swimming in second-layer solutions; it feels like an Olympic game. But who carries the torch?
The most popular layer two solutions abstract away from Ethereum. They are making transactions faster and cheaper. Notably, L2's redirect network congestion and increase the throughput of transactions. In addition, Arbitrum, Optimism, Polygon and chains like Gnosis allow users to reap the benefits of the native Ethereum chain— without excessive confirmation times and high gas fees.
Below I'll go through three of my favourite L2 solutions.
Choosing a Network
Before you bridge to layer two, consider what you want to achieve. Are you looking for cheaper fees and quicker confirmation times? You'll get that with any of the prominent layer twos.
If you want a first-mover advantage, I'll recommend Arbitrum. Many applications on the Arbitrum network span networks like Optimism and Polygon.
Although, the newer versions take time to integrate: notably Nova, the most recent release. But don't let that discourage you from bridging! It means you can rank high with early app usage. For those who want to be power users, it's easier to move up the ranks. And easier for those who wish to pioneer network releases.
Optimism is your best bet if you're looking for rewards for using applications, especially since the community made some recent governance decisions to incentivize app usage.
Follow this link for OP Summer incentives. And, if you'd like to learn more about incentives on Optimism, click here.
Reasons to Bridge
Some reasons many people bridge to an L2 solution are because fees are cheaper, there are faster confirmation times, and as of late, there are several unique games deployed to L2s like Arbitrum and Polygon.
Recently, there has been an uptick in different games, from point and click, dungeon raider, fantasy style, and storyboard — among a few. As a result, L2s are attracting more unique users, and blockchain games are getting an advantage.
Another reason to bridge is for a better trading experience; if you want better returns from your transactions or liquidity positions, I'd recommend bridging capital for preservation purposes, especially since many L2s have active programs to migrate liquidity. It's also considerably easier to compound a position because you don't need to worry about timing the day/week for the best gas prices.
There are many ways to trade on an L2, and many protocols offer capital pools that compare to mainnet in terms of slippage and depth— made possible with complex smart contracts and oracles.
Using L2’s
To get started on an L2, you'll need to use an official bridge and if you want to be safe when navigating to applications, use official portals.
The only L2 above that requires a different base currency is Polygon, which requires $MATIC for transactions. The others use plain $ETH for transaction fees.
Arbitrum has no native token or governance token; it uses $ETH for transactions. Polygon uses $MATIC to facilitate transactions, and Optimism has a governance token called $OP but uses $ETH as the gas token.
Recap
There are several reasons to bridge to another layer instead of solely using mainnet Ethereum. First, you can make more transactions and learn the ins and outs before getting burnt on hefty gas fees on the mainnet. Although the gas fees have been reasonable lately— on Ethereum L1 —it doesn't stay that way forever, but we are trying. And second, you can take advantage of applications that don't work effectively on the mainnet or are cost-prohibited.
Layer twos are one step towards lower overall fees because abstracted layers can handle the load of users. Mainnet notoriously becomes expensive when congested— because block space gets bid higher and higher, and the room is precious. With second layers, Ethereum has room to breathe when transactions don't need to be posted immediately to the chain— congesting block space.
You have multiple options to explore. If you want to find something new and exciting, check each ecosystem before bridging funds there, but remember— you can bridge between many different chains.
Including Arbitrum, Optimism and Polygon. If the chain is EVM compatible, if constructed, you can bridge. 🏰 🌉 🏰