The number of decentralized exchanges with layer two solutions is growing as the Ethereum network struggles to keep up with its own popularity.
As excessive Ethereum gas prices continue to hinder smaller transactions and operations on the network, the number of faster and cheaper options continues to grow as layer two adoption rises. Layer two solutions have the potential to process thousands of transactions per second, rather than the handful processed on layer one.
The decentralized exchange LeverJ has seen a surge in trading volumes since it launched perpetual contracts four weeks ago. About $ 75 million has been traded in 26,600 trades, which equates to just under $ 600 in total gas fees. Industry observer ‘DeFi Dad’ noticed;
“Only in DeFi 2021 could you miss these monster numbers trading on an Ethereum DEX – built on L2”
While these numbers may seem small compared to DeFi giants such as Uniswap, they represent an increase in layer two adoption at a time when the technology is most needed. In essence, scaling layer two means taking the work out of the root chain to process data and transactions faster and more cost-effectively.
DeFi protocol Synthetix is also ready to launch its Optimism layer-two strike upgrade called Castor later today, January 14, at 23:00 UTC.
Unfortunately, we have had to delay the release of Castor by ~ 22 hours, and it will now be deployed on Thursday, January 14 at 23:00 UTC. https://t.co/nlbgvZ99pI
– Synthetix ⚔️ (@synthetix_io) January 13, 2021
Castor is the result of four months of testing started at the end of September by offering incentives in its own SNX token to testnet participants.
The DeFi protocol, which provides synthetic assets that track the value of real assets, is migrating to a new SNX escrow contract that supports L2. The upgrade also includes two smart contracts that allow tier one deposits and tier two withdrawals using optimistic roll-ups.
The developers expect that by plotting to layer two improve the user experience with faster transaction processing and cheaper gas costs. With its complicated smart contracts, hitting, staking, and claiming weekly rewards can sometimes cost over $ 100 per trade, which will now be a thing of the past.
According to the Synthetix dashboardmarket cap has reached $ 3.2 billion, while SNX prices are up 26% in the past seven days to a record high of $ 16.
Loopring’s decentralized exchange is also gaining traction with new updates and layer-two liquidity mining incentives for its own token, LRC.
Her latest feature is the ability to send from a Loopring L2 account to any Ethereum-based L1 account without the recipient ever having to be on L2.
“This means you can send a quick, cheap (gas-free) payment on L2 to your friend who has never heard of L2, all you need is his Ethereum address (or ENS name),”
The number of layer two based networks and exchanges is on the rise, but the big question remains when the most popular DEX, Uniswap, will launch its L2 upgrade?
Average Ethereum transaction prices have pulled back a bit from their record high of over $ 16 on Jan. 11, but according to bitinfocharts.com, they’re still economically unviable for many users at over $ 5.