With the continuous emergence of questions surrounding the soaring transaction costs and the acceleration of activities in the decentralized finance (defi) field, Vitalik Buterin, the founder of Ethereum, believes that the layer 2 solution can expand the network in just a few months. 100 times to meet the growing demand.
Sidechain bundling is touted as a solution to current network congestion
Ethereum has undergone many milestone developments in the past 12 months, and due to its smart contract function, it can be considered a protocol responsible for popularizing counter-revolution. However, with the simultaneous surge in demand for network services, the surge in natural gas costs has greatly increased transaction costs, which has brought new troubles to users.
These developments coincide with the ongoing launch of ETH2, which can effectively upgrade the original infrastructure to support better performance by improving scalability, increasing efficiency, and increasing transaction throughput. However, recent activities have blocked network performance and sparked debate about the best way to solve these problems.
In a recent Tim Ferriss Show interview with Naval Ravikant, Ethereum’s 27-year-old co-founder Vitalik Buterin discussed how to solve this congestion lies in a second-layer scaling solution that can be implemented within a few months. Buterin believes that aggregations such as ZKS may play a key role in reducing network costs and enhancing performance.
Aggregate supplementary plans for sharding as part of the ETH2 upgrade
Unlike traditional Ethereum transactions (which require network confirmation of transactions), the second level of aggregation effectively allows the side chain to record and verify all transactions, and then “aggregate” them into a single transaction. Then, the single transaction needs to be approved by the main chain (Ethereum in this case).
In sharp contrast to the existing confirmation time, aggregation can provide instant confirmation, thus avoiding the congestion that has plagued the Ethereum network for months. Buterin believes that this second-tier scaling solution can provide 100 times scalability within a few months. When combined with a first-layer scaling solution such as sharding, the solution will also enter the network, and the number will be increased to 1,000 times.
In addition, side chains can solve the high transaction fees that anger users, thereby increasing affordability. New defi applications have begun to take advantage of these affordability, and these new defi applications are eager to expand their coverage.
Decentralized exchanges transition to the second layer
Decentralized exchanges (dex) and defi protocols like Uniswap have become unfortunate victims of Ethereum congestion due to their first layer structure. In order to solve this shortcoming, ZK-Rollups of ZKSwap is a second-layer token exchange protocol based on automatic market maker (AMM), and a side chain aggregation has been developed to solve this problem.
This summary can support defi, but it will not put them into trouble due to the high gas costs that plagued defi participants. Buterin believes that this aggregation may be the answer needed to achieve the 100-fold scalability he mentioned, and the solution has achieved provable results.
According to the Tweet on March 10 (focusing on the second-tier dex competition), ZKSwap currently ranks first among similar solutions, with revenue of more than $66,000,000 in 24-hour transaction volume.
L2 DEX trading volume in the last 24 hours:
1 piece @ZKSwapOfficial $70,717,033 (7% $ ZKS)
2 pcs @QuickswapDEX $32,014,977 (25% $ Fast)
3 @loopringorg $8,447,643 (63% $ LRC)
4 @nashsocial $ 1,608,638
5 @deversifi $ 763,514
6 @Leverj_io $ 234,417
powered by @coingecko API
— L2_Dex_Wars (@ L2Wars) March 10, 2021
At the time of writing, the total locked value (TVL) in the dex (decentralized exchange) numbers currently exceeds $813 million.
Do you think the Ethereum network will grow by X100 in the current bull market, as Vitalik predicted? Let us know in the comments section below.
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