Trying To Find Second Layer Solution To Ethereum's Problem

Ethereum has been used as the default platform for decentralized applications for many years. It also is the default choice to issue your own tokens in the form of ERC-20. And while many newer blockchain platforms have been trying to dethrone Ethereum, none of them has been able to do it with a decent success rate. Yes, there are DApps on Tron or EOS and others, but they are still so far behind Ethereum as of today.

The problem is, Ethereum is not very scalable. In fact, many people have been complaining about the increasingly worrying gas fees. With the hugely popular DeFi protocols and decentralized exchanges, it’s almost impossible to pay less than $1 for every smart contract interaction. This is where things get interesting. Many projects try to offer their second layer solution to solve these issues. But, will the mainstream Ethereum traders ever migrate to these second layer solutions?

So, who are the most promising projects that can help Ethereum to solve this problem? Well, let’s find out together.

Loopring (LRC)

Basically, Loopring or LRC is an open-source protocol to scale decentralized exchanges on top of Ethereum main blockchain. With the smart contract mechanism of Loopring, the DEX-es or decentralized exchanges will be able to natively integrate with zkRollup feature, which was popularized by the famous privacy coin ZCash.

With Loopring, there will be lower settlement fees as well as higher throughput on Loopring DEX-es. On top of that, they still won’t compromise with Ethereum security guarantees. DEX-es that operate on Loopring (instead of native Ethereum DEX-es) will be able to enjoy much lower gas fees and better privacy protocol as well. Recently Loopring gets significantly more popular after the rise of DeFi’s hype-ness.

Matic Network

Matic Network is another hyped second layer solution that Ethereum DEX-es might need to adopt before it’s too late. Matic implements a complex Plasma scalability solution with a Proof-of-Stake based side chain. Among all Ethereum second-layer projects, Matic is perhaps the closest one to implement life-changing Plasma implementations. Recently they have boasted nearly zero transaction fees compared to Ethereum super-high fees.

Matic is able to solve this problem by building an adapted version of Plasma that only uses Ethereum blockchain for finality. Due to its own PoS sidechains, only the checkpoints need to be confirmed by the Ethereum main chain. Theoretically, Matic Network can achieve millions of transactions on all side chains.

Matic Network gets super hyped due to its IEO on Binance last year although recently, the hype has subsided.

OmiseGo (OMG)

The next second-layer solution for Ethereum is OmiseGo Network (OMG). OMG also uses similar mechanisms, but it has its main attention on enterprise use and B2B (business to business) solutions for more traditional companies. OmiseGo claims it only requires one-third of Ethereum’s average gas fees even though it can process as many as thousands of transactions per second.

And just like Matic, OmiseGo also uses Proof-of-Stake to make the transaction confirmations much faster. They settle asset transfers and value movements instantly in a trustless environment.

Final Thoughts

So, among the top three second-layer solutions for Ethereum, Matic Network, OmiseGo, and Loopring, I personally feel that none of them will ever go mainstream. Loopring might have its own place among DEX-es and DeFi enthusiasts, but I still think many newer exchange businesses would never use it in the first place.

The interface is great, the technology is good, but crypto traders might just try to find another blockchain altogether rather than a side chain or second layer protocol with its own token. Let’s see what happens, though, as I could be wrong, of course.

A strong blockchain advocate, crypto enthusiast, and secretly hoping crypto will go mainstream