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Ethereum Layer 2 Protocols Under Scrutiny Amid Rising Transaction Costs: Details

Mon, 04/10/2023 - 14:30
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Godfrey Benjamin
Ethereum Layer 2 networks are far cheaper for transactions, but are they future of scaling?
Ethereum Layer 2 Protocols Under Scrutiny Amid Rising Transaction Costs: Details
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The future of Ethereum as it relates to its scaling capabilities has been placed under deep scrutiny as the role of the growing horde of Layer 2 protocols in tapering down associated fees is being analyzed. According to data from L2Fees, the majority of L2 protocols have significantly lower fees associated with transfers and swaps of assets when compared with Ethereum's.

Per the data, Loopring ranks as the cheapest platform to conduct transactions as the average cost to send Ethereum is pegged at $0.03, while swapping costs $0.05.

Arbitrum (ARB), Polygon's zkEVM and zkSync Era require 6 cents, 16 cents and 5 cents, respectively. While these protocols are notably more efficient, the fact that they are able to combine speed and low cost when compared to Ethereum has already positioned them as outfits with immense potential.

Ethereum L2s
Image Source: L2Fees.Info

Ethereum, despite its soaring gas fees, is still the most robust blockchain protocol in the world, though there has been an ongoing targeted rebrand in the network's features as a proof-of-stake (PoS) protocol. While a push to higher scalability is in the works, the best way to make use of the Ethereum protocol easily at this time is via the associated L2 protocol.

Analyst Names Year When Ethereum (ETH) Might Reach $10,000

Are L2s enough?

The majority of Layer 2 protocols out there make use of the Zero Knowledge Proof technology to verify transactions. zk-Proof, as it is fondly called, helps convey verification information faster in a way that frees up additional data that can drag down transaction processing.

To date, it is considered the most viable way to fully commercialize the Ethereum blockchain, as many transactions can be bundled and confirmed at the same time and for much less. While these technologies are still undergoing active development, they represent the best avenue to onboard the next billion users into the Ethereum ecosystem.

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About the author

Godfrey Benjamin is an experienced crypto journalist whose main goal is to educate everyone around him about the prospects of Web 3.0. His love for crypto was birthed when, as a former banker, he discovered the obvious advantages of decentralized money over traditional payments. With his vast experience covering various aspects of Web3, Godfrey's articles has been featured on, Cryptonews and Coingape, among others.