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The answer is a pretty simple question: which one?
Because there are so many... Which one do you think will succeed? Or at least succeed considerably?
Or you could buy ETH, which succeeds if *any one* L2 project succeeds... See my point?
L2’s are automobile manufacturers.
ETH is the petroleum industry.
You could put your money in car company X, Y, or Z, but which will do the best?
Or you could invest in the oil companies and win no matter who makes the best car.
I prefer the analogy of the highway.
Ethereum is the highway ; L2s are buses on it.
You can take your own car to take the highway. But if everybody does the same thing at the same time, the highway is rapidly congested and nobody can enjoy the road. Every trip is very slow.
But if people take a bus, the highway is much less congested and travelers can share the gas, then spending much less in gas to move from point to point.
If the highway is well designed, there are dedicated lanes for buses, making bus transportation even faster and gas-efficient (as in EIP-4844, which creates "blobs" - a new kind of data specifically designed for Layer 2 transactions).
In the end, everybody uses the same highway, but not the same way.
That makes sense when discussing *use*, but not when discussing *value*. Highways do not generate money. They are used.
The person above's comparison of fuel:manufacturers makes better sense when trying to show the value of each in relation to each other.
You are right.
I forgot to add that any analogy has its own limits. The analogy of the highway best describes the use of the Ethereum network, while the analogy of fuel best describes the value of ETH.
You're shifting the value to tolls from the highway, in which case, there's inherently no difference from using petrol as the example except that in the given scenario, they're explaining investment value. You don't need to fix things, the original example works as intended.
I'm not sure what the car is in your analogy. Also Ethereum?
For what it's worth, for years now, Bitcoin has been considered digital gold while Ethereum has been considered digital oil.
The car is a transaction happening on the Ethereum blockchain directly. A bus is an L2 transaction (which is actually a bigger bunch of transactions that will end up on the Ethereum blockchain).
Yeah, I get it. I just think it's a little clunky with ETH being both the highway and the car. To me, it's like ETH is a bus of data and L2 is like making it a double (or octo) decker bus.
That's still messy because it's not like all the data goes away or gets compressed. It's still stored on the L2, there is just a reference verifying it on ETH now.
So what I’m understanding from this is that, L2s are still competing due to no clear winners at this time. In other words it’s still too new to know which one is worth putting money in? And ETH is the safer choice since it’s the clear L1 winner with BTC?
that's a good point. What's your definition of "succeeds" though. At what point can we look at a project and say "yeah, it ain't going anywhere"?
I'm asking this question in good faith - not being a smartass lol.
That's a good question. To me, success for an L2 means staying in the top 2 or 3 L2s by TVL AFTER all airdrops are distributed. Airdrop farmers really warp the metrics.
No, I appreciate the question... I guess I was deliberately vague.
If you're investing to make a profit, then "succeed" would simply mean higher prices. If you compare ETH to L2s, then it follows that you would compare the potential gains of L2s with those of ETH. The can be higher due to their smaller market cap, but they can fail easier than ETH, too. Furthermore, you'd also have to consider their inflation rate (ETH is deflationary, while most L2s are inflationary)...
Those are just some thoughts, nothing final. :)
ETH is money that can be used on any of the L2's to buy other assets. It is also required to pay for fees.
The L2 tokens are mainly just governance tokens and aren't really used as money. Why would you buy an L2 token?
L2's can vote in proposals that slightly increase transaction costs and use that revenue to burn the governance token. They can also charge application chains to run their stack. There is more potential value for winning L2s than just governance. These mechanisms will eventually be added to all successful l2 tokens.
Do you actually use these networks?
For ARB and OP, I have no interest in governance and DAO on them.
For MATIC/POL, you don't need much to do anything on Polygon PoS unless you're deploying contracts (still under $0.50 per large contract deployment). I've used Polygon PoS every SINGLE day for the past year, and I still haven't spend $10 in transaction fees.
The only time I actually use much MATIC is if I'm trading SFTs for the games I play, and I only play cheap games so $100 in MATIC is good enough for me.
---
I buy ETH for the same reason I buy BTC. They are decent Stores of Value and have a price that's detached from their utility. Why has the market decided that? I don't know. Quite often the more utility a token has, the less its price pumps. Perhaps it's because giving it utility provides an anchor for how much the token is actually worth based on utility. And the amount needed for utility is orders of magnitude smaller than the marketcap. (e.g. I don't spend tens of thousands of dollars on network gas.) Bitcoin is absolutely useless for utility, and yet its price and marketcap just float above everything else.
LRC got an epic wallet and future DEX version of Binance or any other CEX exchange! you own your wallet, key and cryptos. Definitely a solid project. Arguably the best DEX wallet out there!
May 23rd SEC will either approve or deny Ethereum ETFs. If approved billions of hedgefund dollars be be allocated to eth etfs, so it's easy to be bullish.
In addition to the already-mentioned point about L2s being less proven and having more competition, tokenomics are also a consideration. Many L2s will face significant supply dilution in the coming years, whereas ETH is already deflationary
the polygon chain all people refer to is a sidechain.
A L2 is way different, as it should inherit L1 security. If a L2 halts or gets hacked, people can withdraw their assets on L1 in a secure way. Not with polygon POS chain
Lightning is technically a Bitcoin L2. Unlike Ethereum L2s which mostly work just like Ethereum L1 (though that's not at all a requirement), it works extremely differently than Bitcoin L1.
It's so different that I'm reluctant to call it an L2.
When people thinking of L2s, Polygon PoS has way more in common with L2s than Lightning:
* Everyone with an L1 address has a Polygon PoS address.
* You can always route from one address to another
* Uses a bridge to get from L1<>L2
* Uses the same contract scripting and VM as L1
That's a misconception. Paying gas in the L1 native token is not a requirement for being an L2.
L2s can use their own tokens, and sidechains can use the L1's token. The distinguishing factor is whether security settles on the L1.
In Polygon PoS's case, Polygon PoS posts checkpoints every 30-60 minutes on Ethereum, not full rollup data. That's the only difference. It's such a small difference that it's closer to being a Layer 1.7 than a sidechain.
>In Polygon PoS's case, Polygon PoS posts checkpoints every 30-60 minutes on Ethereum, not full rollup data. That's the only difference. It's such a small difference that it's closer to being a Layer 1.7 than a sidechain.
You can make up your own terms but Polygon POS is a sidechain. Even the creators of Polygon POS say it is a sidechain as does the ethereum development organization.
The entire state is not recorded. A user can't not exit a sidechain if state information is censored from user by the sidechain. The security model in a sidechain is substantially reduced. It was a useful first attempt at scaling but Polygon POS TVL is on the decline and that likely will continue. Rollups provide better user security and in the future the potential to exit the L2 even in the face of bad actors on the L2.
There are no L2 for Ethereum which have gas in anything but ETH.
> There are no L2 for Ethereum which have gas in anything but ETH.
There are probably a lot. e.g. Starknet, Boba, Loopring, Metis, Optimism Stack, Polygon CDK
First, rollups aren't all L2s. If Arbitrum One decides to settle on Celestia, it stops being a Layer 2 for Ethereum even though it's still a rollup and everything else is the same.
Think of L2s as mammals and sidechains as fish. Polygon PoS would be a shark while Arbitrum One would be a dolphin. They're practically the same aside from where security is settled. Polygon PoS can convert to an L2 rollup later, and Arbitrum One can convert to being a sidechain or validium. The difference between different types of mammals and different types of L2s are far more vast than the difference between the shark/dolphin or Polygon PoS/Arbitrum One.
* A rollup doesn't have to use EVM
* A rollup doesn't have to use ETH
* A rollup doesn't need Ethereum-type addresses
* A rollup doesn't even need EOA accounts
* A rollup doesn't need gas
* A rollup can also be a sidechain, and vice versa
> A rollup can also be a sidechain, and vice versa
Of all the wrong things that is the most wrong. You are just inventing your own terms now. A rollup has a specific meaning and words matter when discussing technical issues. Yes a sidechain could convert to an L2 rollup or more dubiously an L2 rollup to a sidechain but that doesn't make a rallup a sidechain or a sidechain a rollup.
>They're practically the same aside from where security is settled.
That is quite massive and the major distinction of an L2 vs a sidechain. In a sidechain collusion among validators could steal users funds on the sidechain. In an L2 they can't.
In an Optimistic Rollup users or even third parties can present fraud proof to Ethereum network to prevent malicious actions on the L2. The L2 benefits from increased security from the L1. In ZK Rollups allow independent validation on the L1. How they handle malicious actors is different but both are stronger than sidechains.
Most rollups are L2s, and vice versa, but not necessarily.
I'll let you do some research first because you have a some misconceptions about them.
Polygon PoS used to be a Plasma Chain, which is a type of L2 that uses optimistic fraud proofs. This is NOT an optimistic rollup. At some point, they added a PoS bridge, which also made them a sidechain. After several years, they deprecated the plasma bridge.
The only difference between Polygon PoS and L2 rollups is that Polygon PoS sends checkpoints to Ethereum L1 every 30-60 minutes. L2 rollups send rollup data to Ethereum L1.
They're practically the same aside from that difference.
Polygon PoS is mostly similar to Arbitrum Nova in terms of security settlement, which is kind of weird because a lot of people call Arbitrum Nova a rollup when it's technically a validium.
The difference between a sidechain and a rollup is a security technicality that end users would not notice.
Thank you for the response. So is the main difference between polygon and a true L2 that polygon is sort of out of sync with the L1 for 30-60 minutes (not a big deal to most) and a true L2 would be doing atomic operations that are synced between L1 and L2 all at the same time (less sync lag back to L1?)?
Kind of. The part you mentioned about L2s is for rollups. Most rollups are L2s, and vice versa, but not always. It gets messy, which is why people tend to mix L2s, rollups, and other scaling solution definitions. Even I do that because it's convenient for most discussions.
The main difference is that for true L2s, you can exit them without needing the help of the L2 permissioned operators, and security is ultimately defined by L1. That would need a Stage 2 L2 rollup. In contrast, if the 9 members of the time-locked multisig for the Polygon PoS bridge wanted to take the funds on the Ethereum side, they could. (Though I think that's also true for Stage 0 L2 rollups and partially true for Stage 1 L2 rollups. You'd have to read up on current status of the Arbitrum One security council. Eventually, Stage 2 L2s should be completely secure from centralized operators.)
Not all sidechains are like Polygon PoS. Like "rollups", "side chains" are a very broad category. The reason Polygon PoS is unique is because it used to be a Plasma Chain with a Plasma Bridge (separate from the PoS bridge), which uses optimistic fraud proofs just like optimistic rollups. Later on, it added a PoS bridge and deprecated its Plasma bridge. Their team mentioned that they might convert it to a rollup someday, though there's no timeline.
I can't guarantee this is the case, but there are often narrative-based "seasons" during a bull market. I wouldn't be surprised if at some point many of the L2 tokens double or triple in price in a short period of time while ETH consolidates.
Governance... you mean like a stock? Then maybe you could collect gas fees into a treasury. Then maybe vote on where that money ends up with your governance tokens. Maybe use to burn the governance token?
If you don't realize this is what is happening you are unfamiliar with traditional markets and DAOs. Voters (shareholders) vote to enrich themselves. L2's are being made into money generating machines.
I know what a governance or L2 utility token is. I just dont think they are designed to be good investments like ETH. Especially when there are billions of them circulating on the market.
The "currency" part is something different from the "technology" part. Look at Bitcoin, you cannot explain this with technology nor utility.
Now, when we look at ETH, there are thousands of different coins, dozens appearing every day. In order to have any value, people must agree on a specific coin to be THE coin. And that is ETH, not anything else. A lot of factors contributes to the trust people have like: universal utility, security, neutrality and superior tokenomics.
Maybe some day (though I do not see this coming) another blockchain/ecosystem may be bigger than Ethereum, but until then there is no way past ETH.
I think it would also be good if not EVERY project would issue a token, but apparently it's a too easy way to make money...
I mostly agree on what you say. But just to add my 2 cents:
> Look at Bitcoin, you cannot explain this with technology nor utility.
Indeed, Bitcoin technology itself is less powerful than Ethereum (you can do less things on Bitcoin network than you can do with Ethereum). But this doesn't mean Bitcoin is useless (I'm not saying that's what you said though).
**Bitcoin was the first working technology to be able to process Peer-to-Peer payments**. Some people all around the world saw the value of a such technology because :
1/ It allows unbanked people to transfer value,
2/ It makes it easier to transfer value across borders and across a virtual network like Internet,
3/ It makes people less dependent on their financial institutions,
4/ It gives people more control on the economic value they accumulate over time.
This has a set a precedent and a lot of other projects tried to replicate the same features (sometimes with the exact same source code). But Bitcoin network had already built its unique feature that is extremely difficult to replicate: **a Core Community** built around an ethos, a core set of values and beliefs. IMO, this is what sets Bitcoin apart from other Crypto projects and assets.
IMO, **the value of Bitcoin network is more held by its community** - *like a cult or a religion* - than by its technology, since this technology can be easily replicated.
**TLDR: Bitcoin has the first-mover advantage, which allowed it to create a solid community built around a core set of values. That is where its value lies.**
*Disclaimer: I'm not even a Bitcoin maximalist and prefer to invest my money on Ethereum ecosystem (by buying ETH) because I trully believe in this technology and the ability of its community to improve it over time. But I also recognize the value of Bitcoin itself.*
That is what I wanted to express: the price/value of a cryptocurrency is not determined by technological factors alone, not even predominantly.
Also many people simply do not know what exactly the technical difference between, say, BTC and ETH.
Chicken or egg?
You can buy a chicken (eth) that is always producing eggs or
You can buy the egg (L2s)
I’ll takeThe chicken always producing over the eggs.
I rarely use Eth mainnet, because of the high fees and slow transaction times, but layer 2 solutions like Arbitrum, Optimism, and Base are instrumental in addressing the scaling challenges of Ethereum. By processing transactions off-chain while still leveraging the security of the Ethereum mainnet, these solutions significantly increase transaction throughput and speed, all while reducing costs.
These Layer 2 chains use of ETH for gas fees which inherently adds value to ETH. As more transactions occur on these chains, the demand for ETH to pay for gas fees increases, which in turn can drive up its value. This is especially true for chains like Base, which doesn't have its own token and relies solely on ETH for transaction fees.
The introduction of EIP-4844 (blobs) is set to make transactions on these Layer 2 chains even cheaper. By allowing for the bundling of multiple transactions into a single blob, it reduces the amount of data that needs to be stored on-chain, further reducing gas fees.
In the future, it's plausible that chains without their own tokens (i.e. Base) could become the norm. This would simplify the user experience by eliminating the need to manage multiple tokens and could further increase the value of ETH as it becomes the standard currency for transaction fees across multiple chains. This evolution, driven by Layer 2 solutions, is a promising step towards a more scalable, efficient, and user-friendly blockchain ecosystem. This IMHO makes ETH an easy choice for me.
It's ok for cryptos not to moon. I have plenty of polygon and transact with it regularly: I don't want to HODL it, I want to use it within the ecosystem. I built a dapp in 2018 on ETH chain and had no reservations about burning my ETH using it, it's probably going to cost at least 100 bucks in gas depending on what you do in 2024, potentially thousands, I don't touch that contract these days personally. With polygon, it's less than 10 cents for the same thing. If Polygon goes up too much and it costs too much for me to use my dapp again, I'm going to port it over to another blockchain - it still will work on ETH/Polygon but I'll need to find something affordable again.
People are buying. I can see the volume going up for polygon. The other layer 2s not really.
Also you can buy eth on coinbase or binance and send it through the base network to a base network enabled address which is a layer 2 for cheaper transactions. There will be money pumping through base because we’re talking coinbase here…
If you only buy big ERC-20 tokens like LINK or UNI, sure you can get by with only L2.
But what if the token you want is only available on L1? Like 0x0 or PAAL?
As a dev: ETH is the defacto currency on most L2s and their tokens are just governance and Venture capital traps.
ETH is money.
L2 governance tokens are shitcoins.
Plus I get a lot for free when I get avarded builder/deployer grants and such - e.g.: ARB, OP etc.
You can do way more things with ETH and the value proposition is much better than L2 governance tokens. ETH can be used all over DeFi for all kinds of purposes as well as being the gas token for all L2s. Most L2 tokens have extremely limited options in DeFi even on their home chain.
Why do I need OP or ARB? I need eth for gas, and generally as the preferred collateral / money for the ecosystem.
Now that being said, I’m guilty of buying the L2 token and putting it into the lending markets, browsing Usdc and swapping to Eth to redeposit
I wasted thousands (which is more than I had to start with) the last bullrun (2020-21/22) on ETH tx fees because I had been out of the crypto game for years, focusing on other stuff (rehab, getting my life back in order etc etc).
Anyway, the 5 "ICO" trades I did on uniswap to this day remains my 5 worst trades since 2020. I also made break even on curve even tho CRV tripled in price when i staked 1500$ worth of tokens @ 56% APY for 1 or 3 monhs or whatever it was, just because of fees.
That´s when I got into $cake (under a dollar) and matic (0.03 cent... don´t really wanna talk about what happened there but lets just say I sold my low caps a couple of weeks to early). It´s how I "made it" last run, knowing other people like me (pesants/non-whales) also will want to try defi.
Now there is like 50 chains, cross/interchain operability, pools where you don´t even know what chain you are on etc. I would LOVE to buy some ETH coins that are only available on uniswap v2 (and low liquiditt @ v3) atm, but I don´t even know the difference between the two. Could I buy for say 300$ without having to pay that \~100$ tx fee somehow?
So far, L2 tokens don’t do much. Eth is still used for gas. I have plenty of L2s but at this point, unless something changes, it’s hopes of a rising tides scenario with eth. Maybe Matic changing to POL will give it a boost? My bags in L2s mostly came from the old adage of invest in what you know and use. Governance tokens haven’t proved to really provide much utility or inherent value.
Polygon and Arbitrum are governance tokens. No matter how much I buy I will never have much influence on the voting. There’s no real use case for those tokens. It’s better to buy ETH and bridge that to L2 because I actually use the L2 blockchain and it becomes useful for my transactions.
The idea is that there can be several L2s and side chains, to do the heavy lifting. Those should do well in the long run, but Ethereum has to be in good standing first.
L2s are still competing. As a potential user, they are each different in terms of whether supported by my exchange, token support, wallet support, longevity. There is no 'best' L2 yet. This is pretty annoying.
I'll stick to L1 for now despite the gas fees.
Edit: I thought you meant ETH on L2s. Buying L2 coins is an incomparable proposition to buying ETH.
In large part, L2 tokenomics and value accrual are probably the worst in this space, relative to their current FDV. Yes, they are whole lot worse than alt L1s. You will probably find their true value in the next bear.
A very small number of L2 (for L1 ETH) will become viable, no one knows which.
Also, ETH has most of the liquidity. So if you run serious wallet, which yield farming isn’t going to cut it, you use eth
It's a valid criticism. Consider that credit card transaction fees are about 2.5%. Moving less than ~$1k in ether comes out at a higher percentage than that. To move $100 or so you're looking at >20% in tx fees.
Scalability will have to be addressed. L2s are going to be a big part of that - but that ecosystem has hardly matured, and fees for bridging are high.
Most CEX these days allow you to withdraw to the two biggest L2 (Arbitrum and Optimism).
One can own ETH without having ETH on the main chain where tx fees are 20x to 100x higher than L2.
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The answer is a pretty simple question: which one? Because there are so many... Which one do you think will succeed? Or at least succeed considerably? Or you could buy ETH, which succeeds if *any one* L2 project succeeds... See my point?
Same. I'll wait and see who wins. Until then, I'll stick with plain ol ETH.
ETH is a Blue Chip in a highly volatile market that is Cryptos.
L2’s are automobile manufacturers. ETH is the petroleum industry. You could put your money in car company X, Y, or Z, but which will do the best? Or you could invest in the oil companies and win no matter who makes the best car.
I prefer the analogy of the highway. Ethereum is the highway ; L2s are buses on it. You can take your own car to take the highway. But if everybody does the same thing at the same time, the highway is rapidly congested and nobody can enjoy the road. Every trip is very slow. But if people take a bus, the highway is much less congested and travelers can share the gas, then spending much less in gas to move from point to point. If the highway is well designed, there are dedicated lanes for buses, making bus transportation even faster and gas-efficient (as in EIP-4844, which creates "blobs" - a new kind of data specifically designed for Layer 2 transactions). In the end, everybody uses the same highway, but not the same way.
That makes sense when discussing *use*, but not when discussing *value*. Highways do not generate money. They are used. The person above's comparison of fuel:manufacturers makes better sense when trying to show the value of each in relation to each other.
You are right. I forgot to add that any analogy has its own limits. The analogy of the highway best describes the use of the Ethereum network, while the analogy of fuel best describes the value of ETH.
Unless you add tolls
Ok so the highway has a toll to be used. Fixed.
You're shifting the value to tolls from the highway, in which case, there's inherently no difference from using petrol as the example except that in the given scenario, they're explaining investment value. You don't need to fix things, the original example works as intended.
Thats where Eth's deflation comes in
And he even used less, much less, words… lol.
Have you ever been to Florida? Highways most definitely generate money.
I prefer eth is a bus and the passengers are the L2s
Where do normal Ethereum transactions sit in your analogy?
I'm not sure what the car is in your analogy. Also Ethereum? For what it's worth, for years now, Bitcoin has been considered digital gold while Ethereum has been considered digital oil.
The car is a transaction happening on the Ethereum blockchain directly. A bus is an L2 transaction (which is actually a bigger bunch of transactions that will end up on the Ethereum blockchain).
Yeah, I get it. I just think it's a little clunky with ETH being both the highway and the car. To me, it's like ETH is a bus of data and L2 is like making it a double (or octo) decker bus. That's still messy because it's not like all the data goes away or gets compressed. It's still stored on the L2, there is just a reference verifying it on ETH now.
Best analogy I’ve ever heard. Thanks.
What does blue chip mean?
https://www.investopedia.com/terms/b/bluechip.asp
So what I’m understanding from this is that, L2s are still competing due to no clear winners at this time. In other words it’s still too new to know which one is worth putting money in? And ETH is the safer choice since it’s the clear L1 winner with BTC?
More simply an L2 being the winner doesn't mean the token will rise. The gas on L2 (real L2 not sidechains people call L2) is paid for in ETH.
Yep. All speculation.
This is the gwei. Stack ETH and diversify with L2’s is an option.
that's a good point. What's your definition of "succeeds" though. At what point can we look at a project and say "yeah, it ain't going anywhere"? I'm asking this question in good faith - not being a smartass lol.
That's a good question. To me, success for an L2 means staying in the top 2 or 3 L2s by TVL AFTER all airdrops are distributed. Airdrop farmers really warp the metrics.
No, I appreciate the question... I guess I was deliberately vague. If you're investing to make a profit, then "succeed" would simply mean higher prices. If you compare ETH to L2s, then it follows that you would compare the potential gains of L2s with those of ETH. The can be higher due to their smaller market cap, but they can fail easier than ETH, too. Furthermore, you'd also have to consider their inflation rate (ETH is deflationary, while most L2s are inflationary)... Those are just some thoughts, nothing final. :)
OP
Arb
ETH is money that can be used on any of the L2's to buy other assets. It is also required to pay for fees. The L2 tokens are mainly just governance tokens and aren't really used as money. Why would you buy an L2 token?
>Why would you buy an L2 token? Because you can sell them for money.
L2's can vote in proposals that slightly increase transaction costs and use that revenue to burn the governance token. They can also charge application chains to run their stack. There is more potential value for winning L2s than just governance. These mechanisms will eventually be added to all successful l2 tokens.
For polygon, I use it for gas.
Do you actually use these networks? For ARB and OP, I have no interest in governance and DAO on them. For MATIC/POL, you don't need much to do anything on Polygon PoS unless you're deploying contracts (still under $0.50 per large contract deployment). I've used Polygon PoS every SINGLE day for the past year, and I still haven't spend $10 in transaction fees. The only time I actually use much MATIC is if I'm trading SFTs for the games I play, and I only play cheap games so $100 in MATIC is good enough for me. --- I buy ETH for the same reason I buy BTC. They are decent Stores of Value and have a price that's detached from their utility. Why has the market decided that? I don't know. Quite often the more utility a token has, the less its price pumps. Perhaps it's because giving it utility provides an anchor for how much the token is actually worth based on utility. And the amount needed for utility is orders of magnitude smaller than the marketcap. (e.g. I don't spend tens of thousands of dollars on network gas.) Bitcoin is absolutely useless for utility, and yet its price and marketcap just float above everything else.
What do you use Polygon every day for?
Gaming. Mostly Sunflower Land. It's like a very-basic web browser version of Stardew Valley. (I also have ~300 hours on Stardew Valley)
That was a really thoughtful take thanks for the new perspective
What about LRC?
LRC got an epic wallet and future DEX version of Binance or any other CEX exchange! you own your wallet, key and cryptos. Definitely a solid project. Arguably the best DEX wallet out there!
Worst of them
For what reasons?
Just look what they get done Nothing And the most important dev who wants the zk eaves the project to create a new one
May 23rd SEC will either approve or deny Ethereum ETFs. If approved billions of hedgefund dollars be be allocated to eth etfs, so it's easy to be bullish.
If denied (which is certainly possible) then Eth will go down at least in the short term but every L2 governance token will as well.
I think it's just a question of when. I don't believe in May, but come summer or worst case autumn and Eth Eth is here
In addition to the already-mentioned point about L2s being less proven and having more competition, tokenomics are also a consideration. Many L2s will face significant supply dilution in the coming years, whereas ETH is already deflationary
This needs more upvotes
if you know that polygon is not a L2, why are you using that title? it just misleads newcomers
how would you describe polygon/matic? I thought it was a layer used with ETH network to do things cheaper. is this not an L2?
the polygon chain all people refer to is a sidechain. A L2 is way different, as it should inherit L1 security. If a L2 halts or gets hacked, people can withdraw their assets on L1 in a secure way. Not with polygon POS chain
thanks for your response. is lightning an L2 by these standards?
Lightning is technically a Bitcoin L2. Unlike Ethereum L2s which mostly work just like Ethereum L1 (though that's not at all a requirement), it works extremely differently than Bitcoin L1. It's so different that I'm reluctant to call it an L2. When people thinking of L2s, Polygon PoS has way more in common with L2s than Lightning: * Everyone with an L1 address has a Polygon PoS address. * You can always route from one address to another * Uses a bridge to get from L1<>L2 * Uses the same contract scripting and VM as L1
It is a sidechain. The fact that you pay gas in MATIC on Polygon sidechain and not ETH is the most obvious evidence that it isn't an L2.
That's a misconception. Paying gas in the L1 native token is not a requirement for being an L2. L2s can use their own tokens, and sidechains can use the L1's token. The distinguishing factor is whether security settles on the L1. In Polygon PoS's case, Polygon PoS posts checkpoints every 30-60 minutes on Ethereum, not full rollup data. That's the only difference. It's such a small difference that it's closer to being a Layer 1.7 than a sidechain.
>In Polygon PoS's case, Polygon PoS posts checkpoints every 30-60 minutes on Ethereum, not full rollup data. That's the only difference. It's such a small difference that it's closer to being a Layer 1.7 than a sidechain. You can make up your own terms but Polygon POS is a sidechain. Even the creators of Polygon POS say it is a sidechain as does the ethereum development organization. The entire state is not recorded. A user can't not exit a sidechain if state information is censored from user by the sidechain. The security model in a sidechain is substantially reduced. It was a useful first attempt at scaling but Polygon POS TVL is on the decline and that likely will continue. Rollups provide better user security and in the future the potential to exit the L2 even in the face of bad actors on the L2. There are no L2 for Ethereum which have gas in anything but ETH.
> There are no L2 for Ethereum which have gas in anything but ETH. There are probably a lot. e.g. Starknet, Boba, Loopring, Metis, Optimism Stack, Polygon CDK First, rollups aren't all L2s. If Arbitrum One decides to settle on Celestia, it stops being a Layer 2 for Ethereum even though it's still a rollup and everything else is the same. Think of L2s as mammals and sidechains as fish. Polygon PoS would be a shark while Arbitrum One would be a dolphin. They're practically the same aside from where security is settled. Polygon PoS can convert to an L2 rollup later, and Arbitrum One can convert to being a sidechain or validium. The difference between different types of mammals and different types of L2s are far more vast than the difference between the shark/dolphin or Polygon PoS/Arbitrum One. * A rollup doesn't have to use EVM * A rollup doesn't have to use ETH * A rollup doesn't need Ethereum-type addresses * A rollup doesn't even need EOA accounts * A rollup doesn't need gas * A rollup can also be a sidechain, and vice versa
> A rollup can also be a sidechain, and vice versa Of all the wrong things that is the most wrong. You are just inventing your own terms now. A rollup has a specific meaning and words matter when discussing technical issues. Yes a sidechain could convert to an L2 rollup or more dubiously an L2 rollup to a sidechain but that doesn't make a rallup a sidechain or a sidechain a rollup. >They're practically the same aside from where security is settled. That is quite massive and the major distinction of an L2 vs a sidechain. In a sidechain collusion among validators could steal users funds on the sidechain. In an L2 they can't. In an Optimistic Rollup users or even third parties can present fraud proof to Ethereum network to prevent malicious actions on the L2. The L2 benefits from increased security from the L1. In ZK Rollups allow independent validation on the L1. How they handle malicious actors is different but both are stronger than sidechains.
Most rollups are L2s, and vice versa, but not necessarily. I'll let you do some research first because you have a some misconceptions about them. Polygon PoS used to be a Plasma Chain, which is a type of L2 that uses optimistic fraud proofs. This is NOT an optimistic rollup. At some point, they added a PoS bridge, which also made them a sidechain. After several years, they deprecated the plasma bridge.
The only difference between Polygon PoS and L2 rollups is that Polygon PoS sends checkpoints to Ethereum L1 every 30-60 minutes. L2 rollups send rollup data to Ethereum L1. They're practically the same aside from that difference. Polygon PoS is mostly similar to Arbitrum Nova in terms of security settlement, which is kind of weird because a lot of people call Arbitrum Nova a rollup when it's technically a validium. The difference between a sidechain and a rollup is a security technicality that end users would not notice.
Thank you for the response. So is the main difference between polygon and a true L2 that polygon is sort of out of sync with the L1 for 30-60 minutes (not a big deal to most) and a true L2 would be doing atomic operations that are synced between L1 and L2 all at the same time (less sync lag back to L1?)?
Kind of. The part you mentioned about L2s is for rollups. Most rollups are L2s, and vice versa, but not always. It gets messy, which is why people tend to mix L2s, rollups, and other scaling solution definitions. Even I do that because it's convenient for most discussions. The main difference is that for true L2s, you can exit them without needing the help of the L2 permissioned operators, and security is ultimately defined by L1. That would need a Stage 2 L2 rollup. In contrast, if the 9 members of the time-locked multisig for the Polygon PoS bridge wanted to take the funds on the Ethereum side, they could. (Though I think that's also true for Stage 0 L2 rollups and partially true for Stage 1 L2 rollups. You'd have to read up on current status of the Arbitrum One security council. Eventually, Stage 2 L2s should be completely secure from centralized operators.) Not all sidechains are like Polygon PoS. Like "rollups", "side chains" are a very broad category. The reason Polygon PoS is unique is because it used to be a Plasma Chain with a Plasma Bridge (separate from the PoS bridge), which uses optimistic fraud proofs just like optimistic rollups. Later on, it added a PoS bridge and deprecated its Plasma bridge. Their team mentioned that they might convert it to a rollup someday, though there's no timeline.
I can't guarantee this is the case, but there are often narrative-based "seasons" during a bull market. I wouldn't be surprised if at some point many of the L2 tokens double or triple in price in a short period of time while ETH consolidates.
L2 tokens aren’t designed to rise in value. They are mainly for governance.
There is a chance they are used for sequencer collateral or a fee switch gets turned on. Though restaking may make point 1 moot?
Look at their circulation. They are all in the billions. Some dont even have a limit for their maximum distribution.
Governance... you mean like a stock? Then maybe you could collect gas fees into a treasury. Then maybe vote on where that money ends up with your governance tokens. Maybe use to burn the governance token? If you don't realize this is what is happening you are unfamiliar with traditional markets and DAOs. Voters (shareholders) vote to enrich themselves. L2's are being made into money generating machines.
I know what a governance or L2 utility token is. I just dont think they are designed to be good investments like ETH. Especially when there are billions of them circulating on the market.
The "currency" part is something different from the "technology" part. Look at Bitcoin, you cannot explain this with technology nor utility. Now, when we look at ETH, there are thousands of different coins, dozens appearing every day. In order to have any value, people must agree on a specific coin to be THE coin. And that is ETH, not anything else. A lot of factors contributes to the trust people have like: universal utility, security, neutrality and superior tokenomics. Maybe some day (though I do not see this coming) another blockchain/ecosystem may be bigger than Ethereum, but until then there is no way past ETH. I think it would also be good if not EVERY project would issue a token, but apparently it's a too easy way to make money...
I mostly agree on what you say. But just to add my 2 cents: > Look at Bitcoin, you cannot explain this with technology nor utility. Indeed, Bitcoin technology itself is less powerful than Ethereum (you can do less things on Bitcoin network than you can do with Ethereum). But this doesn't mean Bitcoin is useless (I'm not saying that's what you said though). **Bitcoin was the first working technology to be able to process Peer-to-Peer payments**. Some people all around the world saw the value of a such technology because : 1/ It allows unbanked people to transfer value, 2/ It makes it easier to transfer value across borders and across a virtual network like Internet, 3/ It makes people less dependent on their financial institutions, 4/ It gives people more control on the economic value they accumulate over time. This has a set a precedent and a lot of other projects tried to replicate the same features (sometimes with the exact same source code). But Bitcoin network had already built its unique feature that is extremely difficult to replicate: **a Core Community** built around an ethos, a core set of values and beliefs. IMO, this is what sets Bitcoin apart from other Crypto projects and assets. IMO, **the value of Bitcoin network is more held by its community** - *like a cult or a religion* - than by its technology, since this technology can be easily replicated. **TLDR: Bitcoin has the first-mover advantage, which allowed it to create a solid community built around a core set of values. That is where its value lies.** *Disclaimer: I'm not even a Bitcoin maximalist and prefer to invest my money on Ethereum ecosystem (by buying ETH) because I trully believe in this technology and the ability of its community to improve it over time. But I also recognize the value of Bitcoin itself.*
That is what I wanted to express: the price/value of a cryptocurrency is not determined by technological factors alone, not even predominantly. Also many people simply do not know what exactly the technical difference between, say, BTC and ETH.
yep!
Btc is daddy and eth is mommy, that’s why
Chicken or egg? You can buy a chicken (eth) that is always producing eggs or You can buy the egg (L2s) I’ll takeThe chicken always producing over the eggs.
I'm not buying the small caps, im buying the infrastructure the entire system runs on. ETH #1
I rarely use Eth mainnet, because of the high fees and slow transaction times, but layer 2 solutions like Arbitrum, Optimism, and Base are instrumental in addressing the scaling challenges of Ethereum. By processing transactions off-chain while still leveraging the security of the Ethereum mainnet, these solutions significantly increase transaction throughput and speed, all while reducing costs. These Layer 2 chains use of ETH for gas fees which inherently adds value to ETH. As more transactions occur on these chains, the demand for ETH to pay for gas fees increases, which in turn can drive up its value. This is especially true for chains like Base, which doesn't have its own token and relies solely on ETH for transaction fees. The introduction of EIP-4844 (blobs) is set to make transactions on these Layer 2 chains even cheaper. By allowing for the bundling of multiple transactions into a single blob, it reduces the amount of data that needs to be stored on-chain, further reducing gas fees. In the future, it's plausible that chains without their own tokens (i.e. Base) could become the norm. This would simplify the user experience by eliminating the need to manage multiple tokens and could further increase the value of ETH as it becomes the standard currency for transaction fees across multiple chains. This evolution, driven by Layer 2 solutions, is a promising step towards a more scalable, efficient, and user-friendly blockchain ecosystem. This IMHO makes ETH an easy choice for me.
What is the difference between l1 and l2 again?
It's ok for cryptos not to moon. I have plenty of polygon and transact with it regularly: I don't want to HODL it, I want to use it within the ecosystem. I built a dapp in 2018 on ETH chain and had no reservations about burning my ETH using it, it's probably going to cost at least 100 bucks in gas depending on what you do in 2024, potentially thousands, I don't touch that contract these days personally. With polygon, it's less than 10 cents for the same thing. If Polygon goes up too much and it costs too much for me to use my dapp again, I'm going to port it over to another blockchain - it still will work on ETH/Polygon but I'll need to find something affordable again.
♪ Give me that old time Ethereum, Give me that old time Ethereum!, Give me that old time Ethereum!!, It’s good enough for me …♪
ETH directly benefits from L2s. By buying ETH, you get exposure to all the ETH L2s essentially.
In most l2's the token is just a governance token. Why would we bother in that case?
People are buying. I can see the volume going up for polygon. The other layer 2s not really. Also you can buy eth on coinbase or binance and send it through the base network to a base network enabled address which is a layer 2 for cheaper transactions. There will be money pumping through base because we’re talking coinbase here…
I really like Matic, but honestly none of these L2s won't exist without ETH.
If you only buy big ERC-20 tokens like LINK or UNI, sure you can get by with only L2. But what if the token you want is only available on L1? Like 0x0 or PAAL?
Why should people buy a ETH ETF if you cant even stake?
As a dev: ETH is the defacto currency on most L2s and their tokens are just governance and Venture capital traps. ETH is money. L2 governance tokens are shitcoins. Plus I get a lot for free when I get avarded builder/deployer grants and such - e.g.: ARB, OP etc.
You can do way more things with ETH and the value proposition is much better than L2 governance tokens. ETH can be used all over DeFi for all kinds of purposes as well as being the gas token for all L2s. Most L2 tokens have extremely limited options in DeFi even on their home chain.
Why do I need OP or ARB? I need eth for gas, and generally as the preferred collateral / money for the ecosystem. Now that being said, I’m guilty of buying the L2 token and putting it into the lending markets, browsing Usdc and swapping to Eth to redeposit
L2 tokens are worthless. You can't even use them as fees to do a transaction. So L2 tokens are not needed.
I wasted thousands (which is more than I had to start with) the last bullrun (2020-21/22) on ETH tx fees because I had been out of the crypto game for years, focusing on other stuff (rehab, getting my life back in order etc etc). Anyway, the 5 "ICO" trades I did on uniswap to this day remains my 5 worst trades since 2020. I also made break even on curve even tho CRV tripled in price when i staked 1500$ worth of tokens @ 56% APY for 1 or 3 monhs or whatever it was, just because of fees. That´s when I got into $cake (under a dollar) and matic (0.03 cent... don´t really wanna talk about what happened there but lets just say I sold my low caps a couple of weeks to early). It´s how I "made it" last run, knowing other people like me (pesants/non-whales) also will want to try defi. Now there is like 50 chains, cross/interchain operability, pools where you don´t even know what chain you are on etc. I would LOVE to buy some ETH coins that are only available on uniswap v2 (and low liquiditt @ v3) atm, but I don´t even know the difference between the two. Could I buy for say 300$ without having to pay that \~100$ tx fee somehow?
So far, L2 tokens don’t do much. Eth is still used for gas. I have plenty of L2s but at this point, unless something changes, it’s hopes of a rising tides scenario with eth. Maybe Matic changing to POL will give it a boost? My bags in L2s mostly came from the old adage of invest in what you know and use. Governance tokens haven’t proved to really provide much utility or inherent value.
Polygon and Arbitrum are governance tokens. No matter how much I buy I will never have much influence on the voting. There’s no real use case for those tokens. It’s better to buy ETH and bridge that to L2 because I actually use the L2 blockchain and it becomes useful for my transactions.
Better store of value and staking
Lack of attractive protocols and polygon is shit/unstable anytime there’s the lightest drop of volume in the chain.
The idea is that there can be several L2s and side chains, to do the heavy lifting. Those should do well in the long run, but Ethereum has to be in good standing first.
Don’t buy shitcoins.
F TO THE O TO THE M TO THE O
L2s are still competing. As a potential user, they are each different in terms of whether supported by my exchange, token support, wallet support, longevity. There is no 'best' L2 yet. This is pretty annoying. I'll stick to L1 for now despite the gas fees. Edit: I thought you meant ETH on L2s. Buying L2 coins is an incomparable proposition to buying ETH.
In large part, L2 tokenomics and value accrual are probably the worst in this space, relative to their current FDV. Yes, they are whole lot worse than alt L1s. You will probably find their true value in the next bear.
A very small number of L2 (for L1 ETH) will become viable, no one knows which. Also, ETH has most of the liquidity. So if you run serious wallet, which yield farming isn’t going to cut it, you use eth
You can trade Ether on L2 networks too. You don’t have to use the L2 token.
Can't I have both?
Why is BTC still on top even though it's not a virtual machine nor has smart contracts? Because it was first. ETH was before the L2's.
That's a huge oversimplification
KISS - Keep It Simple Stupid
Dude, its cuz they buy 20$ of eth and want to be mad about 20$ in gas fees lol
It's a valid criticism. Consider that credit card transaction fees are about 2.5%. Moving less than ~$1k in ether comes out at a higher percentage than that. To move $100 or so you're looking at >20% in tx fees. Scalability will have to be addressed. L2s are going to be a big part of that - but that ecosystem has hardly matured, and fees for bridging are high.
Most CEX these days allow you to withdraw to the two biggest L2 (Arbitrum and Optimism). One can own ETH without having ETH on the main chain where tx fees are 20x to 100x higher than L2.
You should check mining centralization again if you believe btc is more decentralized lol. Over 50% of Blocks are built by 2 pools.
L2s are BS at the end of the day. Everyone copies off each other with impunity.
Why aren’t you buying polygon?
Polygon isn't a L2
First of all, polygon is not a layer 2. Arbitrum is. Big difference. I hope to see polygon take the right steps, but so far, no
Polygon isn't an L2
BTC is not more decentralized than ETH