Layer 2 and Scaling Solutions | March 2022 | Week 2

Hello scaling aficionados,

There was quite some noise about Andre Cronje and Anton Nell leaving the DeFi space. They contributed to quite some projects and the Fantom Foundation. The Fantom token plunged by 15% after the announcement and did not recover yet. The TVL on Fantom dropped by even 34% over the last seven days. That is interesting to see because DeFi and a blockchain like Fantom should be decentralized enough to not see such a decline when two persons leave. They also contributed to Multichain (formerly AnySwap) which is one of the biggest cross-chain bridges.

Let’s look at what happened in the ecosystem

• Pseudotheos enlightens us with a short thread about the Proposer-Builder Separation (PBS). It is a good, short read with a nice graphic at the end showing a potential timeline for integration. 
• Dragonfly Capital analysed the performance of different L1s. Performance is quite difficult to compare when it comes to blockchains. Counting the TPS alone surely is too short-sighted. The complexity of a transaction and its finality must be considered as well. The researchers have a nice approach to compare hypothetical blocks full of Uniswap-like trades. Then, they measure how many of those certain blockchains would be able to process. Especially, when you are interested in the mechanics of different L1s, it is a nice read.
• Celer’s cBridge aims to let its users choose the security model. The team adds an additional optimistic approach for the bridge. App Guardians can be used to cross-check the validity of a state on the destination chain. This feature is more secure (depending on who those guardians are) but takes time to finality.  
• The Daily Gwei about the reasons why Layer 2s get so much funding – Immutable X raised an additional 200m$ at a 2.5b$ valuation.  
• Finally, I found a good Dune Analytics site for the Solana User Base. It is quite comprehensive. Check it out.

Let’s look at the data

Comparing blockchains, especially rollups to monolithic chains, on the below indicators might be questionable. Every indicator can be discussed, whether it is useful to track unique addresses or TPS. We believe that all indicators together and especially looking at a 7d change can be used to build hypotheses about the current state of scaling.

• Optimism and Arbitrum have fees now below 1$ in a 30d average. That is partly because of a cheaper ETH price compared to 2021 but also their calldata compression techniques.
• Optimism and Arbitrum are almost equal now in their daily transactions. Even though Arbitrum is still six times bigger in TVL.
• Terra seems unstoppable in its TVL growth. After Ethereum it is by far the biggest alternative L1 when it comes to TVL. But also the Avalanche C Chain, grows significantly and overthrows almost the Binance Smart Chain.

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