L2 Archives - Coin Engineer

Layer-2 Effect: Is ETH a “Completely Dead” Investment?

Emre Yumlu — Sat, 29 Mar 2025 11:30:42 +0000

Ether’s Performance Against Bitcoin at Its Lowest in Nearly 5 Years: Is ETH a ‘Completely Dead’ Investment?

Declining Appeal of ETH as an Investment

The decline in Ether’s investment appeal is attributed to layer-2 (L2) networks draining value from the main Ethereum network and a lack of community pushback against excessive token creation, according to a crypto venture capitalist.

Nic Carter, partner at Castle Island Ventures, stated in a March 28 post, “The number one cause of this is greedy L2s siphoning value from L1 and the social consensus that excess token creation was A-OK.”

“ETH died by its own hand,” Carter said. “ETH was buried under an avalanche of its own tokens. It died by its own hand.” This statement was made in response to Lekker Capital founder Quinn Thompson’s claim that Ether is a “completely dead” investment.

Thompson posted on March 28:

“A $225 billion market cap network seeing declines in transaction activity, user growth, and fees/revenues. There’s no investment case here. As a network with utility? Yes. As an investment? Absolutely not.”

ETH/BTC Ratio Hits Historic Low

The ETH/BTC ratio, which measures Ether’s relative strength compared to Bitcoin, dropped to 0.02260, marking its lowest level in nearly five years, according to TradingView data.

At the time of publication, Ether was trading at $1,894, down 5.34% in the past seven days, according to CoinMarketCap.

Meanwhile, in September 2024, it was reported that Ethereum’s fee revenue had “collapsed” by 99% over the previous six months as “extractive L2s” absorbed all the users, transactions, and fee revenue without contributing to the base layer.

At the same time, Cinneamhain Ventures partner Adam Cochran suggested that Based Rollups could solve the issue of Ethereum’s L2 networks pulling liquidity and revenue from the blockchain’s base layer. Cochran said Based Rollups could “directly impact Ethereum’s monetization model by making a pretty fundamental change to incentive structures.”

Investment Outlook for Ether Deteriorates: $10,000 to $4,000 Downgrade and Bullish Views

At the end of last year, there was optimism that Ether could reach $10,000 by 2025, especially after it touched $4,000 in December, coinciding with Bitcoin crossing $100,000 for the first time. However, since then, Ether has experienced a sharp decline, along with the broader crypto market downturn.

Standard Chartered revised its 2025 end-of-year ETH price estimate from $10,000 to $4,000, cutting it by 60% in a client letter on March 17.

However, some crypto traders, including pseudonymous figures Doctor Profit and Merlijn The Trader, are “insanely bullish” and argue that Ether could be the “best opportunity in the market.”

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Uniswap Launches Its Official Layer-2 Unichain!

Yigit Taha OZTURK — Wed, 12 Feb 2025 10:00:27 +0000

Uniswap Labs has announced the launch of the mainnet for the Ethereum-based Layer 2 blockchain network Unichain. This development is seen as a significant part of Uniswap’s expansion strategy into the L2 market.

According to the announcement made on February 11, Unichain will have a block time of one second, provide swap liquidity, and offer users the ability to earn interest or borrow against collateral. The mainnet launch of Unichain follows millions of transactions and smart contract tests on the testnet, which began on October 10.

The new network is expected to generate approximately $500 million in annual revenue for Uniswap Labs and UNI token holders by redirecting fees to Ethereum validators.

Can Ethereum Maintain its DeFi Leadership?

Ethereum continues to hold its position as the leader in the decentralized finance (DeFi) ecosystem. According to DefiLlama data, Ethereum’s first-layer network has a total locked value (TVL) of $56.6 billion. Solana holds second place with a TVL of $9.1 billion, while the Bitcoin network is in third place with $6.6 billion.

TVL is considered one of the most accurate indicators for measuring DeFi activity, as it includes locked and staked assets.

You Might Be Interested In: Elon Musk Talks About the Name of a New Memecoin!

Unichain enters the rapidly growing Ethereum Layer 2 ecosystem and will compete directly with projects such as Arbitrum, Base, Blast, Mantle, and Polygon.

The Future of Unichain and Ethereum

While some Layer 2 projects operate as independent chains, many, including Unichain, are integrated into Optimism’s Superchain network. Superchain is emerging as an ecosystem of Layer 2 networks aimed at enhancing Ethereum’s scalability.

Layer 2 blockchain networks are secondary protocols built on top of existing networks like Ethereum, designed to increase scalability and efficiency.

According to CoinGecko data, the largest Ethereum Layer 2 blockchain networks by TVL are: Base – $3.1 billion, Arbitrum – $2.7 billion, Polygon – $769 million, Mantle – $357 million, and Gnosis Chain – $310 million.

Uniswap Labs, along with Across, is working on a new Ethereum Improvement Proposal (EIP-7683) to contribute to these changes. EIP-7683 aims to establish a new standard to streamline cross-chain swaps and trade operations. It is expected that around 50 projects and protocols will support this new standard, including Arbitrum, Base, Optimism, and Polygon.

The addition of Unichain to the Ethereum Layer 2 ecosystem is seen as a move to solidify Uniswap‘s dominance in the decentralized finance space.

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What is Toshi (TOSHI) and What Does It Do?

Tanju Akbıyık — Wed, 15 Jan 2025 13:30:31 +0000

Toshi (TOSHI) is a memecoin named after Brian Armstrong‘s (Coinbase co-founder) cat and inspired by Bitcoin’s anonymous creator Satoshi Nakamoto. It also stands out as the face and mascot of the Base blockchain.

Starting as a memecoin, Toshi is a project progressing toward becoming a decentralized finance (DeFi) protocol in the Base ecosystem. Toshi’s goal is to provide continuous revenue flow by bringing important and missing DeFi tools to the Base ecosystem and developing long-term collaborations.

How Does It Work?

Toshi is a project built on Base. Base is a low-cost, secure, and user-friendly platform running on Ethereum Layer 2 (L2). It offers features such as running Ethereum Virtual Machine (EVM) codebases and asset transfers from Ethereum Layer 1 and other chains. The Toshi project uses Base’s robust infrastructure to expand memecoin culture and create a community-focused ecosystem.

Advantages Provided to Users

Offers an economical DeFi experience by utilizing Base’s low transaction fees
Through MEOW DAO, users have a say in project decisions
The project offers investors an opportunity to become part of the community through unique NFT collections called NFTOSHIS
Utilizes Base’s reliability and scalability advantages

How to Use the Project Ecosystem?

Accessing Toshi, which uses Base infrastructure, is quite straightforward. Asset transfers can be made from Ethereum Layer 1, Coinbase, or other chains. Additionally, Toshi’s NFTOSHIS collections are traded on Base. You can start using the ecosystem by interacting with these assets.

About NFTOSHIS NFTs

NFTOSHIS is a collection of 3,000 unique NFTs inspired by Brian Armstrong’s cat. Each is created through algorithmic combinations of more than 110 different traits. NFTOSHIS holders gain opportunities for deeper participation in the Toshi community.

MEOW DAO and Decentralization

Toshi embraces community-focused governance by transforming into a completely decentralized DAO. MEOW DAO enables the Toshi community to play an active role in making decisions that guide the project. Each token provides one voting right, increasing the community’s power in shaping the project.

In summary, the Toshi (TOSHI) project is an initiative that brings memecoin culture to the DeFi world and aims to offer innovative solutions in the Base ecosystem. Standing out with both its strong infrastructure and community-centered approach, Toshi offers attractive opportunities for investors and users.

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Deutsche Bank is developing an L2 blockchain on Ethereum

Orhan — Thu, 19 Dec 2024 16:00:30 +0000

Germany’s largest bank, Deutsche Bank, is developing a layer 2 (L2) blockchain on Ethereum using ZKsync technology to enhance compliance in the regulated financial sector.

Project Dama 2

This initiative is part of Deutsche Bank’s “Project Dama 2,” designed to integrate directly with Ethereum. The primary goal is to improve transaction efficiency while strengthening regulatory measures.

Potential Impact on the Financial Sector

Deutsche Bank’s solution aims to minimize risks such as interactions with sanctioned assets by providing regulators with special audit rights. The platform is designed to combine blockchain transparency with financial compliance requirements.

If successful, Deutsche Bank’s approach could lead the financial sector to engage more deeply with decentralized networks. However, regulatory approvals will be a critical step for the platform’s launch as a minimum viable product (MVP) in 2025.

Why Choose Layer-2 Blockchain Technology?

Layer 2 blockchains operate atop main networks (layer 1) like Ethereum, offering faster and cheaper transactions. Additionally, they enhance the auditability of financial transactions with regulatory tools like “super admin rights.”

Partnership with Crypto.com

On December 10, Deutsche Bank partnered with Crypto.com to provide institutional banking services in the Asia-Pacific region. This partnership will offer fiat-to-crypto exchange and trading services in areas like Singapore, Australia, and Hong Kong.

The German bank has also announced plans for future partnerships in the UK and other European countries.

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Uniswap Achieves Record Monthly Volume

Yigit Taha OZTURK — Thu, 28 Nov 2024 11:30:18 +0000

Uniswap recorded a $38 billion trading volume across Ethereum Layer-2 (L2) networks in November, breaking its previous record. According to Dune Analytics, this volume includes major networks like Base, Arbitrum, Polygon, and Optimism. The record set in March at $34 billion was surpassed this month by an additional $4 billion.

Henrik Andersson, the investment director at Apollo Crypto, linked this surge to increasing demand for assets and stablecoins within the DeFi ecosystem. He highlighted that the rise in the ETH/BTC ratio and growing on-chain yields contributed to this momentum. Additionally, Andersson noted that when Bitcoin approaches the $100,000 threshold, Ethereum and DeFi tokens typically show increased activity.

Uniswap’s Leading Networks

Arbitrum: Leads with a trading volume of $19.5 billion.
Base: Follows with $13 billion.

Uniswap also collected $90 million in fees during November, outperforming protocols like Pump.fun and Tron.

UNI Token Gains Strength

Uniswap’s native token, UNI, surged by 42% in the past week, reflecting the protocol’s heightened activity. Currently trading at $12.58, UNI outperformed decentralized exchange tokens like Raydium (-2.2%) and Jupiter (7.7%).

This record-breaking volume signals the potential for the Ethereum ecosystem to enter a long-awaited growth phase. Rising DeFi interest, increased stablecoin usage, and higher on-chain yields point to a promising future for the ecosystem.

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Coinbase’s L2 Base Surpasses Arbitrum and Ethereum in Daily Transactions

admin — Sun, 07 Apr 2024 11:15:00 +0000

Coinbase’s Ethereum Layer-2 scaling solution, Base, has emerged as a leader in daily transactions, surpassing established players like Arbitrum and Ethereum itself.

Data from L2Beat reveals that Base currently boasts a 30-day transaction count of 45.21 million, eclipsing Arbitrum One’s 38.58 million and Ethereum’s 37.93 million. It’s important to note that Arbitrum Nova maintains the highest overall 30-day transaction count at 81.31 million.

Base Experiences Significant Growth

Coinbase’s Base has seen impressive growth, reflected in its Total Value Locked (TVL) of $3.89 billion. This comes after a 19.96% surge in transaction volume over the past week. Compared to Arbitrum One’s TVL of $18.45 billion (after a 4.87% transaction decline) and Ethereum’s TVL of $40.02 billion (down 4.24%), Base’s growth is significant. Notably, Arbitrum held the leading position in L2 TVL just a month ago.

Despite facing network congestion concerns just weeks ago, Base’s high transaction volume suggests user confidence in its services. Base also leads in daily Transactions Per Second (TPS) with 35.16 (a 36.12% increase), compared to Arbitrum’s 17.80 and Ethereum’s 14.38 TPS. Zora, another L2 solution, has also witnessed a significant TPS increase of over 700%, reaching 10.95.

Coinbase Considers Expanding Base Functionality

The recent surge in Base’s metrics coincides with positive developments within its ecosystem. One such development is the storage of USDC balances for both corporate and retail Coinbase customers directly on the Base network.

Max Branzburg, Coinbase’s Vice President and head of Consumer Products, announced plans to leverage the Base network for storing user USDC balances in late Q1 2024. This move aims to facilitate efficient and secure customer fund management with lower fees and faster settlement times. Ultimately, it contributes to enhanced Base functionality and, consequently, TVL growth.

Base Token Speculations Linger

The possibility of a Base token remains a topic of speculation. During an interview last year, Coinbase’s legal chief, Paul Grewa, hinted at the potential for a token offering. The delay was attributed to the network’s focus on technological advancements.

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