Layer-2 adoption could spur the next crypto turning point

cointelegraph.com:

A mysterious Redditor has made a data-driven prediction that the next major phase of development in the blockchain space will be in layer-2 solutions, primarily on Ethereum.

The May 22 post explains that “We’re at a turning point” where the industry is moving away from bridging between L1 blockchains towards L2’s which are “right out of the gate, more secure and decentralized than alt-L1s and are built to use sound money on a credibly neutral platform.”

An L2 scaling solution takes advantage of the security of a L1 chain like Ethereum (ETH) and alleviates traffic on it by ‘rolling up’ a number of transactions into a single package to be settled at once.

Other L1 chains like Solana (SOL), which boasts relatively cheap and fast transactions, have garnered support from users turned off by high fees.

The average SOL transaction costs about $0.0025 while ETH transactions cost about $1.30 at the time of writing. Despite that wild disparity, demand for Ethereum block space has remained overwhelmingly dominant as its $73.89 billion total value locked (TVL) outweighs Solana’s $4.24 billion according to DeFi Llama blockchain tracker. Additionally, Solana has been plagued with reliability issues recently. 

As of the time of writing, Arbitrum is the largest L2 on Ethereum with $2.65 billion in TVL according to L2beat. The entire Ethereum L2 ecosystem has a TVL of $4.77 billion. These numbers may be set for an explosion if the right forces conspire to draw users and capital away from other L1’s.

Several major decentralized apps (Dapps) are already deployed on L2’s. Decentralized exchange (DEX) SushiSwap (SUSHI) and yield aggregator Curve (CRV) are on Arbitrum. Also, crypto derivatives protocol Synthetix (SNX) and DEX Uniswap (UNI) are on