Layer-2 projects are massive contributors to the crypto ecosystem, as they improve the performance of layer-1 blockchains. This guide explores some of the top layer-2 crypto projects. But first, let’s define layer-2 technology.
Understanding Layer-2 (L2) Technology
A layer-2 network is a protocol developed on top of a layer-1 blockchain. The primary goal of layer-2 technology is to scale the underlying blockchain. It seeks to address the limitations in blockchains like Ethereum and Bitcoin, all while reducing the cost of transactions and improving their speed.
Top Layer-2 Projects
Since 2017, several Layer-2 networks have emerged. Here are the top L2 projects:
Arbitrum is a scaling solution for Ethereum, the second biggest layer-1 blockchain. The L2 network, which uses rollup technology to combine several transactions into a single transaction, was created by blockchain startup Offchain Labs. Arbitrum processes transactions faster and at lower fees than Ethereum.
Arbitrum has its own native token, ARB. Holders are eligible to vote on the project’s proposals regarding fund allocation and its development. As of September 2023, 1.27 billion ARB tokens are in circulation. The total supply is capped at 10 billion, according to CoinGecko’s data. ARB’s tokenomics show that by 2027, all the remaining tokens would have been added to the circulating supply.
With over 300,000 daily users, Polygon ranks among the leading layer-2 projects. The network is known for its capability to process transactions fast, up to 6,500 per second. As of this writing, Polygon’s Total Valued Locked is at $795 million.
The project recently launched its zkEVM, making it compatible with EVM (Ethereum Virtual Machine). That means Ethereum developers can migrate their decentralized applications to Polygon without making any adjustments.
Moreover, there are several bridges that enable holders of MATIC, Polygon’s native token, to transfer their holdings to Ethereum. MATIC owners can participate in the governance of Polygon or even stake their tokens to earn rewards. MATIC has a market valuation of $4.8 billion, with a circulating supply of 9.31 billion tokens. Like ARB, MATIC’s maximum supply is 10 billion. If you wish to buy the token, it is listed on various popular exchanges, including Poloniex, Digifinex, HTX, and Binance.
Optimism is another layer-2 network that employs rollup technology to improve the performance of the Ethereum blockchain. Its developer, Optimism Foundation, recently announced that it was developing a “Superchain” protocol, which would consist of multiple Stack chains connected to the Optimism Mainnet.
Optimism’s native token is OP. It has a market capitalization of $1.01 billion, with over 798 million tokens in circulation. OP’s total supply is capped at 4.29 billion.
This Ethereum scaling solution comes with multiple features that allow creators to build NFT projects easily and list them on the project’s marketplace. As a network focusing on NFTs, Immutable X adopts the zk-Rollup technology, allowing users to transact quickly and securely.
Immutable X’s native token is known as IMX. The project uses it to distribute rewards to NFT traders. IMX has a maximum supply of 2 billion. As of this writing, more than 1.16 billion tokens are in circulation, data from CoinGecko shows.
Shiba Inu is no longer a mere meme coin after launching its Shibarium layer-2 network to support decentralized finance projects and the development of NFTs. Moreover, developers behind Shiba Inu are building a Metaverse dubbed Shib.
Shibarium uses a Delegated Proof-of-Stake consensus mechanism to validate transactions.
Shiba Inu has a market cap of $4.28 billion, with 589 trillion tokens circulating. The token’s total supply is 999.9 trillion.
This scaling solution has put emphasis on decentralized governance. Holders of its native token, MNT, are able to vote on all proposals raised in the project’s Decentralized Autonomous Organization. As of September 2023, Mantle has a Total Value Locked of $36.7 million.
MNT’s market cap stands at $1.23 billion. There are about 3.2 billion tokens currently circulating. The crypto asset’s total supply is 6.21 billion.
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