What Are The Best Ethereum Layer 2 Solutions?
1. Polygon
Launched in 2017 as the Matic network, Polygon can expand Ethereum's TPS to just about 7000 TPS. CNBC recently reported that Polygon has managed over a billion transactions, with over 2.7 million monthly active users since launch. Due to the high TPS, Polygon has lower gas charges than ETH. Polygon has formed partnerships with many projects like Graphlink, Umbrella network, Kambria Open Innovation, and Mogul Productions to offer optimal services. Top projects like Sushiswap, Chain Games, Quickswap, and Aavegotchi leverage this layer-2 solution.
The network's native token Matic is an excellent long-term investment option. In 2019, it was trading around $0.0035 and surged to $2.7 in 2021. Currently, the coin is trading at $0.5, but analysts predict that it could hit $10 by 2025. While ETH 2.0 is just around the corner, Polygon's roadmap showcases ways to place it among the fundamentals of ETH 2.0.
2. Arbitrum
Arbitrum Optimistic Rollup was launched in mid-2021 and amassed massive traction, hitting over 280k addresses interacting with the network by November 2021. It can scale the Ethereum chain by about 40k TPS and has already processed over 14 million transactions. The verification of transactions in Arbitrum takes place in Ethereum's main chain. Hence, gas fees are higher than many other layer-2 solutions but slightly lower than Ethereum main chain.
It partners with projects like Chainlink, Graph Protocol, OKEx, and many others as it strives to achieve maximum scalability. Recent reports indicate that UniSwap, the largest DEX, passed a governance vote to use Arbitrums layer-2 solutions. The solution uses an EthBridge to link with Ethereum. Unlike other Layer 2 solutions, Arbitrum does not have its native token; hence, there is no basis for analyzing its investment prospects. Like the other layer-2 solutions, Arbitrum is also likely to have space once the ETH 2 merger happens.
3. Loopring
Launched in March 2020, the Loopring ZK-Rollup specifically focuses on decentralized exchanges. Loopring can achieve the high throughput of 1000x layer 1. For instance, Loopring can currently release around 2025 transactions every second.
Other reports indicate that Looprings gas charges are 100x lower than the standard Ethereum layer-1 fees. Due to its use of 16 order rings, Loopring ensures continuous high liquidity for its token. When LRC, Loopring's native token, began trading back in 2017, the token was trading at $0.13. It hit its all-time high in late 2021 at $3.37. Currently, LRC is trading at just about $0.5, and experts predict that this coin will hit around $1.7 by 2026.
Loopring, like many other Layer-2 solutions, will also be quite helpful in the ETH 2.0 era. Many suggest since ETH targets to increase its throughput to 100k TPS, Loopring could quickly achieve 1000x of that.
4. Optimism
Optimism, another Optimistic Rollup, takes a slot as one of the best Ethereum Layer 2 solutions today. Optimism's Alpha mainnet went live on January 2021, and since then, this solution has accumulated immense traffic. Reports indicate that Optimism can host over 2k transactions every second while saving massive gas fees. For instance, when writing this report, the Optimism website indicated that investors had saved about $1 billion in gas charges since its launch.
As an investment, on June 1st 2022, Optimism launched a native token named Op, which has a currency valuation of $1.36. The all-time token high was at around $4.6 just after launch on June 1st. But since then, it dropped mainly because the crypto markets were all bearish. However, investors should expect further price gains since Optimism will remain even past the ETH 2.0 merge.
5. Immutable X
This list of the best Ethereum Layer 2 solutions cannot be complete without mentioning Immutable X, an NFT-focused Ethereum scaling solution. Launched in 2018, Immutable X focuses mainly on Non-fungible tokens, allowing holders to send them from 1 wallet to another at reduced gas fees. Many refer to this network as a zero gas scalability solution.
Reports indicate that this network can hit up to 9k TPS, making it the best NFT-focused layer-2 solution. Immutable X has a native token called IMX, which has recently performed exemplarily well in the markets. The token began trading in the markets in mid-2021 at barely $0.000000000001. When writing this report, IMX was trading at a little over $0.93. IMX's all-time high stands at about $9 in November 2021. Even though the token vastly dropped in value, analysts have very high hopes for IMX. Some even suggest that it might hit $24 by 2030.
Author's Take
This guide has looked into the five best Ethereum Layer 2 solutions. Polygon is currently the most popular, and its token Matic is also a good investment option. Loopring is focused more on DEXes, while Immutable X focuses more on NFTs. If you wish to avoid network congestion and elevated gas fees, investing in Optimism could be a good option. If you are looking for high EVM compatibility at low costs, Arbitrum could be your best bet.