Written by: William M. Peaster
Editor: Nanfeng Ethereum is the primary infrastructure for global open applications. Unfortunately, due to Ethereum’s trade-offs, using this evolving network during periods of high demand can be very expensive and slow-after all, there is only so much block space available.
Layer 2 scalability solution
These L2 systems are no longer just in theory. Currently, multiple L2 solutions are already online, and new L2 projects and integrations seem to be coming every day. As of the time of writing, the two mainstream L2 models — ZK Rollups Optimistic Rollups
Above: As of April 15, 2021, the trend of changes in the value of encrypted assets locked in the major expansion plans of Ethereum. Source: The Block
01 Use Aave for lending on Polygon
Earlier this year, the scalability project Matic, which provided the Matic Plasma chain and Matic PoS side chain solution, was renamed Polygon , aiming to become the “Ethereum Blockchain Internet”. As part of the rebranding, the team is now embracing other Layer 2 solutions such as Optimistic Rollups, ZK Rollups, and Validium. For details, see:
https://polygontech.medium.com/matic-network-becomes-polygon-ethereums-internet-of-blockchains-expands-mission-and-tech-scope-364932c02cd0
Soon after, the popular DeFi lending agreement Aave announced its “New Frontiers” plan, which will enable Aave to adopt a series of scalability solutions so that its users can enjoy a variety of options. In the statement of this plan, Aave revealed that the first integration action of its scalability plan will be integration with Polygon’s PoS sidechain .
It should be emphasized that this Polygon sidechain does not directly inherit the security guarantee of the Ethereum mainnet like most L2 solutions, but it does provide throughput capabilities similar to L2 . From the perspective of the “New Frontiers” plan, Aave and Polygon are likely to further coordinate the integration of Rollups in the future.
During this period, you can handle your Aave lending business cheaply through the Polygon sidechain. First of all, please make sure that the Polygon network is added to your Metamask wallet . The specific method is as follows:
1. Open Metamask wallet and select “Custom RPC” in “Network”;
2. In the window bar that opens, manually enter the following information and click “Save”.
Next, users will need to transfer assets on the Ethereum mainnet to Polygon (Matic Network) through the Polygon Bridge (https://wallet.matic.network/bridge/) , and then use Metamask to view the assets that have been transferred to the Polygon network. assets. For more details and precautions, see:
https://medium.com/aave/exploring-new-frontiers-with-aave-59563ddd2405
Then go to the Aave official website (https://app.aave.com/markets), connect to the Metamask wallet, click on the ” Aave Market (POLYGON) ” market tab on the page (see the picture below), check the available lending opportunities, and you can go through The Polygon network uses AAVE for lending.
02 Trading decentralized perpetual contracts
dYdX is a decentralized exchange (DEX), known for providing decentralized margin trading, spot trading and perpetual contract trading on Ethereum.
However, traders want to trade as quickly and cheaply as possible . Fortunately, dYdX recently announced the launch of L2 perpetual contract trading , supported by StarkWare’s StarkEx scalability engine (L2). The perpetual contract for dYdX users on Layer 1 will last until April 20, 2021. At that time, users need to close the perpetual contract on the Layer 1 agreement, and then reopen the position on our Layer 2 agreement. For more details and precautions, see:
https://dydx.exchange/blog/public
StarkEx is very powerful and flexible and can support on-chain data availability through ZK Rollup or off-chain data availability through Validium. In short, the StarkEx engine has improved the user experience of dYdX’s perpetual contract transactions to a new level. Currently, dYdX integrates the L2 solution and has launched perpetual contract products including:
- ETH-USD
- BTC-USD
- LINK-USD
- UNI-USD
- AAVE-USD
Therefore, if you are interested in derivatives, you can consider going to the Perpetuals dashboard of dYdX (https://trade.dydx.exchange/). There, you can easily deposit assets into dYdX’s L2 system and start trading! For detailed steps, please refer to:
https://newsletter.banklesshq.com/p/how-to-trade-on-the-dydx-rollup
03 Earn SNX pledge rewards
Synthetix is a leading derivative project in the DeFi field. If an asset exists, regardless of whether the asset exists on any blockchain or in the real world, it can be traded as an on-chain synthetic asset through Synthetix.
The core of Synthetix’s powerful DeFi protocol is staking ( staking ), that is, users pledge Synthetix’s native token SNX to the protocol as collateral. U.S. dollar peg), and then the user can choose to exchange sUSD for any of his synthetic assets, such as sBTC, sETH, etc. SNX pledgers can obtain new SNX token rewards and transaction fees . This is the mechanism behind motivating users to pledge SNX! For more information about how Synthetix works, please refer to the Chinese version of the instructions:
https://docs.synthetix.io/litepaper/chinese/
Is there anything cool? Yes, now you can pledge SNX on L2 ! From the beginning of 2021 began, SNX pledge has been developed by a team Optimism Optimistic Ethereum on the line (L2 network), the network consists of L2 Optimistic Rollups technical support.
If this novel staking method arouses your interest, you can use Synthetix’s L2 staking dashboard (https://staking.synthetix.io/l2) to migrate your SNX on L1 to Optimistic Ethereum (L2) Medium (Before the migration, if you have pledged SNX on L1, you need to repay the debt and redeem SNX), and then you can use the L2 network to pledge your SNX. For Snythetix and Optimistic Ethereum, it is still too early to trade synthetic assets in L2, and other core protocol functions still need to be integrated. For more migration operation information and precautions to participate:
https://blog.synthetix.io/l2-mainnet-launch/
In addition, it should be noted that after migrating SNX to L2, if you want to get SNX back to L1, you need to wait about 7 days . Although it is still in the early stages, it is worth it to become a pioneer in the West of DeFi!
04 Profit Farming LRC Reward
Since the rise last summer, farming income (yield farming) has been DeFi trends. What is the philosophy? That is, you provide liquidity to the DeFi protocol to help the early DeFi project flow, in exchange for Token rewards (that is, income). However, when the network becomes congested, income farming on Ethereum can become very expensive. In the process of providing liquidity, the cost of all storage, pledge and withdrawal operations may increase rapidly! But profit farming is not necessarily costly. A typical example is Loopring ‘s L2 income farming. Loopring is an exchange and payment protocol supported by ZK-Rollup technology. The builder of the project has created Loopring Exchange , which provides users with an AMM (automatic market maker) experience with L2 advantages.
The picture above is a screenshot of providing liquidity to the LRC-ETH liquidity pool in the Loopring Exchange
Since the prosperity of AMM relies on liquidity, Loopring is currently holding a liquidity mining reward program to attract liquidity providers (LPs). Any LP that provides liquidity to Loopring can correspondingly receive the project’s native token LRC as a reward. For more details, see: https://loopring.org/#/post/loopring-l2-liquidity-mining-round-5 If you are excited about the future of L2 expansion and think Loopring may play an important role in the future, then These LRC income farming is definitely worth considering. You can first go to Loopring’s official website (https://loopring.org/), deposit assets into their L2 wallet, and then send the assets to the liquidity pool of your choice!
05 Use DeversiFi to trade DeFi tokens
DeversiFi is an efficient, one-stop decentralized exchange, powered by StarkWare’s StarkEx (L2) scalability engine, and provides a range of services, including decentralized limit orders, over-the-counter transactions, and free transfers. This makes DeversiFi (https://www.deversifi.com/) very suitable for trading currently popular DeFi tokens, such as UNI, MKR and AAVE.
Of course, the Loopring AMM mentioned above can also be used to trade DeFi tokens, which is not unique to DeversiFi.
And advanced traders may like DeversiFi, because it provides more trading functions than standard AMMs, so if you are looking for transaction-centric L2 applications, then DeversiFi is definitely a trading platform worth exploring.
06 Donate to the Ethereum project through Gitcoin
The Ethereum and DeFi projects we know and love are all obtained through the hard work of open source software (OSS) builders. This is why Gitcoin is a rising star in the crypto economy. This platform makes it easier than ever for open source software builders to get paid for their work on Ethereum, DeFi, etc. Gitcoin (https://gitcoin.co/landing) is most famous for its Gitcoin Grants grant rounds. During each round of donation, each Ethereum project receives grants from donors, and at the same time uses quadratic financing from the platform Mechanism (quadratic funding) and matching funds. But it’s worth noting that projects can accept donations through Gitcoin at any time, and what’s great is that the platform has recently integrated support for the Layer 2 solution zkSync , so users can donate through zkSync. The process is very simple. When donating money, users add one or more items to your shopping cart (Add to Cart), then click “Checkout”, and then select the ” Checkout with zkSync ” option in the lower right corner of the next page (see the picture below), and then Deposit your funds into zkSync according to the next pop-up window. After that, you can save huge gas costs while supporting the Ethereum ecosystem.
Unsurprisingly, this feature has proven to be quite popular. For example, in the latest round 9 of Gitcoin grants, more than 80% of donations were supported through zkSync!
07 Superfluid currency flow
Superfluid is a currency streaming protocol that allows anyone to start a payment stream and send funds in real time. The protocol uses two different scalability solutions- xDAI and Polygon , users can choose according to their own preferences.
Imagine that DAOs (Decentralized Autonomous Organizations) regularly distribute rewards to all its members, or NFTs representing music copyrights pay their holders a license fee every second. These scenarios can all be implemented through Superfluid. The cool thing about Superfluid is that payment streams are not locked, they can move freely between accounts. You can split the payment flow according to your wishes, that is, if you are receiving Tokens through a payment flow, then you can forward the payment flow to another recipient at any amount you choose, and the recipient can continue this way. This effectively creates an interconnected wallet network that exchanges value in real time! (I.e. these interconnected wallets can exchange value in real time)
This programmable currency 2.0 is the birth of real-time finance, and it is also a dream application for cryptocurrency enthusiasts. Because of Layer 2, this is possible! For more details about Superfluid, see:
https://newsletter.banklesshq.com/p/how-to-stream-money
08 Conclusion
The golden age of L2 activities has just begun . And as top-level L2 solutions continue to innovate, iterate rapidly, and deliver powerful and feasible solutions that the project wants to use, this ecosystem will continue to grow.
Recently, the zkSync team announced that this is an unprecedented scalability system. In the next few years, it has a great opportunity to become the preferred scalability architecture in the Ethereum ecosystem. Some mainstream Ethereum applications, such as, may launch their L2 integrated version at any time. Coupled with usability solutions, such as Connext’s Vector (Ethereum Layer 2 and fragmented cross-link network), it can be used as the connection hub for Ethereum and its many L2 solutions. It is obvious that the scalability problem will soon become past. Ethereum is expanding, right now.