If you need some context behind what Layer-2s are, how they differentiate from Layer-1s, and what different types of Layer-2 protocols there are, visit our last week’s article.

Context - Layer-2 solutions

Layer 2 scaling solutions are becoming increasingly important in the Web3 world.

These protocols address the scalability issues of blockchain networks which have been widely touted as a major roadblock to widespread adoption.

Try and think back to the last time you were moving around money on Ethereum, when you were all excited during the last bull-run, you, like many others, probably got to a point where you weren’t blinking twice at hitting ‘Confirm’ on transactions that cost you $100 just to send out.

In the perfect world, people won’t have to pay $100 to send through a transaction in the next bull run, it’s not sustainable and it’s not realistic if we’re thinking big picture.

So it’s no surprise that projects like Optimism and Arbitrum on the Ethereum blockchain are blowing up because they’re helping make these extreme scenarios a thing of the past.

It’s important that we know what Layer-2 solutions are out there so that we can make use of them.

Content - Platforms you should know about:

SKALE ($SKL)

What is it?

The SKALE Network is a Layer 2 solution that utilizes sidechains to process transactions off-chain for the Ethereum blockchain.

The sidechains are secured by SKALE's decentralized network of nodes, allowing for faster and more cost-effective transactions compared to the main Ethereum network. SKALE uses a Proof of Stake (PoS) consensus mechanism.

Once the sidechain transactions are validated by the nodes, they are committed to the Ethereum mainnet for final settlement.

The $SKL token itself has four main use cases.

1. Subscription fees
   Developers pay subscription fees for access to the SKALE sidechains using the $SKL tokens.

2. Governance
   Community members will use $SKL to participate in on-chain voting.

3. Staking
   $SKL token holders stake their $SKL tokens to become validators or delegators in the network. They each play a part in securing the network by validating transactions and participating in consensus.

4. Rewards
   Combining income from the developer’s subscription payments and the $SKL token’s monthly inflation, rewards are distributed to those staking, validating, and delegating.

Why bullish?

1. Metrics
   If a company is creating serious value, some of its numbers will likely reflect that. SKALE makes these numbers easily accessible and transparent.
   
   Of course, everything is on-chain but they have a dedicated page on their website to reflect the value they are bringing to the Ethereum community.
   
   We’ve extracted what we believe are the highest value metrics that they have curated on their website, below:
   

   Total User Count: 403,461

   Monthly Active Users: 48,832

   Total Gas Fees Saved: $849,624,215 (603,169 ETH)

2. TPS & Time to Finality
   A recent Dartmouth Blockchain study revealed that SKALE is outperforming all blockchains at the moment in transactions per second and time to finality.
   
   Consider the data below which we’ve taken from SKALE’s blog post covering the study’s results.

3. Open source
   The project is completely open-source which allows developers to easily build and contribute to the SKALE ecosystem without any barriers. It helps even more that they have documentation and other resources to support developers.
   

   Open-source projects enable strong and engaged communities and facilitate a network effect by allowing other projects to build on top of them. This obviously leads to more adoption and growth for SKALE.
   

4. Strong team and advisors

   SKALE is led by experienced entrepreneurs, blockchain enthusiasts, and cryptographers. The team includes veterans from companies like Tesla, SpaceX, Oracle, and more.
   
   They also have a diverse set of advisors coming through from their investors including big names like, ConsenSys Labs, Winklevoss Capital, and Hashed, among others.
   
   There are many great minds and influential people behind this project, and as we know, the team is vital to the project’s success.

2. Multichain (previously AnySwap) ($MULTI)

What is it?

Multichain is another Layer-2 sidechain scaling solution provider for many blockchains.

The Multichain platform allows the creation and deployment of sidechains. These run parallel to the main blockchain and are interoperable with it. This is known as Multichain’s core product. In contrast to SKALE, Multichain uses the Tendermint consensus algorithm for its networks.

As the name would suggest, Multichain addresses interoperability in the sense that they focus on providing scaling solutions to many other blockchains, not just Ethereum. They have connected others like Fantom, Avalanche, Binance, Polygon, and many others totaling 89 different blockchains.

In addition to the core product, they also offer “anyCall”, which allows developers to call any smart contract on any blockchain using a unified API. This simplifies the development process by eliminating the need for devs to write custom code for each individual blockchain they are working with and instead just use a single API to interact with the desired blockchain.

Why bullish?

1. Expanding product line
   Multichain is creating unique solutions as a layer-2 protocol. Most sidechains will be the same and offer the same type of product, but Multichain is trying to differentiate itself by offering niche solutions for developers in a number of ways.
   
   We have the core product which allows for the creation of sidechains, the unique value proposition here is that we can connect to 89 different supported chains. There is also the anyCall product, which makes a dev’s life easier in what is already a difficult terrain to learn to develop in.
   
   If similar products continue to be developed, it can only mean goods things as these types of products accelerate and promote development in their ecosystem.
   

2. Partnerships
   Multichain is quite established in terms of its collaborators.
   
   Below are just a few of the big names working with Multichain.
   
   Blockchains: Fantom, Binance,EOS, Cronos, Avalanche, Conflux, BitTorrent, Kava, etc. (see below)
   

   

   
   

3. Metrics

   Citing blockchain data analyst, Adria Parcersias and his recent report on L2s operating on Avalanche published on 18 April 2023, Multichain is the top layer-2 attracting new daily active users. They are clearly gaining momentum on the AVAX network and by being the top L2 solution on that chain, they’re demonstrating that their tech is effective and meeting the needs of users on the network.
   
   Being at the top for a top 20 crypto like Avalanche is an impressive feat. If it checks out there, it’s likely outperforming many L2s on other chains as well.

3. Immutable X ($IMX)

What is it?

Immutable X is an optimised game-specific ZK-rollup powerhouse built on top of the Ethereum network.

Processing and settling transactions off-chain, the platform was optimised for Web3 gaming, which means the platform can handle high throughput and very low, if any at all, transaction fees. They have built and continue to develop the most successful Web3 trading card game, Gods Unchained, which was the first to benefit from their Immutable X marketplace, and are partnered with some of the largest names in Web3 and gaming generally.

Immutable is the overarching company that built Immutable X. They have used the ($IMX) token to represent their company and all of their product suite.

Why bullish?

1. Product suite
   There are three different groups of offerings that Immutable has. The first is the Immutable rollups, this includes Immutable zkEVM, which is designed to run smart contracts, and Immutable X which, in contrast, does not allow for smart contract development and focuses on trading and exchanging NFTs and ERC tokens.
   
   The next is the Immutable foundations. These are the software developer kits, APIs, smart contracts, etc. Anything a developer needs for building. To complement this, they have their own Developer Hub where you can track and manage whatever you build on Immutable.
   
   In addition to the foundations, they have segments in their docs in which they give fundamental advice from marketing a new project to developing the tokenomics of that project and more.
   
   Finally, there are the Immutable products which in their own words include:

   • Mint
     NFT minting tools.

   • The Immutable Orderbook
     A product that makes it easier to share NFT orders across different marketplaces.

   • Trade
     Reliable NFT trading endpoints and smart contracts which are optimised for NFT liquidity.

   • Checkout
     An all-in-one transaction infrastructure, which is a complete payment solution that manages a project’s game and marketplace’s entire checkout process.

   • Blockchain data APIs

   • Passport
     A non-custodial wallet that streamlines user onboarding through a passwordless sign-on and automated wallet creation.

   All of their offerings have been built to make developing in Web3 easier. They have clearly put in the effort to make sure that building with them is an easy process, and this type of convenience for development can’t be overlooked, especially in Web3 where things are often more difficult than they need to be in these early times of adoption.
   
   

2. Interoperability

   Following the theme of developer-friendly practices, Immutable X emphasized interoperability by supporting ERC-20 tokens and NFTs at launch, as well as other token types that came after (ERC-721, ERC-1155 for instance). This meant that established projects could transition over to the Immutable X platform without some major hurdles to jump through.
   

3. No gas fees

   Using their off-chain order book to facilitate the zk-Rollup, Immutable X enables instant trades and supports up to 9,000 transactions per second with no gas fees. This is compared to Ethereum’s 15 transactions per second. Zero gas fees is the most ideal situation in the NFT and gaming industry because even relatively small gas fees are unrealistic for users to sustain over the long course of a good online game’s play cycle.
   

4. Dominating

   “The Future of Gaming Awaits” is the Immutable tagline, and they aren’t kidding.
   
   The platform boasts some of the biggest names in the web3 gaming industry, so it’s difficult to argue that IMX won’t be around for a long time. Some of these projects include Illuvium, Embersword, Guild of Guardians, Gods Unchained, Kongregate, Polygon, Gamestop, to name a few.
   
   These are all either highly anticipated titles in the Web3 space, major existing traditional gaming companies that have decided to go with IMX, or major blockchains.