Do you regret missing out on the LSD bull market before Shanghai’s upgrade? Don’t worry, the Cancun upgrade is coming – an upgrade that will directly benefit Layer 2 (L2) tokens.
What benefits will the Cancun upgrade bring and how will it affect L2s?
In short, the Cancun upgrade will make L2 10-100 times faster and cheaper.
Some people may ask, how is this possible?
Basically, L2 needs to submit L2 txs to L1 (Ethereum) to achieve the same security level as L1.
Before the Cancun upgrade, L2 txs were stored in Calldata of L1 txs. However, this method is costly and the space of Calldata is limited.
After the Cancun upgrade, L1 will be stored in a new location called "Blob". Blob storage is cheaper and has more space.
So, here’s a quick calculation:
If L2 has 1000 txs stored on L1, 1 Calldata can store up to 100 L2 txs at a cost of 1 ETH.
If there are 1000 L2 txs, 10 Calldata are required, costing 10 ETH.
If stored in Blob, you can store 1000 L2 txs in 1 Blob, and the cost of 1 Blob is 0.1 ETH.
Before the Cancun upgrade:
1 L2 transaction will cost 10/1000 = 0.01 ETH
After Cancun upgrade:
1 L2 transaction will cost 0.1/1000 = 0.0001 ETH
100 times cheaper.
Note that in order for L2 transactions to be finally confirmed, they must be stored in Ethereum. Therefore, if you want to confirm 1,000 L2 txs, it also depends on the time it takes to submit to L1. So let's do another math problem:
When stored in Blob, 1 L1 txs can be used to confirm 1000 L2 txs, but when stored in Calldata, 10 L1 txs are required to confirm 1000 L2 txs.
Therefore, storing on Blob can confirm 10 times more L2 txs than before, and the larger the space, the faster the speed.
The actual logic and data is much more complicated, but all you need to know is:
The Cancun upgrade will make L2s cheaper and faster.
Right now you might see L2s costing even more than L1s, but after the Cancun upgrades, things will be much better.
Now that we know the basic logic, what should we do to prepare? What projects should we invest in? Here is a list. They are all L2 projects and tokens that will benefit from the Cancun upgrade.
ARB、OP
These two are the top projects of Layer2. If there is an L2 Summer, these two tokens will definitely benefit the most.
Arbitrum and Optimism have the highest TVL and the most users, and have been running for many years with mature ecosystems.
Assessment: Low risk, medium return
These two are forked projects of the early Optimism. Both tokens have been falling for a year, so now is a relatively good time to enter.
Assessment: Medium risk but high reward
LRC、IMX、dYdX
These are early zk projects that have developed their own application-specific Rollups and issued tokens. They will be excellent investment targets for zk Layer2s.
MATIC
The "Polygon" currently used is not L2, but they have several ZK Layer2 solutions, including Polygon ZKEVM, which has already launched the mainnet.
Evaluation: MATIC's market capitalization is already very high, so the expected return on investment is relatively small.
SHIB
SHIB stated that it will launch Layer2 this year. If the launch is successful and the ecosystem grows and develops, they will be included in the L2 narrative like YFI and FXS.
Layer2 Ecosystem Project
The fast and cheap network brought by the Cancun upgrade will also promote the development of projects built on L2. For example:
GMX, GNS, RDNT, JOE, etc. in the Arb ecosystem.
SNX, PERP, KWENTA, etc. in the Op ecosystem.
And other zkRollup ecosystem projects.
ZKS、STARK、SCROLL
None of these 3 have issued coins, and if they did (in any form), they would be as important as ARB and OP, or even better, because the crypto industry sees zkRollup as a more advanced Rollup solution. Also, keep an eye out for airdrops, which are expected to have a high probability.
Author: OnChainChad
