As Ethereum (ETH) aims to solve the scaling problem in its upcoming updates, what awaits emerging Tier-2 projects?
Having successfully completed The Merge and Shapella updates, Ethereum started to focus on the Dencun update. Dencun aims to solve the scalability issue with the EIP 4844 upgrade. On the other hand, what will be the fate of the emerging Ethereum scaling projects?
Ethereum’s Scaling Problem
Ethereum, the second largest cryptocurrency with a market capitalization of approximately $250 billion, focused on scalability.
Ethereum (ETH) continues its structuring processes with The Merge and Shanghai updates. Ethereum, which took on the PoS structure with the Merge update, became thoroughly deflationary with the Shapella update.
Ethereum has become one of the most popular cryptocurrencies that has left its mark on the crypto industry after Bitcoin. Network activities and memecoins in particular have taken Ethereum to a different level. However, Ethereum has not escaped criticism for its slow transactions and high transaction fees. After all these processes, Ethereum, which performs strong updates, also aims to solve the scaling problem.
Will Ethereum’s attempt to solve the scaling problem also affect Tier-2 projects?
Emerging Ethereum Scaling Projects
Almost every period, many cryptocurrencies emerge with the definition of Ethereum scaling project. While the most popular of these projects is Polygon, Aptos and Optimism are also on the agenda. The common point of all these projects was to settle in Ethereum’s Layer-2 network and to reveal low cost and high performance.
In particular, Polygon, with the zkEVM update, has breathed new life into the scaling of Ethereum. Polygon plans to process the transactions it receives through Layer-2 on the Ethereum network quickly and at low cost.
Among the crypto projects that have gained popularity recently, there are many Ethereum scaling platforms. Many projects such as Polygon, Aptos, Arbitrum, Optimism and Starknet offer innovative solutions. All these projects aim to reveal a more efficient and cheaper blockchain independent of Ethereum. However, Polygon has come a long way in the development of Ethereum recently.
Most of the Tier-2 projects that will scale Ethereum appeared in 2021. These projects, which distribute their networks, still embody additional trust assumptions.
Making Ethereum More Efficient
Embracing the PoS structure with The Merge update, Ethereum (ETH) will try to reveal the low cost and fast network status in its next updates. In particular, Ethereum co-founder Vitalik Buterin stated that scalability is critical in future updates.
Buterin stated that if they fail to resolve the scaling issue, Ethereum’s transaction fees could rise to as high as $500 in the next bull run. Buterin underlined that the update, called Cancun, will focus on this issue.
Ethereum has peaked its network activity, especially in these times of memecoin rush. The increase in network activity strengthens the deflationary nature of Ethereum. However, on the other hand, it is observed that transaction fees on the network have risen to serious levels. Therefore, the need for scaling solutions has become quite high. Layer-2 networks are gaining popularity because of this.
Ethereum’s total locked asset status is around $9.3 billion. It is said that the project, which has a large ecosystem, will enter a period of intense work with the EIP 4844 update to solve the scaling problem.
The definition of crypto as Danksharding is that Ethereum is a truly scalable blockchain network. However, Ethereum has a long way to go to get to this point. The Cancun fork with the EIP 4844 update will create Proto-Dansharding. This definition will be an important step forward for Ethereum towards full scalability.
Danksharding and Proto-Danksharding plan to make operations at Layer-2 as efficient as possible. As such, the updates need to scale Ethereum to more than 100,000 transactions per second.
It is said that there is a few more years for Danksharding, which is full scalability. Proto-Dansharding will appear soon.
Scalability Post by Vitalik Buterin
Ethereum co-founder Vitalik Buterin said in a livestream he attended that with the Shapella update, developers will focus on scalability.
Buterin confirmed that his next hard fork, which is set to take place in early 2024, will involve EIP-4844, also referred to as proto-danksharding. The creator of Ethereum believes that this update will provide 10x greater scalability.
Cryptocurrency Buterin praised Polygon and Matter Labs’ launch of zkEVMs and the growth of Arbitrum and Optimism. Buterin underlined the progress made by the Tier-2 projects in 12 months.
What Awaits Tier-2 Projects?
Ethereum’s search for a solution to the scalability problem is also stimulating Tier-2 projects. As Ethereum architect Vitalik Buterin said, Tier-2 projects are critical to Ethereum’s development.
Tier-2 projects built with zero-knowledge (zk) technology make Ethereum cheaper and more efficient. The Cancun update, which will take place on Ethereum, will allow EIP 4844 to enter the market. This could make the second largest cryptocurrency more efficient. In such a case, it can be expected that Tier-2 projects will multiply further and zk technology will become even more popular. However, Tier-2 projects seem to focus more on zk technology rather than scaling Ethereum. Because if Ethereum becomes a scalable blockchain, it may not need outside support.
Still, the coexistence of Ethereum and Layer-2 projects promises a lot of hope for the future.
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