A Twitter user with the name Crypto noodles recently shared his opinion on the development of layer-two scaling solutions for Ethereum. According to Crypto noodles, upcoming and existing scaling solutions will split liquidity.
In the last few years, numerous scaling solutions for the Ethereum network have been developed. Some of these include Polygon, Optimism, zkSync, and Arbitrum. Crypto noodles argued that these L2 protocols will fragment ETH’s liquidity if they turn out successful.
At the moment, Polygon is the most successful layer-two protocol for the Ethereum network. MATIC, Polygon’s native token has experienced significant growth since its launch in 2017. MATIC investors had the best time of their lives in 2021.
MATIC soared more than 100x between January to May last year. The network became more popular due to its amazing features. Polygon users could spend a few cents for the same transactions that cost Ethereum users hundreds of dollars. Interestingly, the protocol also supported non-fungible token standards, making it all the more appealing.
Other layer twos have also enjoyed similar successes, but none has soared as much as Polygon. For example, Optimism has gained some ground in the crypto ecosystem, with its market cap currently above $100 million. In comparison with Polygon, the OP token’s market capitalization is just 1/30 that of MATIC.
Ethereum – The King of DeFi
Despite the rise of scaling solutions for the Ethereum blockchain, ETH’s status in the DeFi ecosystem is unmatched. The cumulative market capitalization of all scaling solutions is still less than 5% of that of Ethereum.
Aside from scaling solutions for ETH, alternative blockchains like the Solana Chain and Cardano chain have been developed. While these chains are great innovations, they have been unable to surpass Ethereum.
As it stands, neither layer-twos nor “Ethereum Killers” look set to tump Ethereum. Ethereum will continue to rule the DeFi ecosystem for a long time.
