Own blockchain: advantages of second-level networks
Decentralized technologies, which are becoming increasingly integrated into business processes, are of particular interest to fintech companies. These companies see innovation as a way to simplify payment transactions. According to OP Labs, this trend will result in every firm having its own blockchain. A similar situation is developing among crypto exchanges, which are seeking to reduce transaction costs.
Advantages of L2 networks
Sam McIngvale of OP Labs attributes these trends to the success of Coinbase’s Base. Base is a second-level network based on the Ethereum ecosystem. Since its launch in 2023, the network has achieved impressive results:
– created a multifunctional system of services;
– became the largest in its category in terms of total value locked (TVL);
– provided extensive opportunities for users;
– became an effective tool for exchange development;
– expanded options for monetizing inactive crypto assets.
Regarding the last point, this feature became available thanks to the system’s integration with Coinbase loans secured by Bitcoin. Base works with stored assets and helps users leverage them as credit funds.
Base operates using the OP Stack solution, which came from Optimism. This software enables the use of second-layer blockchains integrated with the Ethereum blockchain. At the same time, the tool significantly reduces transaction costs and speeds up the transfer of funds.
Market trends
McIngvale believes Base’s success has launched a new trend that could become the industry standard. He predicts that, in the coming years, every fintech company and crypto exchange will have its own blockchain.
In addition to Optimism, Arbitrum offers a solution for launching L2. Developers use a similar principle for their software. The program considers all transactions valid and uses a proof-of-error system to detect fraud. This approach increases the throughput of the main Ethereum layer. Since transactions are performed outside the network, the computational load is reduced. The results are recorded at the L1 level, increasing security.
Alternatives
Zero-knowledge proofs are an alternative method. They enable the development of rollup networks that cryptographically confirm the authenticity of on-chain transactions.
Many companies are seeking to abandon the practice of storing crypto assets in cold wallets. Storing them on the platform increases costs and security risks. Assets used for loans do not incur storage costs and operate transparently alongside other exchange processes.
Given the advantages of second-layer networks, we can expect them to spread further and be actively developed. One of the first to recognize the potential of this approach was the Kraken exchange. It launched the Ink network, which runs on Optimism software.
