'5 Reasons Why Layer 2 Solutions Will Overhaul FinTech As We Know It' zkswap layer2
For those of you who may not be as familiar with the topic, layer2 is usually an application layer that sits on top of layer1 chains like Ethereum to enable limitless scalability. Layer2 brings much-needed scalability to the blockchain ecosystem by moving transactions off of the main chain to achieve greater efficiency, resulting in higher throughput, quicker transactions, and lower fees.
As more and more users enter the Ethereum ecosystem following a surge in retail interest in DeFi, GameFi and NFTs, the Ethereum network has become increasingly congested. Coupled with the rise in ETH prices, gas fees have become incredibly costly, effectively pricing out many new users.
But first, a quick primer on roll-ups. A roll-up is an off-chain aggregation of transactions inside a smart contract, which reduces fees and congestion by increasing the throughput of the blockchain. These roll-ups can take Ethereum from the current 15 transactions per second, or TPS, to thousands of TPS. Within the smart contract, users can transact with security guarantees their transactions will not be misused and they will settle to the main chain at some point in the future.
This allows users to trade on ZKSwap with little-to-no gas fees, which greatly reduces user friction and empowers users to trade more freely. Because transactions happen in real-time on layer2, fees are only paid at layer1 withdrawal. This means users can make dozens of trades without incurring exorbitant gas fees and with the confidence of knowing their assets are safely secured by the layer1 contract.
With V2, we wanted to ensure that users not only have a frictionless user experience but also participate in a more expansive DeFi ecosystem that allows anyone to list and swap thousands of new tokens with ease. By leveraging layer2 technology, we’re aiming to make DeFi more accessible to the masses by eliminating unnecessary gas fees and network congestion, which are two of the biggest barriers to DeFi adoption of layer1 chains like Ethereum.
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