The Next Big Layer 2s (Plus Airdrop Opportunities)

At this point, everyone in the crypto space has heard of and likely used the most popular and earliest Layer 2s like Arbitrum and Optimism. Though these are currently the largest in market capitalization and total value locked, other more recent L2s have impressive technology and some innovative solutions that could help them overtake the current market leaders. In this article, we’ll dive into Manta Pacific, Aztec, and Taiko, as well as how to become eligible for their likely airdrops.

For some greater context, a Layer 2 is a blockchain scalability solution that takes transaction execution, which is typically very expensive in a decentralized environment, and moves it off-chain. It verifies that the computations were done correctly by posting a cryptographic proof to a settlement chain, typically Ethereum, and the data used for computing to a data availability solution, like Ethereum or Celesita. Through these solutions, it becomes possible to scale blockchains dramatically, as each L2 can handle over a thousand transactions per second at a fraction of the cost of an L1 transaction. 

The Layer 2 narrative has been fascinating to watch develop. The first L2s to market, Arbitrum and Optimism, came out in late 2021 and have been slowly accumulating volume and liquidity since, now holding nearly $9 and $6 billion in value, respectively, and making up nearly 80% of the total L2 market share. With this massive advantage over competitors, it may seem inevitable that these two L2s dominate the landscape for the next several years. However, this advantage is primarily due to their first-mover advantage, and liquidity will likely fractionalize over time as more rollups are created with features that more specifically cater to user needs. Additionally, as the only two rollups to complete a large-scale airdrop campaign, there is still plenty of time for other L2s to use the promise of free tokens to drive liquidity to their L2s. 

One extremely interesting L2 that recently released its beta is Manta Pacific. The Manta team, which originally created a digital identity solution on Polkadot, intends for Manta Pacific to be a cheap, reliable platform on which to deploy zero-knowledge applications in an EVM-compatible environment through a ZK-enabled library for Solidity programs. They also recently announced their New Paradigm program, where users can deposit ETH and USDC and earn yield in several different forms, including EigenLayer re-staking and points towards a token airdrop. Manta Pacific is able to achieve all of this at some of the lowest fees of any L2, thanks to their use of Celestia as their data availability layer - the first of many. With its impressive tech stack, lucrative rewards, and capable team, Manta Pacific is certainly a project to watch.

Aztec, a long-term player in the Ethereum scalability and zero-knowledge space, is gearing up to release its privacy-oriented L2 sometime in the near future. They allow for the deployment of privacy-enabled smart contracts while still retaining the guarantees of a blockchain execution environment. The three types of privacy they offer - user, data, and code - ensure that transactions are secure from several different angles. Previously, the Aztec team released zk.money, a specialized rollup for private interactions with Ethereum DeFi apps, but sunsetted it recently to focus on their new initiative, a general-purpose rollup that allows anyone to write smart contracts in their Noir programming language. Though there is not a testnet available yet, nor anticipated mainnet release, Aztec is one of, if not the, only rollups focusing on privacy, and their years of experience bode well for the eventual release of their rollup.

Taiko, a rollup co-founded by the founder of L2 exchange Loopring, is building a first-of-its-kind zkEVM-based boosted rollup - a lot of words to describe a truly interesting construction. As a Type 1 zkEVM, it has an identical execution environment to mainnet Ethereum, allowing for maximum compatibility of smart contracts. By being a based rollup, they use the existing L1 validator set as the sequencer for the rollup, meaning that the validator set for the L1 and L2 are the same or a subset of one another. With their innovative booster design, any dApps deployed on L1 Ethereum will immediately be usable on the L2, making both the developer and user experience seamless. The based booster rollup (BBR) design is incredibly exciting and could result in an Ethereum-aligned rollup at its most fundamental level. That being said, mainnet deployment of Taiko is still a long way away, as development work on all of these features is ongoing, though a testnet is currently available.

The L2 space has become a hot area of interest over the past several months. With new projects innovating on the original L2 designs by incorporating different data availability layers, levels of Ethereum alignment, and privacy tradeoffs, it has become clear that there will not be one L2 to rule them all. To make oneself eligible for these projects’ airdrops, it is advised to simply use them as an enthusiast, and consistently interact with smart contracts and protocols. Though we may be years away from their full releases and airdrops, watching these projects evolve over the coming months and years will be a magnificent way to watch the evolution of the blockchain industry.

By Lincoln Murr

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