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Layer 2 Scaling - Market Update

Binance Research (Stefan Piech)


  • Once L1s are strong enough, the majority of transactions can take place on L2s, allowing for further scalability and faster transactions with lower gas cost

  • Comparing the different solutions, we can observe differences in speed and security. Optimistic and ZK-Rollups are seen as more secure than Side Chains and Plasma, though they are more limited in terms of speed and execution

  • Looking at the different characteristics of Layer 2 scaling solutions (including Side Chains), we believe that ZK-Rollups offer the best overall approach in terms of security, performance, usability, and other noteworthy aspects

  • The Ethereum blockchain will remain the settlement layer, while scaling solutions will continue to manifest their place as execution layers for the growing dApp ecosystem

  • The introduction of zkEVM is a major milestone in terms of coding language usability and accessibility for developers. Currently, most ZK-Rollups are written in a low-level hexadecimal-based assembly language rather than Solidity, which introduces new levels of abstraction and complexity

  • While Arbitrum’s centralization tradeoff in pursuit of lower gas fees is understandable in the short term, we urge the project to continue its focus on creating a decentralized system

  • Leveraging the power of ZK-Rollups, BNB Smart Chain has introduced zkBNB, bringing further scalability to the blockchain

  • Optimistic rollups will likely see a further rise in popularity until zkEVMs are strong enough to compete. ZK-Rollups, using validity proof, offer long-term benefits due to fewer limitations compared to Optimistic rollups

  • As of now, the majority of applications on Ethereum today will likely move to L2, further underlying the need for secure bridges. We consequently expect more bridges between L2s and centralized exchanges to emerge, as well as bridges between various L2s

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