Experts share their views on how the Ethereum merge escalation will impact scalability solutions in the form of layer 2 coins.
Which coins will the Ethereum merge affect?
Ethereum is just a week away from the transition to PoS scheduled for September 13-15. With the transition, Ethereum will leave the existing PoW network, removing miners from the ecosystem. However, there are some layer 2 coins that offer faster and lower transactions on Ethereum. These are solutions built on top of layer 1 to make Ethereum more scalable.
So, will layer-2 solutions like Polygon, Boba Network and Loopering be valid after the merge? Only these layer 2 coins will be directly affected by the first 20 altcoin merges below.
- Polygon (MATIC)
- Looping (LRC)
- Optimism (OP)
- Immutable X (IMX)
- dYdX (DYDX)
- MetisDAO (METIS)
- Boba Network (BOBA)
- rhino.fi (DVF)
- ZKSpace (ZKS)
- GMX (GMX)
- Nahmii (NII)
- zkLend (ZEND)
Why Merge matters for Layer 2 coins
Bitfinex chief technology officer Paolo Ardoino believes the merge will not have any impact on L2s, as Merge will not immediately resolve scalability solutions. He says that even after the third phase of the Ethereum transition is complete, when it becomes monumentally scalable, L2s will still find a place in the ecosystem:
It will be business as usual for the L2s. These solutions still hold significant value for short-, medium-, and long-term scalability. L2s will still be needed to meet the increasing demand and use of Blockchain around the world. Even 100,000 transactions per second would not be enough to meet true global demand and adoption.
Anton Gulin, global business director at AAX Exchange, said that since it took two years to rise, L2s won’t face many issues or need major technical changes, so L2 chains are already ready:
More important is how successful the merge will be and whether it can meet the momentum. With more significant investments flowing into space, we can expect even more performance solutions regardless of what happens after the merge. The rest of the L2s either adapt or catch up with being.
Misconceptions about Merge
It is a common misconception that Ethereum scaling solutions will eventually render L2 solutions redundant or useless. But most L2 solutions like Polygon said that changing the consensus for Ethereum won’t really reduce the need for such L2 scaling protocol in an official blog post, he said:
While Merge paves the way for sharding, this future upgrade won’t be enough to scale Ethereum. In fact, Polygon will take advantage of this and improve the performance of our scaling solution.
Long and short term outlook for layer 2 coins after merge
L2 integrations have been improving Ethereum’s performance for some time now. However, experts claim that the merge will not only improve the Ethereum ecosystem. As Vlad Totia, research analyst at L1 blockchain platform Zilliqa, puts it:
Built to help Ethereum scale, every L2 moves with Ethereum. So, for example, if we take that Arbitrum is faster than Ethereum before the merge, and L1 itself becomes faster, then Arbitrum essentially scales in speed as well. The user and developer experience with L2s will evolve in line with how Ethereum evolves over time.
Experts say the environmental aspect of the PoS transition could pave the way for better adoption via L2s. Pat White, co-founder and CEO of institutional digital asset platform Bitwave, said the move to PoS will be key to legitimizing the Ethereum network. He added that a significant number of businesses are sitting on their edge in cryptocurrencies due to environmental concerns.
Meanwhile, the merge will mark the completion of the second phase of the three-step process. After the completion of the third and final phase, which is planned for the end of 2023, an important scalability feature such as sharding and high transaction volume will be achieved.
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