Loopring & DeversiFi announce a Layer-2 Committee — L²
By: Matthew Finestone
Tags: Deversifi, Loopring, Ethereum, Layer 2, L2 Squared

L2 exchanges Loopring & DeversiFi have joined forces to establish the industry’s first L2-specific committee & working-group aptly titled L2 Squared (or L² for short). Symbolising the launch of L², Loopring & DeversiFi have also conducted a token swap, swapping LRC & NEC respectively. Read on for the full story.

The DeFi explosion of 2020 has undeniably proven the power of permissionless, self-custodial finance. Decentralised Exchange trading volumes have grown to now seriously compete with custodial centralised counterparts. However the Ethereum blockchain has been heavily congested by this new activity, leading to prohibitive gas prices and high fees for end users.

🗣 “I believe Layer-2 scaling systems are the solution to Ethereum’s short-term gas price challenges as well as long-term scaling.” says Will Harborne, DeversiFi’s Founder. “As things stand, Loopring and DeversiFi are the first exchanges on Ethereum to harness Layer-2 solutions, using zkRollup and StarkEx’s Validum respectively. However the much-needed migration to Layer-2 is not a simple one, and the network effects of Layer-1 composability are very strong which stand to slow down this ongoing transition.”

Today therefore we announce the formation of a new committee & working group — L2 Squared — designed to collaborate closely on helping the Ethereum ecosystem to solve these pressing issues and accelerate the transition to Layer-2. This will further set the groundwork for L2 composability, where the potential to improve end-user experience and wider DeFi adoption is huge.

Formalising our commitment of working together on this collaboration, DeversiFi and Loopring will be conducting a token swap, swapping LRC for NEC on December 16th 2020. Based on recent growth rates, wider Ethereum events, and internal and external research, we believe that the entire Layer-2 exchange space will grow significantly in the coming future. Together, we are committed and excited for this evolution.

The challenges of a transition to Layer-2

As a starting point, we will work together and solve a number of existing challenges:

Education of Ethereum users and traders about the advantages of Layer-2 systems and Zero Knowledge proofs. The complexity of the technology can stifle adoption unless there is both comprehensible educational content and advocacy by trusted figures. Technical solutions and standards for composability between Layer-1 to Layer-2. Bridging the two worlds is a necessary stage and will accelerate our aforementioned goals. Enhanced composability will make Layer-2 DeFi a more powerful and efficient environment. Developing and agreeing standards for composability and movement of funds between Layer-2 systems. With a growing number of dissimilar L2 technologies, it is paramount we establish a standard to allow easy communication between respective systems and reduce switching costs. The end-goal is easy capital transfer between two L2 dapps. Jointly pushing for increased wallet support for Layer-2. More wallets, more users, more choice, more fun.

🗣 “Vitalik’s rollup-centric Ethereum roadmap for Eth 2 stresses the importance of layer 2 solutions not only today, but as the essential building block for scalability on Eth 2. Layer 2 will always be needed to take Ethereum to its full potential, and to the masses.” Jay Zhou Loopring co-founder.