The highly anticipated Cancun upgrade of Ethereum is expected to unleash tremendous opportunities for Layer 2 scaling solutions. Let’s take a look at some of the top Layer 2 protocols that are ready to leverage the Cancun features.
The core of the Cancun upgrade involves turbocharging Layer 2 through EIP-4844, introducing Blob to improve throughput and reduce costs. This greatly enhances Ethereum Layer 2 compared to alternative Layer 1 solutions. However, as competition intensifies among Layer 2 solutions to gain market share, the competition between them will also intensify.
Arbitrum: The Biggest Winner
Arbitrum has always been at the forefront of Ethereum Layer 2 in terms of protocol quantity and ecosystem richness. Its thriving derivatives industry and top-tier gaming ecosystems such as Treasure DAO are unparalleled.
According to DefiLlama, Arbitrum has 524 protocols, ranking third among all chains. Its TVL is $2.6 billion, ranking fourth among all protocols. L2Beat data shows that Arbitrum has processed 28 million transactions in the past 30 days, ranking second only to zkSync.
Given Arbitrum’s dominant position in high-throughput areas such as gaming and derivatives, Arbitrum becomes the biggest beneficiary of the Cancun upgrade. The enhanced performance allows developers to focus more on innovation rather than Layer 2 limitations. This virtuous cycle may give rise to more leading protocols on Arbitrum.
Optimism: A Customizable Blockchain for Everyone
Although Optimism lags behind Arbitrum in terms of numbers, it has taken a creative approach through the OP Stack, enabling projects to launch fully customizable and interoperable blockchains with a single click. Major adopters include Coinbase’s Base Chain, BNB Chain’s opBNB, as well as renowned projects like Worldcoin and DeBank.
The Cancun upgrade will also extend to these OP Stack-based superchains, further solidifying Optimism’s position.
Beyond the Leaders: Three L2 Submarkets
Apart from the top two, other Layer 2 competitors are worth noting, especially the pre-tokenization protocols. L2 can be broadly divided into three categories:
ZK Rollups – higher development complexity but powerful technology (zkSync, Starknet)
Exchange-supported Layers (Mantle, Base) – deep resources
Buzzworthy L2 innovations (Metis, Manta, Blast) – rising stars
Each submarket will benefit from Cancun’s gas fee and performance improvements. As protocols refine their value propositions to become leaders, we should expect intensified competition.
Leveraging Cancun’s Data Availability
Cancun’s Blob data structure provides temporary Layer 2 data availability for one month before deletion. Although the value of this data is still uncertain, on-chain data holds significant strategic importance in the world of cryptocurrencies.
Therefore, decentralized storage networks may engage in fierce competition to leverage Blob data. This includes existing solutions like Filecoin and Arweave, as well as newly built solutions like EigenDA and EthStorage specifically designed for data availability. Their complementary capabilities can help drive Ethereum’s rich data economy.
Preparing Applications to Leverage Cancun
With the Layer 2 performance enhanced by the Cancun upgrade, high-volume industries such as gaming and derivatives are poised for opportunities.
For derivatives, the order book model has always faced secondary limitations such as low liquidity and high slippage, discouraging professional traders. Cancun’s gas fee and performance optimizations enable the flourishing of order book protocols, leading to greater adoption. The trading volume of decentralized derivatives exchanges may surge, narrowing the gap with centralized platforms.
For gaming, eliminating throughput bottlenecks can pave the way for truly decentralized and interactive immersive gaming experiences. We can expect the next wave of blockchain gaming development to thrive on Ethereum Layer 2.
Conclusion
The Cancun upgrade represents a watershed moment for Ethereum by significantly enhancing Layer 2 capabilities. The performance improvements, cost reductions, and data availability brought about by this upgrade will spark a new wave of innovation in Ethereum’s thriving Layer 2 space. As the platform steadily enters the 2.0 era, this upgrade consolidates Ethereum’s market leadership and expands possibilities for developers and users.
This article provides official content and does not represent the position of this site or investment advice. Readers must conduct their own thorough evaluations.
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