Ethereum is one of the prominent blockchains in the cryptocurrency industry that established smart contract technology. This has helped cement decentralized finance and checkmate third-party interference in cryptocurrency transactions. But in the past, their main challenge and drawback was related to scalability and speed in executing transactions.
As the months and years go by, Ethereum is making great progress in fixing scalability issues. This led to the deployment of the layer two version of the blockchain.
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As the new year begins, many people have shared their predictions and expectations for the cryptocurrency industry in 2022. Some of these people include investors, analysts, and industry leaders. Among the many comments is the latest post from Surojit Chatterjee, Chief Product Officer at Coinbase.
Chatterjee predicts big strides in Ethereum’s scalability. Sharing his predictions on Tuesday via a company blog post, the CPO expressed his confidence in Ethereum. He mentioned that the scalability of the blockchain would put it ahead of Web3 and the crypto economy.
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Furthermore, he was confident that there would be an improvement in the scalability of Ethereum. In addition, he indicated the possible traction for alternative layer one networks.
Also in his post, the CPO commented on the emergence of new top-tier networks based on social media and gaming. He explained that moving bridges from layer one to layer two will drive a huge improvement in scalability. Furthermore, he anticipated a situation where the industry is in a desperate search to improve the speed and usefulness of L1 and L1-L2 cross-bridges.
Benefits of Cross-Bridges for Ethereum Scalability
Using these bridges will facilitate the easy transfer of tokens from a layer one (L1) network like Ethereum to a layer two (L2) network like Arbitrum. In addition, it allows reverse transactions between bridges.
For companies like Matter Labs, 2021 saw their tremendous breakthrough. The company developed and implemented its level two platform based on the zkSync rollup package to achieve its great feat.
Overall, 2021 was a year of massive expansion for the tier two ecosystem, as all major platforms saw an increase in adoption. Tier two ecosystem tracker L2beat reports a nearly 11,000% increase in the total amount blocked last year. This brought the value in 2021 to $5.5 billion from $50 million in January 2021.
As for scaling technologies, Chatterjee chose zk-Rollups citing its attractiveness to users and investors. He explained that Zero-knowledge scalability compiles transaction data in batches. This will allow efficiency in its processing in the Ethereum L1.
Additionally, Coinbase CPO predicts the emergence of more privacy-focused apps. However, he mentioned that this would generate more attention from regulators, as there are restrictions imposed through KYC and Anti-Money Laundering (AML).
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Chatterjee has other predictions, including increased industry regulations, safer DeFi, and more institutional participation in DeFi. Others are moves to Web3 by Web2 companies, more brand equity in metaverses, and non-fungible tokens (NFTs).