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Big firms like Coinbase now investing in ETH-L2

Ethereum funding round announced: big firms like Coinbase now investing in ETH-L2

  • Big names are investing in scaling Ethereum Layer 2.
  • Matter Labs wants to bring smart contracts to L2.
  • Gas prices soar again after brief breather.

As demand for Ethereum scaling reaches critical mass, the number of decentralised Bitcoin Revolution finance projects and internet companies investing in Layer 2 solutions is increasing.

A Series A funding round for Matter Labs‘ Layer 2 scaling protocol zkSync has now been announced. The goal is to bring the Solidity smart contract language to the platform.

The round was led by some big names in the crypto and internet security industry – including early Twitter investor Union Square Ventures (USV), Cloudflare, Firebase, Twilio, MongoDB and Coinbase.

Matter Labs first released its Layer 2 product in December 2019 after raising an undisclosed sum.

Layer 2 comes to life

zkSync speeds up Ethereum transactions by using zero knowledge rollups to batch transactions and process them from the root chain. It also provides security guarantees comparable to a normal layer 1 smart contract.

According to the announcement, security will be a big factor for users.

„The crypto community will strongly prefer solutions with the least compromises in security, decentralisation and UX.“

He added that the zkSync ecosystem can grow limitlessly by leveraging composability and composing network effects. This, he said, is important for protocols such as Aave, Balancer and Curve, which are already worth billions of dollars.

zkSync has already processed over 1.1 million transactions and is integrated with a number of dApps and platforms, including Golem, Numio, StablePay and Storj.

Matter Labs foresees further integrations with major wallets such as those of Coinbase and Huobi, adding that it could become Ethereum’s main payment backbone (Go to Buy Ethereum Guide).

„All users will also be able to create and potentially fund their accounts directly from exchanges or on-ramp services (for example Coinbase, Huobi, Binance, Ripio or Moonpay) without a single L1 transaction.“

Investments from the seed round will be channelled to create Turing-complete smart contracts with Solidity to zkSync through its own Zinc programming framework. The blog post says the public test network for smart contracts on zkSync will be available in a few months.

Gas fees rise again

The gas fee respite didn’t last long – transaction costs are on their way back up. As major crypto assets begin to show signs of recovery from last week’s correction, average transaction fees have also risen.

According to BitInfoCharts, the average Ethereum transaction fee is $13, well below last week’s peak of $40 but still heading in the wrong direction.

Even at these levels, microtransactions on the network are unprofitable, making the demand for layer 2 payment channels like zkSync even greater and leaving many users looking to alternative platforms like the Binance Smart Chain.