Aug 7, 2022
Entering the L2 Playground
Super quick quickstart on jumping into the second layer that is evolving rapidly on Ethereum
I contributed a blog post to Etherscan recently, focusing on second layers as products:
The focus of this post is to describe L2 solutions as kinds of products. In another post, I’ve argued that thinking in these terms is helpful. Product-thinking can help to sharpen scrutiny and consumer caution. Products compete. They have favored or disfavored features. Thinking in these terms could encourage careful weighing of potential costs and benefits. Product assessment and comparison can happen when we search for virtually anything, from a fresh pen to a new laptop. We sort, save, scrutinize and filter. Why not structure our decisions like this for all crypto products?
This brief post here accompanies that one. I suggest reading that main one first as it’s an overview of these various features and decision points. Here, I share my own process for entering this playground.
I jumped into a few of the L2s and tried them out. I focused on the top 5 listed by L2BEAT. The UX differs somewhat across them, but I was impressed in general with the smoothness of the bridge. The first step to trying out an L2 is always the bridge — typically, connecting your wallet to their app, then deciding how to bridge (some L2s have a few options). That moment can be the trickiest UX-wise. For some, it takes a moment to determine that there’s movement of your assets across the bridge, and it can take a few minutes (or more).
Once across the bridge, you can play. Entering a “universal” L2 is fun because you can try a few things you might do on the main chain. Swap some tokens. Buy an L2 NFT. Deploy a contract (for a base fee of < 1 gwei!?).
It’s simple, I know, but it’s worth listing some basic steps for those who may feel unfamiliar. This is not advice. It’s a description of what I did. I’ll elaborate in detail with concrete steps here. Take it or leave it.
- Send a small amount of ETH to a new hot wallet; don’t use a main wallet or even primary hot wallet; that way, it’s a more relaxed start
- Answer that question about market specialization noted above by checking out L2 offerings; pick one such that you know just what you’ll do once funds are bridged
- Explore bridge options, there may be a few
- Bridge assets and sip coffee ☕️ or tea and maybe go for a walk
- Connect your wallet (MM, etc.) to the L2 network (this will often be done for us by the app; this worked quite well for me)
- Click around as we would on main chain
Playground Activities
Why would we do this? I’ll end on a few clear examples for L2s. This is described in other places (see Further Reading on the main post). But the L2 may represent a kind of experimental layer.
NFT experimentation. We can deploy contracts very cheaply and distribute them to collectors for very low cost. Some platforms now have a native interface for minting an NFT directly on the L2 (using the IPFS pointer method). We can also create new experimental, complex NFTs apparatus, making for new 100% on-chain opportunities akin to CyberBrokers or Avastars. (Remember to check ecosystem suitability for this and all experimentation; some may be better setup for some applications than others.)
DeFi experimentation. Minute, fractional base fees permit very high throughput and remove limitation to certain gas-heavy AMM experimentation.
Just visiting. When all tokens can be passed across bridges (even wrapped NFTs) it may be possible to do all of this experimentation but only for a short period of time — to benefit from the lowest cost, but then secure assets on L1 after a period time.
L2 dweller. Or you could stay for good. You can create a new collection of tokens that reside on the L2, and help build communities in these marketplaces. Many projects are anchoring themselves in the L2.
DAO benefits. There’s interesting discussion by Verse Network about how L2s may help DAOs engage in more thorough governance and participation because of the savings and speed. They make the interesting point that on-chain governance models can increase participation on L2 because “…they can allow a maximum number of contributors to participate in the network. The L2 landscape reduces the barrier to entry significantly, allowing people with even the smallest funds or knowledge to be a part of the reputation DAO.”
Payments. Some ecosystems have payment platforms for micropayments or continuous payments (e.g., Sablier’s “money streaming”). Lower-cost and faster transactions make these tools far more feasible.
These are relatively obvious, but it’s worth reminding how any of this experimentation can become impossible during gas wars and other sustained periods of activity, like the Otherside mint that opened the root post. The list above is a reminder of how barriers to all such play are removed almost completely when you’ve chosen the right L2. There are risks. You can mitigate them by using hot wallets, keeping assets longer term on L1, and so on. But it seems time to jump in and give it a try. I hope you found this little survey useful.
Disclaimers
This article is only to share my opinion and shouldn’t be regarded as advice about anything at all except maybe fun (but maybe not even that, at least not for everyone). I’m on Twitter. I was not compensated for this survey. I wrote it for fun. I hope you found it useful.
