Sup, nerds!

Here’s what you’re getting in today’s edition:

• 🚨 Special Edition Part 1: The ETH L2 wars (they’ve begun/here’s how)

• 🚨 Special Edition Part 2: The ETH L2 wars (where things stand now)

• 🤝 Partner: The easiest way to convert cash into crypto​

• 🚨 Special Edition Part 3: The ETH L2 wars (here’s how they will end)

Terms used in this edition (click for an explanation, or ask Web(GPT)3!):
Layer 1 / Layer 2, Blockchains, Self Custody Wallet, NFT, Wallet, Protocol.

🚨 Special Edition:

[PART 1] The Ethereum Layer-2 Wars (They’re a Thing, They’ve Begun, Here’s How)

In one sentence: There’re 20+ L2 chains being built on ETH, and each project is somehow convinced they’re not in competition with the next (they are, and it's ‘winner takes most’).

Remember at the ending of Terminator 3, how you find out the human/cyborg war had already quietly begun earlier in the movie…

But it took the humans the better part of the 1hr 49min watch time to figure it all out?

The Ethereum layer-2 (L2) situation is reminiscent of that.

There are a BUNCH of L2 blockchains being built on top of Ethereum, and each project is (somehow) convinced they’re not in competition with the next.

Rather, they’re all doing it for the greater good of Ethereum (this is referred to as ‘Ethereum alignment’).

In reality, these L2 chains are at war with one another.

(Whether they realize/admit it, or not).

Bold words, we know! So let’s back them up. Starting with the ‘what’ of it all…

The Ethereum mainnet (aka the ‘layer-1’) is like a freight train (slow, expensive, but highly secure/reliable), while L2 chains are like passenger trains (fast, cheap, but a little less reliable/secure).

Both rely on the same set of rails (the Ethereum network) to operate, but serve different purposes.

…and as romantic as it might seem:

You’re not going to want to use a freight train (ETH) for personal transport (everyday transactions) cause it’s not designed for it! It’s just too damn slow/expensive.

(Think anywhere between $3-$3k in fees per transaction, depending on demand).

Ok, so why the ‘war’?

Well, right now, there’re something like 20+ layer-2 chains competing for your money/attention/patronage.

Can you imagine a train system where there were 20 different passenger train companies competing for customers?

Picture it…hold that image in your mind…ok, got it? Good.

Now, let’s make things even more complex:

Imagine that the platform you were boarding from determined the train company you would use — and that that company had its own currency/ticketing system that didn’t play nice with any of the other companies.

Which meant if you needed to change trains at some point, it’s going to result in transfer fees and a long wait time.

Ok, ok, this analogy is getting way too heady.

But that’s kinda the point — the Ethereum L2 ecosystem is a mess right now, just like this fictional train system!

The same way Amtrak owns the majority of the interstate passenger rail market in the US, we believe we’ll inevitably see a dominant L2 take over on Ethereum.

It won’t be winner takes all, but instead: winner takes most.

Wanna know why?

Keep scrolling to read Part 2 👇…

🥇 Want the news before anyone else?

🚨 Special Edition:

[PART 2] The Ethereum Layer-2 Wars (Here’s Where Things Stand Right Now)

In one sentence: As it currently stands, transferring ETH to an L2 still requires a large initial fee — and if/when you want to transfer between L2’s, it can take up to 7 days.

To understand how the war of the Ethereum layer-2’s will shake out, we first need to understand the relationship Ethereum currently has with its users…

If it were a conversation, it’d go something like this:

Good news is: these are just the growing pains of the world’s second largest cryptocurrency!

They are set to pass in due time.

Learn how, in Part 3 👇…

🤝 Partner:

The Easiest Way to Convert Cash Into Crypto

We can count on one hand the amount of times we’ve converted fiat cash into crypto and thought:

“Hmmm…that was easy!”

1. The time we bought ETH via MoonPay from within our wallet.

That’s it. That’s all the times.

MoonPay offers a fast and simple way to buy and sell cryptocurrencies, allowing you to buy crypto with your credit card, bank transfer or even Apple Pay!

(They’re basically the Visa/Mastercard of crypto).

If you want a seamless, hands off fiat to crypto conversion & payment experience:

Click this link to buy crypto right away; or look for the MoonPay logo within your chosen crypto app!

🚨 Special Edition:

[PART 3] The Ethereum Layer-2 Wars (Here’s How They’ll End)

In one sentence: Before interoperability is solved, slow transfers between L2’s will force the market to make a clear choice, resulting in one L2 taking the majority of the market.

If you’re feeling frazzled after that last part — don’t panic, we’re in good hands!

Ethereum has the largest amount of big-brained-developer-types in the space.

Which means they’re working on a fix!

A fix that essentially makes the process of transferring your Ethereum between layer-2’s so fast n’ cheap, that you won’t even notice it!

It’ll all just happen quietly in the background. The friction will be gone…and you’ll be blissfully ignorant to how the mechanics of the exchange works.

(The same way you are with bank transfers).

That said: we still believe the L2 war will not only happen, but one clear winner will take most of the market.

Why/How? It’s all about incentives (short, medium, and long term).

In the short term, most users aren’t going to want to transfer their ETH between layer-2’s, cause it’s so damn slow n’ clunky (for now).

In the medium term, this will incentivize developers to choose the most active/popular/well funded layer-2 to build their products on.

(As to not scare people off/make it as easy as humanly possible for a large amount of users to adopt their product).

In the long term, no matter how cheap n’ fast transfers become between two opposing Layer-2’s — the cost to move Ethereum from one person’s wallet to another, will always be cheaper/faster if the transfer is being made on the same chain.

And this creates a snowball effect…

Early on, users will avoid transferring between L2’s → which will drive siloed adoption to a range of L2’s → the L2 with the most adoption will get the majority of developer love → by the time these 20+ L2’s become fully interoperable (aka friendly with one another), it’ll be too late…

Cause sure, the fees and speed of transferring between any/all L2’s will eventually become negligible.

But by that time, the market will have chose one dominant chain (alongside a few runner-ups).

Don’t believe us? The same thing happened with email.

Email is an ‘open protocol’ (aka open set of rules) that anyone/everyone can build upon, without prior permission and free of charge (just like Ethereum).

Yet one one email platform owns 58% of the global email market, while the runners up trail behind with a % of ownership that falls off at a drastic rate:

1. Apple @ 58.07%

2. Gmail @ 29.67%

3. Outlook @ 3.42%

Right now, the top Ethereum L2 scaling solutions (by total value) look like this:

1. Polygon @ $10.1B

2. Arbitrum @ $4.37B

3. Immutable @ $3.8B

So how will the L2 wars end?

With one winner taking most.

Which L2 will that be?

No idea ¯\_(ツ)_/¯

Ethereum Layer 2 Solutions Explained