Breaking the Chains of Crypto
Layer 2 smashes through transaction costs and processing time
The crypto industry has skyrocketed in 2021, moving faster than ever before. We can see untapped potential and are growing to exceed all expectations. However, with this growth, we’ve seen the pace of adoption strangling access to the market.
The Hurdles We’re Facing
The Decentralised finance (DeFi) movement has revolutionised financial capabilities and is currently worth almost 100 billion dollars – a drop in the ocean of what it’s sure to be worth in 10 years.
Yet, as fast as the industry can move, it’s also come at a cost. Transaction costs (in the form of ‘Gas fees’) have soared; for example, a basic Ethereum token swap currently costs around US$40 in gas fees, with more complex transactions coming in at around $100. At busy times for the network, prices spike even higher.
Transaction throughput, measured in transactions-per-second (TPS), remains a big problem on Ethereum – with the network capable of processing roughly 13 TPS currently.
This low throughput, coupled with surging demand means congestion has also spiked with the sheer number of users, developers, dApps and transaction types choking access and raising transaction costs. Before we can really call the cryptocurrency market accessible, we must address the fundamentals of cryptocurrency transactions – speed and cost.
A Real Solution: Layer 2
To address these issues, we’ve just launched direct fiat purchasing for a range of L2 protocols, including Arbitrum, Optimism and zkSync. This means users can pay with our wide range of global payment options (including credit card and bank transfers) for direct purchasing on L2. With this capability, we’re not just helping scale the Ethereum ecosystem, we’re opening up the door for mass adoption of crypto and a new category of Web3 use cases.
However, the devil is in the details. On Layer 1, a standard Balancer swap can cost $90 USD, yet, a transaction on the zkSync network can be as low as $0.03. The network is also designed to handle 2000 TPS, with plans to up this to 20,000 eventually. The figures speak for themselves, this is a 3000x decrease in costs and 150x increase in throughput. Solutions like this answer the scalability issue creating a truly level playing field for users.
L2 isn’t just cheaper. It’s also faster. We’re seeing fulfilment speeds drop to half the time as with Ethereum, we’ve moved from 30 seconds to 15 seconds.
What’s Next?
Innovation in crypto doesn’t stop. Looking to 2022, we’re committed to helping grow the ecosystem of dApps by working directly with them to enable real-world payments directly into L2 networks.
While the industry moves at a million miles per hour, we also need to remember that the ecosystem infrastructure and access are fundamentals. Expanding access and speed will create the foundation we all need to innovate, expand and grow.
Visit Our Partners
In celebration of this launch, Banxa is offering free purchasing Layer 2 with Optimism, Arbitrum and zkSync for a limited time. User’s spread fees will be waived; however standard payment surcharges will apply, such as credit card transaction fees. This offer is now available* to all users making purchases using these Layer 2 protocols.
TERMS AND CONDITIONS
*Available with L2 purchases made using Optimism, Arbitrum, Loopring and zkSync for, 2 weeks from 22 December, or 500K fulfilment achieved on each protocol.