Chocolate Sundae

“Chocolate Sundae” – a cartoon that illustrates how many of the centralized exchanges are now launching their own L2s, which are blockchain settlement technology on Ethereum.

Layer 2s are an industry term for a network-level layer technology built on top of a Layer 1 blockchain to enable faster transactions and low cost, which have become particularly popular in the last 18 months.

With 32 active Layer 2 blockchains on Ethereum and another 15 are on the way, some of the larger crypto exchanges are wanting to get into the action to offer their customers a one-stop shop for trading, wallet for crypto asset management and a build environment for developers.

Among centralized exchanges, Coinbase’s successful launch of its L2 in August, called Base, has already achieved $580 million in transaction volume.

With Base’s successful launch event with 50+ major brands and artists, the last 2 months has seen OKX and Kraken announce plans for their own L2 on Ethereum, perhaps worried that Base’s momentum could suck away all the developers interested in wanting to build using their technology.