Kraken enters the fray with L2 chain Ink, eyeing Coinbase's $53 million quarterly revenue from Base
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Kraken enters the fray with L2 chain Ink, eyeing Coinbase's $53 million quarterly revenue from Base
About 40 people in the Kraken team are developing Ink, and the testnet will launch later this year.
Navigating Web3 tides with focused insightsCompiled by: Felix, PANews
On October 24, cryptocurrency exchange Kraken announced plans to launch its Layer 2 network Ink on Ethereum in early 2025. The network will focus on DeFi, enabling token trading and lending without intermediaries. The Ink testnet will go live later this year, allowing developers to trial applications on it. The mainnet is expected to open to retail and institutional users in the first quarter of next year.
Ink is built on Optimism’s open-source, MIT-licensed OP Stack codebase, joining the broader Ethereum ecosystem. In addition to benefiting from Ethereum's security, Ink will become part of the OP Superchain—a unified blockchain network that shares security, governance, and values, using a common standards-based codebase to help scale Ethereum.
Notably, Ink founder Andrew Koller said in an interview that Kraken does not plan to issue its own token. Additionally, Kraken has partnered with Optimism to release a limited-edition NFT to thank early supporters.
Currently, about 40 people within the Kraken team are working on developing Ink. The company is already organizing events for developers, including Devcon in Thailand this November.
Following Success, Exchanges Rush to Launch Their Own Chains
After observing how blockchain helped drive Binance’s revenue and user growth, crypto exchanges have rushed to launch their own blockchains. Binance’s BNB Chain and its associated token have become one of the most popular ecosystems. Coinbase has also seen success in this space—Base experienced a 300% quarter-over-quarter increase in transaction volume during Q2, driven by app and memecoin launches. Recently, even decentralized exchange Uniswap announced the launch of its L2 network.
Related reading: What Makes Uniswap's L2 Network Unichain Different?
Although DeFi applications have existed for years, they are widely considered too complex for average users. Kraken aims to simplify the experience, making earning yield and other functions cheaper and more intuitive. Ink founder Andrew Koller said Ink apps will be accessible through the Kraken Wallet app.
"It’s a very easy-to-use, Apple-like experience," he said. "Over time, our users will have access to both centralized and decentralized ecosystems. We want you to feel like you're doing something familiar."
Ink is expected to launch with over ten available dApps, such as decentralized exchanges and aggregators. Initially, Kraken will act as Ink’s sequencer—earning revenue by ordering and managing transactions on the network—but this role will eventually be decentralized and shared among multiple parties. According to Coinbase’s shareholder letter, Base, Coinbase’s Layer 2 network, generated $53 million in sequencer revenue in Q2 alone.
Optimism Becomes the Hot Choice
Creating one’s own L2 network is nothing new. Other L2s—including Polygon, zkSync, Starknet, and Arbitrum—have launched their own stacks, hoping institutions will adopt their technology.
But recently, Optimism has emerged as the preferred choice. Major crypto firms—and even non-crypto companies—are choosing Optimism as the blueprint for their networks. Companies building rollups using Optimism’s code include Base, Sony, Uniswap, and World Network (formerly Worldcoin), backed by Sam Altman.
Optimism chains account for nearly half of the transactions across more than 100 Ethereum rollups. There are at least 43 rollups built with Optimism technology, collectively holding $18.1 billion in total value locked (TVL). These projects are referred to by Optimism’s project lead as the “Superchain,” compared to just 29 projects using Arbitrum’s technology.
While the proliferation of rollups has fragmented Ethereum’s liquidity, Optimism plans to introduce a new token standard in 2025 to enable interoperability between blockchains using its code.
“Ink will support SuperchainERC20 at launch, enabling users to move seamlessly across the Superchain ecosystem and laying the foundation for smoother interactions between Ink and other OP Chains,” Kraken said in a statement.
Founded in 2011 and headquartered in San Francisco, Kraken is expanding into new product areas and markets and continues to consider the possibility of an initial public offering (IPO). Earlier this year, Kraken was reportedly considering a final funding round before going public.
Like many crypto companies, Kraken’s future may depend on whether U.S. crypto policy changes following the upcoming U.S. election. Last year, the SEC accused Kraken of operating an unregistered broker-dealer, exchange, and clearing agency. In February 2023, Kraken reached a separate settlement with the SEC over its staking business, agreeing to pay $30 million in disgorgement, prejudgment interest, and civil penalties.
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