Bankless: How to Prepare for the Upcoming L2 Token Wave
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Bankless: How to Prepare for the Upcoming L2 Token Wave
L2 tokens are inevitable. To achieve full decentralization and compete with alt-L1s, networks like zkSync, Optimism, Arbitrum, and StarkWare will need to launch native tokens.
Navigating Web3 tides with focused insights
By William M. Peaster, Bankless
Translation: Alex, TechFlow
Dear Bankless Nation:
L2 tokens are coming.
Ryan pointed out in last week's article that L2 tokens are inevitable. To achieve full decentralization and compete with alt-L1s, networks like zkSync, Optimism, Arbitrum, and StarkWare will need to launch native tokens.
Ryan predicts these rollups will begin distributing tokens between late 2022 and 2023.
Why? Because before deploying tokens to govern their networks, L2s still face significant technical hurdles.
According to Ryan’s forecast, this gives us nearly a full year to engage with various rollups and accumulate whatever eligibility criteria each team will use to distribute native tokens.
For William, these criteria will primarily take the following forms:
1) Transactions
2) Bridge usage
3) Application usage
PS: You can combine the value of this guide with our upcoming best L2 yield guide!
Let’s get started!
Many of Ethereum’s most promising Layer 2 (L2) scaling solutions will launch native tokens in the coming years. Therefore, what we do on these L2s today will influence our token allocations tomorrow. Bankless will show you how to effectively position yourself ahead of these upcoming L2 token launches.
Objective: Learn how to prepare for L2 token launches
Skill level: Intermediate
Time required: 1 hour
ROI: Potential future airdrops
L2 Tokens Are Heating Up!
Last week, builder and researcher Ryan wrote a guest post for Bankless titled "Layer 2 Tokens Are Coming".
It was an incredible piece because it comprehensively explained why and how L2 projects will adopt native tokens for decentralization.
Notably, in that article, Ryan also speculated on a rough timeline outlining when the "Big Four" rollups might launch their own tokens. Specifically, he predicted:
"I believe rollup tokens will arrive sometime between late 2022 and 2023 in the following order: zkSync (confirmed) → StarkNet (no comment) → Arbitrum (no comment) → Optimism (publicly denied)."
I’m certainly not an L2 expert at Ryan’s level. But I’ve spent considerable time researching the L2 ecosystem, and from everything I’ve seen so far, his predictions here seem entirely reasonable and plausible.
With that said, I think one good way to fully leverage L2s and prepare for the L2 token season is to follow Ryan’s blueprint and participate as a user across the Big Four rollups—by:
1) Conducting transactions on these L2s
2) Using their dapps
3) Using bridges
4) Building new L2 dapps
However, since most of us aren’t developers and app development isn’t feasible, focusing on the first three points—transacting and using apps and bridges—is perfectly fine and a direct approach.
As we prepare for the biggest upcoming L2 tokens, let’s zoom in on some details worth considering. Today, we’ll look at zkSync, Arbitrum, and Optimism, temporarily skipping StarkNet. StarkNet’s ecosystem is still young, with most of its applications still on testnet. However, we encourage you to explore all L2s, so check out our guide on how to use StarkWare Layer 2s!
1) zkSync
What is zkSync?
zkSync is a zkRollup developed by Matter Labs. This L2 uses zero-knowledge cryptographic proofs to efficiently batch many transactions onto Ethereum’s mainnet at once. Remarkably, this model means zkSync becomes cheaper as more users and projects adopt the network.
Bridges
LayerSwap (for CEX to zkSync transfers)
How to Use zkSync
First, create a zkSync wallet using Argent. Then, after funding your account, consider the built-in app integrations within your L2 wallet:
1) Swap ETH for DeFi tokens via ZigZag
2) Buy staked ETH via Lido or Yearn
3) Deposit WBTC via Yearn
4) Buy DAI or USDC via Yearn or Gro Protocol
5) Lend DAI or USDC via Aave
Second, check out my previous Bankless guide on how to use zkSync for more ideas (like Gitcoin donations and zkNFT minting!).
2) Arbitrum
Read Ben Giove's Essential Guide to Arbitrum
What is Arbitrum?
Arbitrum One, commonly shortened to "Arbitrum", is an optimistic rollup created by Offchain Labs. This L2 is EVM-compatible, meaning DeFi and NFT projects can easily port their code to this scaling solution.
According to L2BEAT, this is part of why Arbitrum currently leads among L2s in total value locked (TVL).
Image from L2BEAT
Bridges
1) Arbitrum One Official Bridge
2) Fast bridges (for quick deposits/withdrawals):
How to Use Arbitrum
First, after funding your Arbitrum account using a bridge, explore popular applications on Arbitrum One:
1) Invest in Badger’s DeFi vaults
2) Trade tokens or provide liquidity on Balancer
3) Try BarnBridge’s SMART Alpha pools
4) Provide liquidity to Curve’s tricrypto pool
5) Borrow tokens on Hundred Finance
6) Earn yield on LP tokens via Pickle Finance
7) Trade on Slingshot
8) Trade or provide liquidity on Uniswap
Second, if you’re interested in exploring Arbitrum’s early NFT ecosystem, check out my Metaversal articles: The Arbitrum NFT Scene and A Quick Guide to Treasure
3) Optimism
What is Optimism?
Optimism is an optimistic rollup developed by Optimism PBC. Currently the fourth-largest L2 by TVL, this rollup is the only scaling solution offering full EVM equivalence. This means DeFi and NFT teams can migrate their apps to the L2 with one click while still benefiting from all standard Ethereum L1 tools relied upon by most projects today.
Bridges
1) Optimism’s official Ethereum bridge
2) Fast bridges:
How to Use Optimism
First, after funding your Optimism account, explore the application ecosystem, such as:
1) Trade options or provide liquidity on Lyra
2) Trade or provide liquidity on Uniswap
3) Create and trade options on Thales
4) Provide liquidity and farm yields on ZipSwap
5) Use Unlock Protocol to create content locks
6) Participate in deals on Aelin
Second, if you're interested in NFT trading on Optimism, check out my recent Quixotic marketplace guide on Metaversal.
Final Thoughts
In the coming months, we may see L2 tokens distributed based on random numbers or fees paid, so early and frequent participation is the ideal way to prepare for these launches.
You don't need to spend heavily to prepare—simply migrating some of your DeFi activity and exploring L2 NFTs is sufficient.
Focusing narrowly on these potential L2 token distributions purely as profit opportunities risks missing the bigger picture.
These scaling solutions represent Ethereum’s future, and having a voice in their governance will be powerful and meaningful!
Action Steps
1) Try dapps on zkSync, Arbitrum, and Optimism
2) Read our take on L2 tokens
3) Review our previous content on Arbitrum, zkSync, Optimism, and StarkWare
4) Check out our prior guide on how to accept DeFi governance bribes
Original link
https://newsletter.banklesshq.com/p/how-to-get-ready-for-l2-tokens
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