Layer 2 blockchains are popping like mushrooms after a rain in the crypto world. But do you know which are the BEST Layer 2 projects to invest in during the bear market? In this article, we’re going to rank the TOP 10 biggest Layer 2 blockchains in a tier list that goes from S tier (the best) to D tier (the worst). For each project, we’re going to give both the pros and cons. If you’re looking to buy some Layer 2 tokens, this article will give you the most important information to get started.
The “King of the Hill”, Arbitrum is the first Optimistic Rollup to fully launch.
They are currently number one overall in terms of Total Value Locked and the number of DApps in their ecosystem. All of this adoption WITHOUT a token makes it even more impressive. They also have some tech advantages. Their fraud proofs are more efficient than their competitors. Their big upgrade Nitro brings their tech to a whole other level.
There are some flaws to their security but that applies to all Optimistic Rollups in general. Also they had a couple of outages earlier this year due to the Sequencer. It wasn’t super long like Solana’s outages but of course, we don’t want to see these at all.
We’re giving them an A. Their adoption speaks for themselves and all other other layer twos are playing catch-up right now.
ImmutableX is a Layer 2 that’s focused on gaming and NFTs.
They’re actually a zkRollup but they use a technology called STARKS which is newer and supposedly better than the SNARKS that other ZK Roll-Ups are using. They have a lot of big-name Integrations and Partnerships like GameStop is going to launch their NFT marketplace on ImmutableX. Rarible has already integrated with them. One of the OG blockchain games “Gods Unchained” has been running on their network all along. One reason why they all may have chosen ImmutableX is that they offer gas-free minting which is exactly what game developers want. ImmutableX is focused on a niche and they aren’t trying to be a general-purpose Layer 2 like these other projects.
They don’t have a lot of Total Value Locked and their governance is quite centralized. However, that may not be a big deal because they are working on a niche.
We’re giving them an A rating.
Let’s kick things off with the OG scaling project Polygon Matic.
Polygon is known as the Internet of Blockchains for Ethereum. They have a bunch of different blockchains that people can choose from. They’ve always been friendly to Ethereum instead of trying to fight it. They’ve worked hard on building Partnerships and Integrations. They got Starbucks, Disney, and even Instagram working with them. No other layer 2 project even comes close in terms of partnerships. Their acquisition strategy is also smart. Instead of building all the tech from scratch, they acquired some great protocols such as Hermes Network and Mirror protocol. The best part is they plan on making MATIC the native token of all those networks.
Polygon is quite centralized if you consider their MultiSig wallet which requires only five (5) people’s approval to make changes to the network. They’re also centralized in terms of token distribution because the top 100 addresses hold the vast majority of MATIC tokens out there. Then you could even argue that polygon is not a real Layer 2 project. The popular L2Beat website explains that they didn’t include Polygon because their Proof-of-Stake sidechain doesn’t inherit security from Ethereum like all these other Layer 2 projects do. Polygon’s newer chains are definitely Layer 2 but the critics have a fair point when it comes to their primary chain.
We’re ranking them a B for now.
Optimism is second-in-command behind Arbitrum.
They have a huge airdrop earlier this year and they’re the biggest Optimistic Rollup that actually has a token. They’re EVM equivalent, so you can use all the Ethereum tools and apps on Optimism without changing a thing. Their team is very strong and has deep ties across the Ethereum community which is always helpful when convincing others to choose your network.
They have a lot less adoption than Arbitrum. Their token is for governance purposes only so it’s not that great at capturing value. They also have a ton of supply yet to hit the market.
We’re giving them a B.
Metis started out as a fork of Optimism, so it is an Optimistic Rollup.
They’ve been hard at work building on top of the original code base. For example, they added “Rangers” a “Sequencer Pool” and a bridge that lets you withdraw back to Ethereum in minutes instead of days. We’re not gonna go too deep here but just know that these features improve security, decentralization and user experience. Another thing that got a spotlight is their tokenomics because it is super fair compared to other projects. Just look at their initial token distribution only seven% went to the team while 15.5% went to early investors. That’s freaking amazing compared to the projects that give their insiders over 50% of their initial supply. Furthermore, if we look at their supply schedule, we see that most of their investors’ tokens have already been unlocked which means we don’t have to worry about a lot of future selling pressure. One fun fact: Vitalic Buterin’s mom is part of Metis’s team (we’re not even joking – go look up “Natalia Ameline”).
On the negative side, their Total Value Locked has dropped immensely this past year. They dropped way more than their competitors and that speaks to their overall lack of adoption.
Metis has great potential but we can’t give them more than a C right now.
zkSync is one of the most cutting-edge Layer 2 projects out there. They’re a zkRollup which stands for zero-knowledge rollup.
zkRollup is supposed to be better than the Optimistic Rollup and will be the future of Layer 2. They are currently on zkSync 1.0 but zkSync 2.0 is already in testnet and includes a bunch of new features that are game changers. We’re talking arbitrary smart contracts speeds of up to 20 000 transactions per second and the latest sharding technology.
Their Total Value Locked is quite small and they have a lot of issues with the current version zkSync 1.0. This is quite limited in terms of what it can do. You can only do transfers, swaps and limit orders. It cannot handle arbitrary smart contracts or DApps. It doesn’t support some Metamask transactions. They do not have a token yet but it should be coming soon. They are currently on zkSync 1.0 after all and their tokens should come out along with their 2.0 Network launch.
Their current state is not great which is why we have to rate them as C. We can’t wait to move them up once 2.0 comes out.
Aztec is a project that’s ultra-focused on privacy.
They’re super innovative and research-driven. They invented something called PLONK which other projects like Mina, Polygon Zero, and zkSync have all adopted. Moreover, the problem they’re tackling AKA programmable privacy is a big opportunity in the future.
Their protocol is not EVM-compatible. To build stuff you have to use their own programming language called Noir. That can explain why there aren’t a lot of builders in their ecosystem right now. Also, the big elephant in the room is whether or not they’ll be wrecked by the government just like Tornado Cash. Governments are not a fan of privacy stuff after all and that is what Aztec is focused on, so that’s a potential existential risk that we got to keep in mind.
Overall we give them a C.
StarkNet is a permissionless decentralized zkRollup.
StarkNet is a project with a lot of adoption but not in the way you’d expect. StarkNet is built by a company called StarkWare. Starkware also has a scaling engine called StarkX that’s being used by a lot of big-name projects we’re talking projects like ImmutableX, dYdX, Sorare and Diversify. All of them are using the StarkX Layer 2 engine.
This is super early for them.
I give them a C rating at this stage now but it has a lot of potentials.
Boba Network (BOBA)
Boba Network is a fork of Optimism just like Metis. They’re also the team behind Omisego, a project you might have heard of if you’re around back in 2018. It seems like they abandoned Omisego and pivoted to Boba but we’re not sure what went down there.
Their “Fast Exit” technology lets you withdraw back to Ethereum in minutes instead of days. They also integrate with Phantom and Moonbeam, which makes them a multi-chain project and increases their market opportunity.
Their total value locked is pitiful. Their fraud proofs aren’t even complete yet. Some people complain that their developer’s documentation sucks.
We gotta give them a D.
Loopring is a protocol for building high-performance DEXes.
They have a partnership with GameStop.
They barely have any adoption. It’s kind of sad that they had to build their own decks instead of having other teams join and build on their network. There’s an even more existential risk though and that’s the fact that they’re based in China. The Chinese government is not a fan of crypto, so there’s always the risk that they bring down the “ban” hammer when they feel like it.
We give them a D rating. It does not seem to have a bright future.
Here you have it – a full-tier list in all its glory. Did you notice we didn’t give out any S rating? That’s because Layer 2 blockchains are still very new, so none of them deserve that God-tier rating at this point. These rankings will definitely change once Layer 2 becomes more mature.