The leaders in the fierce competition are Immutable X, Polygon and Arbitrum
Many layer 2 solutions have emerged to address Ethereum’s scaling struggle, offering lightning-fast speed and instant transaction finality at a near-zero cost – the perfect setting for building NFT projects. In this article, we will provide an overview of the latest NFT landscape on leading layer 2 protocols.
- Why are layer 2 solutions necessary for NFTs?
- Top L2 blockchains for NFTs
- Final thoughts
Why are layer 2 solutions necessary for NFTs?
NFTs have captured global attention in 2020 and have been revolutionizing digital ownership and expression since then.
According to DappRadar’s BGA Report 2021, the NFT sector generated $23 billion in full-year trading volume, with game NFTs accounting for 20%. The surge in NFT popularity, however, has unveiled challenges on blockchain networks, particularly Ethereum, relating to scalability, cost, and environmental impact. To address these issues, Layer 2 solutions have emerged as essential enhancements for NFT ecosystems.
As we can see in the chart below, after the DeFi Summer and the rise of NFTs in 2020, Ethereum gas fees witnessed a significant jump, and the general uptrend remains.
As the NFT space evolves, these innovations promise to refine the user experience, making digital ownership and interaction more seamless, affordable, and environmentally conscious. Whether through sidechains, state channels, or rollups, Layer 2 solutions represent a pivotal step towards realizing the full potential of NFTs in a scalable, cost-effective, and sustainable manner.
Top L2 blockchains for NFTs
Join us as we look at some top layer 2 protocols that help NFT collections, games and marketplaces thrive.
Immutable X plays a crucial role in the NFT ecosystem by providing a scalable, cost-effective, and environmentally friendly platform for creating and trading NFTs, all while maintaining compatibility with the Ethereum network. By leveraging zk-rollup technology, Immutable X can handle a high volume of transactions, making it well-suited for NFT projects that require fast and scalable solutions.
It also hosts its own NFT marketplace, facilitating the buying, selling, and trading of these assets. Moreover, Immutable also provides a robust ecosystem for developers, enabling them to build and launch NFT projects on its platform with zero gas fees – a significant advancement in the NFT space.
zkSync stands out as a top choice for NFT project developers, thanks to its efficient zk-rollup technology on the Ethereum blockchain. The open-source layer 2 on Ethereum was developed by MatterLabs since 2020 and has evolved to zkSync Era in 2023. By bundling multiple transactions into one off-chain proof, zkSync Era significantly increases transaction speeds and reduces costs, a major advantage for NFT collections and marketplaces.
Its ability to ease network congestion while maintaining low gas fees makes it ideal for high-volume NFT transactions. Additionally, the security ensured by its link to the Ethereum mainnet provides confidence to developers in the safety of their NFT projects.
A leading Layer 2 scaling solution for Ethereum, Polygon also offers cost-effective and fast transactions, essential for NFT trading.
While balancing Ethereum’s robustness with enhanced efficiency and scalability, Polygon is known for its widespread adoption and several famous partnerships. Hence, it is a favorite solution for a diverse range of NFT projects, from collectibles to in-game assets.
Arbitrum is another layer 2 scaling solution that employs optimistic rollup. Optimistic rollup technology assumes that transactions are valid by default and only computes in case of disputes, enhancing efficiency. Its high compatibility with Ethereum allows for easy migration of smart contracts, encouraging adoption among Ethereum developers.
Additionally, it employs a unique system of delayed finality with fraud proofs, balancing the need for security with efficient processing.
The most recently launched Layer 2 on our list is Base. Coinbase’s decentralized ecosystem is powered by Optimism’s OP Stack, making it one of the most secure, scalable EVM L2s out there.
This blockchain is designed to be a comprehensive ecosystem supporting different functionalities within the space – which includes NFTs but also extends to other areas like DeFi, gaming and SocialFi.
In the future, Base aims to offer an increasingly user-friendly experience, facilitating access and interaction with its dapps. Some of the most traded NFT projects on Base include Parallel, BasePaint, and FrenPet.
The Ronin network is an Ethereum sidechain developed primarily for the popular game Axie Infinity in 2021. It was created to address the high transaction fees and slow processing times on the Ethereum mainnet at the time but came to be one of the most promising chains for NFT game builders.
In 2023, the Layer 2 launched its own utility token RON and transitioned into a delegated proof-of-stake (dPoS) network – increasing the chain’s decentralization and speed while lowering transaction fees.
Recently migrated to Ronin, the farming metaverse game Pixels became one of the most used dapps on the network, heavily contributing to its increased NFT volume. Besides Axie and Pixels, several other Ronin projects are under development and are likely to launch in 2024.
Optimism adopts optimistic rollup to optimize transactions and further reduce gas costs. Perfectly compatible with Ethereum and extremely easy to deploy, Optimism enjoys broad support from developers for its streamlined experience. The launch of the OP token in 2022 proved the popularity of this scaling solution.
What advantages does Optimism have in minting or trading NFTs? For those who trust the security of Ethereum and look for more affordable transaction costs, developer-friendly Optimism is a wise choice.
An exciting announcement for the NFT community came in late 2023 when the marketplace aggregator Blur revealed its upcoming project, Blast. An EVM-compatible layer 2 blockchain, Blast is scheduled to go live in March 2024 and garnered over $200 million in the first days after being announced with its Early Access program.
As the “only Ethereum L2 with native yield for ETH and stablecoins”, Blast sets a high stake months from launch.
Blast Early Access
In conclusion, as NFTs gain mainstream traction, Layer 2 solutions are crucial in addressing Ethereum’s scalability challenges. They offer faster, cost-effective, and environmentally friendly alternatives for NFT transactions, enhancing the digital ownership experience.
The growing trend of migrating projects to Layer 2 platforms, evidenced by the increasing use of Ethereum gas for Layer 2 transactions, signals a shift towards more efficient blockchain interactions.
This evolving landscape, marked by competition and innovation among Layer 2 protocols, promises to enrich the NFT ecosystem, benefiting developers, users, and creators alike.
DappRadar continues to monitor these developments, providing insights into the dynamic blockchain world. Make sure to track NFT volume on your favorite chains using the DappRadar Rankings.