Layer two decentralized exchanges Loopring and DeversiFi align together by setting up a committee to facilitate the use of layer two solutions, called ‘L2 Squared’ or simply ‘L2.’
The partnership, revealed on Monday, wants to ease the transition for consumers into these on-chain transactions with higher performance. “As things stand, Loopring and DeversiFi are the first exchanges on Ethereum to harness Layer-2 solutions, using zkRollup and StarkEx’s Validium respectively,” explained Will Harborne, founder of DeversiFi. “However the much-needed migration to Layer-2 is not a simple one, and the network effects of Layer-1 composability are very strong which stand to slow down this ongoing transition.”
To access their respective ecosystems, Loopring and DeversiFi both need a different deposit transaction. This condition also hampers usability and composability for other protocols, but the funds are never in the custody of the exchanges.
The collaboration will have many areas of responsibility directed towards facilitating the implementation of layer two. It will undertake educational programs from a company point of view to illustrate how the technology functions and what kind of benefits it provides over regular use of Ethereum, as well as advocate for more wallet integrations.
“L2 Squared” will work at the technological level on the implementation of composability specifications between layer one and layer two, as well as between layer two structures. As of yet, most of the solutions of layer two are isolated environments that can not be entered without passing through Ethereum first.
The partnership arrives when a rollup-centric vision has been officially integrated into the Ethereum roadmap. After a comparatively short development period in 2021, data exchange is supposed to be available, and by integrating it with roll-ups, the network will begin handling thousands of transactions per second earlier than originally expected.
The key to enabling the rollup-centric vision is ensuring frictionless composability and interoperability. While several DeFi DApps have pledged available to use one or another alternative, others see the future fragmentation as a significant barrier to adoption.