More advancements in layer 1 to layer 2 bridges and rollup technologies are expected, according to Coinbase’s Chief Product Officer.
Surojit Chatterjee, the Chief Product Officer of Coinbase, is the latest to share his predictions for the crypto sector in 2022, and he predicts huge advancements in Ethereum scalability.
Industry leaders, analysts, and investors are predicting what the crypto ecosystem will look like in 2022, and Coinbase’s Surojit Chatterjee believes Ethereum will be at the vanguard of Web3 and the crypto-economy as it scales.
In a corporate blog post published on Jan. 4, the CPO indicated that Ethereum scalability will improve, but that alternative layer 1 networks will gain traction as well.
Newer layer 1 networks focusing on gaming and social media will also emerge, according to him. Advances in layer 1 to layer 2 bridges, according to Chatterjee, will substantially increase scalability, and the industry will “desperately seek improvements in speed and usability of cross-L1 and L1-L2 bridges.”
Tokens can be transported from a layer 1 network like Ethereum to a layer 2 network like Arbitrum using these bridges, and vice versa.
The CPO particularly cited ZK-rollups while discussing scaling solutions, claiming that they will “draw both investor and user attention.” For more efficient processing on Ethereum’s layer 1, Zero-Knowledge scaling “rolls up” transaction data in batches.
Matter Labs, for example, has made significant progress in 2021 with the development and deployment of their rollup-based zkSync layer 2 technology.
In 2021, the layer 2 ecosystem had a huge expansion, with all major platforms seeing a boom in usage. According to L2beat, a company that tracks the L2 ecosystem, the total value locked increased by about 11,000 percent in the last year, rising from around $50 million in January 2021 to $5.5 billion by the end of the year.
More privacy-focused applications will emerge, according to Chatterjee, but this may draw regulatory attention as more KYC/AML (know your customer/anti-money laundering) rules are implemented.
More industry-wide regulation, increased institutional participation in DeFi, the introduction of more DeFi insurance, increasing brand involvement in Metaverse and NFTs, and Web2 corporations scrambling to get into Web3 are among his other forecasts.