There are three cryptocurrencies worth analyzing among those related to projects based on the second layer or layer 2. These are the best.
Best layer 2 cryptocurrencies
The first one is certainly Polygon, the only layer 2 cryptocurrency that entered the top 15 of those with the highest market capitalization.
With its $17 billion, it capitalizes more than CRO, Algorand, and Litecoin.
It is the largest layer 2 project in the world for Ethereum, and its importance has grown tremendously just during 2021.
Suffice it to say that its native cryptocurrency, MATIC, had increased its value by an incredible 13,600% in the last 12 months, particularly thanks to the resounding jump at the beginning of the year, when it went from $0.018 to $2.45 in just over four and a half months.
The fact is that Ethereum, at the moment, is by far the blockchain that needs layer 2 solutions the most to scale and especially to reduce high transaction costs.
Polygon serves this very purpose, so much so that more and more developers have decided to use its technology to allow their apps on Ethereum to scale over the course of the year.
For example, it is used by Aave, Curve Finance, and QuickSwap, and in total, there are as many as 130 DeFi protocols built on Polygon, with a total TVL of over $4 billion.
Indeed, according to DeFi Llama’s data, for TVL, it has already climbed to seventh position overall, ahead of historical blockchains like Tron or Waves.
It has also signed some important partnerships during the year, effectively becoming the platform of choice for those building projects based on the Ethereum blockchain that need to be able to scale at a reasonable cost.
In other words, it was its adoption that drove MATIC’s value growth, as well as speculation.
The second layer 2 cryptocurrency that needs to be mentioned is Loopring.
This is a relatively different platform than Polygon, as it is primarily used to manage a decentralized exchange.
In fact, the goal of Loopring is to allow users to exchange cryptocurrency assets in a decentralized way without going through the Ethereum blockchain. This avoids the slowness and costs of DEXs that run directly on the Ethereum blockchain.
Loopring has its own native token, LRC, with only $2.5 billion market capitalization.
Throughout 2021, its price had increased by 1000%, thanks largely to the November spike, when it went from $0.4 to $3.2 in just two weeks.
However, we should also mention Immutable X because it is a project related to the NFT world performing very well.
Immutable X is the largest layer 2 platform for NFTs on Ethereum, making it a major success.
It primarily serves to allow holders of NFTs on Ethereum to move them from one wallet to another, paying almost zero fees and with almost immediate transactions.
Its native token is called IMX, and it has a market capitalization of just over $1 billion.
On the cryptocurrency markets, this token has existed for a very short time, so it has not benefited from the spikes of the previous months. However, it is worth keeping an eye on it because it could reserve surprises in the future.
The future of layer 2
These three-layer 2 cryptocurrencies arise from real needs and propose concrete solutions to problems that can hardly be solved in any other way in the short term.
So if in the long term it’s hard to imagine how they might evolve, in the medium term, however, they seem destined to play a key role.