Since the middle of this year, the heat of DeFi has driven the large-scale use of the Ethereum network, which has also made the traffic and fee increase in the network. Starting in June of this year, the miner’s fee in Ethereum has exceeded that of Bitcoin.
On the one hand, the demand for applications on the chain is increasing, and on the other hand, it is the limitation of the performance of the Ethereum network. Although Ethereum 2.0 can solve these problems of the network, it is far from realizing. As an alternative, Layer 2 has won unanimous optimism from Ethereum founder Vitalik and others, and it has almost become the only way before Ethereum realizes sharding. Vitalik also admitted that if his views change, they will be announced in time.
Layer2 current situation
Layer2 solution includes state channels, Plasma, Optimistic Rollup, Zk Rollup, etc. Because of the limited support for smart contracts, state channels and Plasma can no longer meet the current DeFi requirements for smart contract flexibility; and with the increase in the amount of locking on the chain, heavy asset applications have paid more attention to the security performance. Schemes such as Chain and Validum that are highly dependent on intermediate validators also have potential risks. In the end, ZK Rollup and Optimistic Rollup were favored by many project parties and developers.
ZK Rollup can stand out with its unique advantages:
l lCan reduce user transaction fees
l lBlock parallel computing to increase the degree of decentralization
l lLess data contained in the transaction to improve the throughput and scalability of Layer 2
l lFaster transaction speed than Optimistic Rollup
l lThe anti-fraud verification in Optimistic Rollup is not required. Optimistic Rollup relies on this function to realize delayed withdrawal
In decentralized applications, there is generally no need to delay withdrawals, so HyperBC chose a more streamlined and faster ZK Rollup technical solution that merchants can realize fast batch transfers, and then combine with cross-chain to finally realize transfers in any currency within seconds. Merchants transfer money on a large scale in Layer 1 always waste a lot of network resources. Saturday, December 19, Binance collected ETH from an address on its own exchange, and the Gas Price rose from 40GWEI to 300GWEI within a short period of time. The Gas fee consumed within 1 hour accounted for more than 10% of the entire Ethereum network, equivalent to Uniswap, the largest application in Ethereum.
Mainstream DeFi applications including Uniswap, Synthetix, Aave, and Curve are all preparing their own Layer 2 solutions. For a lot of transactions in Layer2, the fees paid by users can be reduced by more than 90%, but the gas fee on the chain will not be reduced, especially that current lego DeFi protocol requires extremely high composability.
According to a report released by Delphi Digital this month, the assets locked on Layer 2 are only $42 million, while there’s over $4 billion in assets locked on Layer 1’s decentralized exchange. One of the very important reasons is that the current Layer 2 lacks a complete ecosystem.
Perfect ecology to prevent being isolated
In addition to Ethereum 2.0, the sharding also has projects such as Elrond, Near, and Harmony, but if there is a lack of ecology, even if performance problems are solved, these public chain projects will become isolated islands. The same is true for Layer2. If these DeFi protocols adopt different technical solutions, they are isolated from each other.
In fact, Layer 2 may have a winner-takes-all situation like the current public chain. If Layer 2 can achieve the level of composability and security of Layer 1, with its own ten time faster transaction speed, it will be mass adopted soon or later.
HyperBC’s vision is to establish an open financial system that can be participated by everyone. HyperBC has been carrying out asset custody, merchant payment, clearing, financial services, etc., and is developing three decentralized businesses, cross-chain staking, mortgage lending and insurance. It has three major brands including cryptocurrency wallet Hyperpay, cryptocurrency financial services company HyperFin, and cryptocurrency exchange CoinW.
1) Cross-chain staking, now is known as HyperBC Farm. Cross-chain asset solutions, including Ren Protocol, are all to achieve asset cross-chain decentralization, which is also the foundation of HyperBC. By decentralized staking of assets on public chains such as BTC, DASH, QTUM, and mapping them on Ethereum to generate hToken, not only can assets on traditional public chains participate in DeFi, but HyperBC can benefit from earning staking income to buyback HBT too.
2) Mortgage lending is the underlying business of DeFi. HyperBC’s mortgage lending will provide more value to assets including hToken.
3) HyperBC’s decentralized insurance will provide smart contracts and currency price with guarantee to protect the safety of other assets.
HyperBC’s three decentralized businesses, cross-chain staking, mortgage lending, and insurance, are linked together. Cross-chain staking provides funds; mortgage lending can better realize the use of funds and lend stablecoins and other assets; insurance provides assurance. It is a complete DeFi ecosystem on its own.
Moreover, HyperBC and its close partners such as Miniswap may build ecosystems under the same Layer 2 network.
Cross-chain business, bridging all mainstream public chains
High-quality assets are essential for any project that wants to develop DeFi. Apart from native assets, cross-chain assets are also a very important direction. Bitcoin only supports a limited scripting language, leading to a lack of applications on the chain, but this does not prevent BTC from being one of the most important assets to be applied on other chains. According to DeBank data, there are currently a total of 143,000 BTC-pegged coins issued on the Ethereum chain, and cross-chain assets has accelerated after MakerDAO listed WBTC as collateral for DAI this year. It can be expected that BTC on the Ethereum will soon exceed 1% of the total BTC.
Presently, WBTC has become the ERC20 token with the most locked amount in the Ethereum network, even surpassing the underlying lending and transaction protocols such as Maker, Compound, and Uniswap.
When the DeFi and Bitcoin-pegged coins in Ethereum are in full swing, many public chain projects seem to have been forgotten, including mainstream projects such as BCH, but these native assets are also one of the high-quality assets.
HyperBC wants to open up the connection between all mainstream public chains. Users of public chain projects can transfer BTC and other tokens to the multi-sign contract address and mint the coin decentralized-ly in the Ethereum contract through HyperBC’s bridging.
HyperBC is about to complete the development of ZK Rollup. Except for the leading technology, ecology is also very important for Layer2. Through cross-chain staking, mortgage lending, decentralized insurance, Miniswap, and other decentralized and centralized services, HyperBC will be able to build a complete DeFi ecosystem on its own, and realize the early occupation of the market in Layer 2.
At the same time, HyperBC will focus on the construction of cross-chain technology, empower each public chain and itself, and introduce the native assets of the mainstream public chain into the HyperBC ecosystem. The complete ecology of HyperBC in Layer 2 is likely to attract other projects.