How big Ethereum layer-2 developers are competing for new mandates

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How big Ethereum layer-2 developers are competing for new mandates

Crypto winter has been a difficult topic to tackle, which is why it's difficult to understand blockchain tech. In this week's The Protocol issue, we highlight layoffs hitting key firms, and how blockchain projects are competing for new mandates - specifically big Ethereum layer-2 developers like OP Labs, Polygon and Matter Labs vying for the technology for the Celo blockchain's new network, there's only so many customers to go around.

In July, when the smart-contracts blockchain Celo proposed to abolish its independent 'layer-1' status in favor of becoming a layer 2 network atop Ethereum, the people behind the project may have had little inkling of just how popular they would become. Now, there's suddenly a burst of competition among veteran layer-2 teams to supply the technology for Celo's new system. The migration was originally supposed to take place on Optimism's OP Stack software kit, which served as the template not only for Coinbase's new Base blockchain but also the Binance-incubated BNB Chain's new opBNB network. Then last month, polygon injected itself into the mix, offering up its Polygon Chain Development Kit, known as Polygon CDK, as an alternative. There's yet another suitor to host Celo: Matter Labs, the creators of another rollup, zkSync, and the ZK Stack open-source software, which can be used to create new 'hyperchains' on Ethereum. In its proposal, Matter Labs recommends a transition to Ethereum, a move that could be made possible in the near future. The episode depicts the intense consolidation trend, with the various networks scrambling to find fresh business.

A year ago, OP Labs introduced software, making it easy for companies to create their own distributed networks on the Ethereum blockchain. But the option soon became so popular that it attracted the likes of the big U.S. cryptocurrency exchange Coinbase, which used the platform to build its new blockchain, Base. As these things go, success leads to greater scrutiny, and in recent months, technical experts reflected on a crucial deficiency of the setup. Networks based on the OP Labs software were missing an element known as 'fault proofs' that theoretically sit at the very core of their inherent 'optimistic rollup' design, as the lack of the security feature was likened to driving a fast car without airbags. On Tuesday, OP Labs officials got the message, and recently had insisted that getting fault proofs into operation was a top priority - so much so that the project even had its own name. At least for a while, such progress may keep critics at bay.

In the chaos that follows the collapse of Sam Bankman-Fried's FTX crypto exchange, a still-unknown party drained Affiliate wallets of as much as $600 million. Until today, $26 million of ether had sat in a single wallet tagged by blockchain sleuths.