How does cross-project composability work for the upcoming L2 scaling solutions?

Cryptocurrency News and Public Mining Pools

How does cross-project composability work for the upcoming L2 scaling solutions?

I'm seeing a lot of hype right now as L2 feels like it's actually turning into reality but one area that I don't have a clear understanding of is how composability will work in this new L2-enabled landscape. Will we have a whole host of project specific L2 silos and we will incur L1 gas fees (and potentially long time delays, depending on particulars of L2) moving between them?

Consider a possible defi use-case and let's imagine for this scenario that each project has managed to implement its own L2:

  1. Deposit ETH into MakerDAO via DefiSaver, incur L1 TX fees in, but once you are in there, fees are cheap. Can engage with DefiSaver automation tools on the cheap as well (yay!).
  2. Take a loan against your ETH collateral, incur L1 fees and potential time delay to get your DAI out of there.
  3. Take this DAI now sitting in your wallet and transfer to Uniswap, incur L1 fees to get in but once you are in fees are cheap. Swap tokens as you please, all fees here are cheap. Provide liquidity in Uniswap pools, also cheap since you are in Uniswap L2 silo.
  4. Transfer Uniswap LP tokens out of Uniswap L2, incur L1 fees and potential time delay.
  5. Take these LP tokens and transfer them to some other yield farming project where you can stake these LP tokens for further yield. Incur L1 fees to get into this other silo.
  6. etc etc.

Am I misunderstanding how this is going to work? I still see a lot of L1 fees/transactions here. What am I missing about these magical L2 solutions? What if the market takes a downswing and I find myself wanting to move assets back into MakerDAO to reduce my C-ratio? Am I at the mercy of potentially slow L2 exit times or relying on some 3rd party service to advance me an equivalent amount within the desired L2 for a service fee?

submitted by /u/tobyalso
[link] [comments]

Facebook Comments