When it comes to NFTs, there’s no better blockchain than Ethereum. Yet, the term “Ethereum killer” is being used increasingly in reference to certain alternate networks that support smart contracts.
One such blockchain, the Solana network, is categorized as such because it uses a proof-of-stake and proof-of-history system, which is much more energy efficient than Ethereum, and can process transactions more swiftly. Additionally, transaction costs are significantly cheaper on Solana – the network charges less than one cent per transaction.
But despite the efficiencies of such alternate chains, Ethereum remains king. Chain utilization and sales volumes on Ethereum still far surpass that of all other smart contract networks combined. As the first and biggest blockchain to support NFTs, Ethereum has an established ecosystem of NFT projects, dApps, creators, and collectors that would be hard pressed to shift away from it. This is especially true for NFT creators, who depend on the larger market exposure they get from being on Ethereum.
The term “Ethereum killers” is therefore less literal and more aspirational. It highlights how the innovation seen in alternate chains address some perceived weaknesses in the Ethereum network – the biggest being scalability, energy efficiency and transaction fees. As the network gets busier, transaction speeds suffer and gas prices increase as users attempt to outbid each other. This can make using Ethereum prohibitively expensive for some users – but this is where Layer 2 solutions come to the rescue.
What is the function of Layer 2?
Layer 2 is a collective term for solutions designed to address scalability issues. They handle transactions off-chain, improving transaction speeds and fees. But because they’re built on top of the Ethereum Mainnet (Layer 1), they still benefit from the robust decentralized security provided by the blockchain.
Here’s how it works:
1. Transactions are processed off-chain, on Layer 2
2. Data and proof of transactions are then stored on the Ethereum Mainnet
3. Data stored on the Mainnet can then be used to enforce correct transactions on Layer 2.
Immutable X – The First Layer 2 Specifically for NFTs
Immutable X is a layer 2 protocol for trading Ethereum NFTs that supports both ERC-721 and ERC-20 tokens. Their goal is to make minting and trading NFTs easier than trading traditional digital assets, by offering instant trades, zero gas fees, massive scalability, and carbon-neutral minting and trading.
Immutable X can be used to trade any NFT on Ethereum, but they also have their own marketplace that features popular projects such as Gods Unchained and Guild of Guardians. Earlier this month, TikTok partnered with Immutable X to drop their first NFT collection, TikTok Top Moments, featuring culturally significant TikToks from Lil Nas X and other prominent users. ESL gaming has also joined forces with Immutable X to release a CS:GO NFT collection.
Why is Layer 2 Needed for NFTs?
Layer 2 solutions like Immutable X fix many of the problems currently associated with trading Ethereum NFTs. Minting and trading NFTs on Ethereum are cheaper via Layer 2, while still having the same high security as the Ethereum Mainnet. Additionally, some use-cases such as decentralized games with NFTs as in-game assets need fast transactions for the game to operate smoothly – with current transaction speed on Ethereum, this isn’t quite feasible. Layer 2 solutions will therefore expand the possibilities of what can be achieved on the Ethereum network, turning the so-called Ethereum killers into mere contenders.