Celer Network, a layer-2 scaling platform, today announced the launch of Layer2.finance, a new project that aims to bring a low-cost and trust-free gateway to explore and benefit from the DeFi ecosystem.
Layer2.finance enables quadratic scaling of the existing layer-1 DeFi ecosystem “in-place” with no protocol migration needed and therefore, does not cause liquidity fragmentation or break composability. This is achieved by using an optimized layer-2 rollup construct to aggregate N small-fish users’ fund allocation transactions on layer-2 into a single one on layer-1 in a trust-free fashion.
“Layer2.finance uses layer-2 rollup in a different way. Similar to any rollup, a user can deposit funds to the Layer2.finance rollup chain by making a deposit transaction to the rollup contract on layer-1. However, different from most popular approaches, Layer2.finance does not migrate DeFi protocols themselves to layer-2. Layer2.finance generalizes the interface between layer-1 and layer-2 beyond simple fund deposit and withdrawal transactions and enables computation instruction relaying. It accepts a large number of users’ “fund allocation instructions” as roll-up transactions, computes the aggregated effect of all these small liquidity movements, and then makes a small number of rebalancing transactions across supported protocols to match the aggregated effect. In effect, Layer2.finance reduces the O(N) fund allocation operation cost for N users to O(1) operation cost for supported protocols. ”
– The Celer Network Team
The launch of Layer2.finance is scheduled for the end of Q1 2021; the exact release date will depend on security audits, and how quickly the number of supported strategies can be integrated.
For more information on the project’s benefits, features, and limitations click here.