- Kraken cryptocurrency exchange is rumored to be developing a layer 2 blockchain solution, with Polygon potentially playing a role.
- Polygon is an Ethereum scaling solution using layer 2 sidechains to enable faster, cheaper transactions while still utilizing Ethereum’s security.
- A layer 2 solution would provide Kraken with advantages like faster speeds, lower fees, better scalability, and interoperability while leveraging layer 1 security.
Kraken, one of the largest cryptocurrency exchanges, is rumored to be developing a layer 2 blockchain solution. Layer 2 refers to secondary frameworks or protocols built on top of an existing blockchain to improve transaction speed and scalability. According to recent reports, Polygon may play a role in Kraken’s layer 2 plans.
Polygon’s Potential Role
Polygon, previously called Matic Network, is an Ethereum scaling solution utilizing Layer 2 sidechains. Polygon aims to provide faster and cheaper transactions while maintaining security by periodically settling transactions on Ethereum’s layer 1 mainnet.
Sources indicate Polygon is in the running to power Kraken’s layer 2 blockchain. If chosen, Polygon’s technology could allow Kraken to offer fast and inexpensive trades while still benefitting from Ethereum’s security.
Benefits of a Layer 2 Solution
For an exchange like Kraken, a layer 2 solution offers many advantages over relying solely on layer 1:
- Faster transaction speeds – Layer 2 can process many more transactions per second than layer 1. This enables quicker trades.
- Lower fees – By handling transactions off-chain and bundling them together, layer 2 reduces network congestion and gas costs.
- Scalability – Layer 2 solutions scale better than layer 1 networks like Ethereum. This allows more users and transactions.
- Interoperability – Many layer 2 solutions can interact with multiple layer 1 chains. This provides flexibility.
By utilizing layer 2 solutions like Polygon, exchanges can provide users with faster and cheaper trades. However, leveraging the security of the underlying layer 1 blockchain remains essential.
While details remain limited, Kraken building a layer 2 solution would align with the exchange’s focus on low fees and reliability. Polygon appears well-suited to provide the speed and scalability Kraken would need. How Polygon and Kraken ultimately collaborate should become clearer as Kraken’s layer 2 plans solidify.