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Home BREAKING NEWS

Kraken to Challenge Coinbase with New Layer 2 Network

by BlockNews.com Team
November 7, 2023
in BREAKING NEWS, BUSINESS, CRYPTO
Reading Time: 3 mins read
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  • 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.

🚨 NEWS: Kraken exchange is scouting partnerships with blockchain firms to launch a layer 2 network.

Discussions with Polygon, Matter Labs, and others are ongoing.

Will this compete with Coinbase's Base? pic.twitter.com/pSlekFddK6

— BlockNews.com (@blocknewsdotcom) November 7, 2023

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.

Conclusion

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.

Tags: CoinbasecryptoCrypto ExchangeethereumKraken
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