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As #Ethereum transitions to Layer 2, I want to try to help the average user understand this change better
Quick thread on what is 'Layer 2' + how do I use it? Using @loopringorg Layer 2 as an example
From the viewpoint of someone who has a Coinbase account + Metamask address
Quick thread on what is 'Layer 2' + how do I use it? Using @loopringorg Layer 2 as an example
From the viewpoint of someone who has a Coinbase account + Metamask address
A good way to think about wallets + addresses in #crypto is that every address has multiple Layers built into it - but requires special integration to access each Layer
A new "wallet" creates a new "address"
A new "address" has Layer 1 + Layer 2 levels already built in
A new "wallet" creates a new "address"
A new "address" has Layer 1 + Layer 2 levels already built in
When you open a Coinbase or Binance account, they create a new "wallet" + "address" for you, which THEY control
Currently almost all exchanges are only integrated with "Layer 1" of Ethereum
Meaning they can't access/see Layer 2 of these addresses (even though they are there)
Currently almost all exchanges are only integrated with "Layer 1" of Ethereum
Meaning they can't access/see Layer 2 of these addresses (even though they are there)
Same goes for Metamask
When you setup a new Metamask wallet, it gives you a new "address"
The difference is YOU control this wallet/address
But by default, you still can't access the 2nd Layer of this address without a proper integration (or 'portal')
When you setup a new Metamask wallet, it gives you a new "address"
The difference is YOU control this wallet/address
But by default, you still can't access the 2nd Layer of this address without a proper integration (or 'portal')
When you buy $ETH on Coinbase + send it to your Metamask address, what's happening is:
Coinbase is accessing your wallet for you + sending your ETH from your Layer 1 Coinbase address to your Layer 1 Metamask address
Layer 1 just means it sits on Ethereum directly
Coinbase is accessing your wallet for you + sending your ETH from your Layer 1 Coinbase address to your Layer 1 Metamask address
Layer 1 just means it sits on Ethereum directly
So how do I access or "get onto" Layer 2?
(using @loopringorg as an example)
1) via web app - http://exchange.loopring.io
This 'portal' opens up (activates) the 2nd layer of your Metamask address
BUT - your $ETH is still sitting on the 1st Layer of your Metamask address
(using @loopringorg as an example)
1) via web app - http://exchange.loopring.io
This 'portal' opens up (activates) the 2nd layer of your Metamask address
BUT - your $ETH is still sitting on the 1st Layer of your Metamask address
SO - you need to deposit your $ETH onto the 2nd Layer of your address to "activate" + start using it on L2
Whatever funds you send to the 2nd Layer will now be usable "gas-free" across the Loopring Exchange - which is integrated to interact with the L2 level of your address
Whatever funds you send to the 2nd Layer will now be usable "gas-free" across the Loopring Exchange - which is integrated to interact with the L2 level of your address
2) via mobile app - http://loopring.io
This sets up a brand new Smart Contract Wallet for you (new wallet + new address)
This is a REPLACEMENT for your Metamask
The benefit of this option is extra safety (social recovery + no seed phrases) but costs extra to setup
This sets up a brand new Smart Contract Wallet for you (new wallet + new address)
This is a REPLACEMENT for your Metamask
The benefit of this option is extra safety (social recovery + no seed phrases) but costs extra to setup
To reiterate... for either Option
All wallets/addresses have multiple "Layers"
Most of #crypto currently is only integrated w/ Ethereum Layer 1
So there is one extra step (txn) to get these funds from L1 to L2 - but once there - you can do alot + avoid any further gas-fees
All wallets/addresses have multiple "Layers"
Most of #crypto currently is only integrated w/ Ethereum Layer 1
So there is one extra step (txn) to get these funds from L1 to L2 - but once there - you can do alot + avoid any further gas-fees
While on @loopringorg Exchange - you have lots of options available
You can participate in AMM Liquidity Providing
(earn APY from fees)
You can swap to other tokens
You can transfer to friends/other wallets
All of this is "gas-free" while your funds remain on the 2nd Layer
You can participate in AMM Liquidity Providing
(earn APY from fees)
You can swap to other tokens
You can transfer to friends/other wallets
All of this is "gas-free" while your funds remain on the 2nd Layer
When/if you decide to "exit" Layer 2 -
it just means you're sending your funds back to the Layer 1 level of your wallet/address (which sits directly on the Ethereum)
As Layer 2 grows + expands though, I don't see why you would ever need to "exit" back in the future
it just means you're sending your funds back to the Layer 1 level of your wallet/address (which sits directly on the Ethereum)
As Layer 2 grows + expands though, I don't see why you would ever need to "exit" back in the future
Anyways, that's it - I hope this helps some people + clears up some of the confusion/ questions I get
Tweet @ me any other confusing things about Layer 2 + I will try to do more threads on the topic
Tweet @ me any other confusing things about Layer 2 + I will try to do more threads on the topic
Hopefully in the future more apps/exchanges start to integrate with Layer 2
For example Coinbase could integrate Layer 2 one day so when you send $ETH from them to your Metamask it just goes directly to the Layer 2 part of your address
But until then it's just one extra step
For example Coinbase could integrate Layer 2 one day so when you send $ETH from them to your Metamask it just goes directly to the Layer 2 part of your address
But until then it's just one extra step
