What new opportunities will the Cancun upgrade bring?

Author: OnChainChad

Compiled by: Felix, PANews

Are you regretting missing out on the LSD bull market before the Shanghai upgrade? Don't worry, the Cancun upgrade—a direct benefit to Layer 2 (L2) tokens—is coming soon.

What benefits will the Cancun upgrade bring and how will it affect L2s?

In short, the Cancun upgrade will increase L2 speed by 10-100 times and lower costs.

Some may ask, how is this possible?

Fundamentally, L2 needs to submit L2 txs to L1 (Ethereum) to achieve the same level of security as L1.

Before the Cancun upgrade, L2 txs were stored in the Calldata of L1 txs. But this method is costly, and the space for Calldata is limited.

After the Cancun upgrade, L1 will be stored in a new location called "Blob." Blob storage is cheaper and has more space.

So, let's quickly calculate:

If L2 has 1000 txs stored in L1, 1 Calldata can store up to 100 L2 txs, costing 1 ETH.

If there are 1000 L2 txs, it requires 10 Calldata, costing 10 ETH.

If stored in Blob, 1 Blob can store 1000 L2 txs, and the cost of 1 Blob is 0.1 ETH.

Before the Cancun upgrade:

1 L2 transaction will cost 10/1000 = 0.01 ETH

After the Cancun upgrade:

1 L2 transaction will cost 0.1/1000 = 0.0001 ETH

That's 100 times cheaper.

Note that to ultimately confirm L2 transactions, they must be stored on Ethereum. Therefore, confirming 1000 L2 txs also depends on the time submitted to L1. So let's do another math problem:

Stored in Blob, 1 L1 tx can confirm 1000 L2 txs, but stored in Calldata, it requires 10 L1 txs to confirm 1000 L2 txs.

Thus, storing in Blob allows for confirming 10 times more L2 txs than before, with more space and faster speed.

The actual logic and data are much more complex, but you just need to know:

The Cancun upgrade will make L2s cheaper and faster.

Now you might see that L2s are even more expensive than L1, but after the Cancun upgrade, things will improve significantly.

Now that you understand the basic logic, what should you prepare? Which projects should you invest in? Here’s a list. These are all L2 projects and tokens that will benefit from the Cancun upgrade.

ARB, OP

These two are the leading projects in Layer 2. If there is an L2 Summer, these two tokens will definitely benefit the most.

Arbitrum and Optimism have the highest TVL and the most users, and they have been running for years, with a mature ecosystem.

Assessment: Low risk, medium return

Boba, Metis

These two are early forks of Optimism, and both tokens have been down for a year, so now is a relatively good entry point.

Assessment: Medium risk but high return

LRC, IMX, dYdX

These are early zk projects that can develop their own application-specific Rollups and have issued tokens. They will be excellent investment targets for zk Layer 2s.

MATIC

The currently used "Polygon" is not L2, but they have several ZK Layer 2 solutions, including the already launched mainnet Polygon ZKEVM.

Assessment: MATIC's market cap is already very high, so the expected investment return is relatively small.

SHIB, CULT

SHIB and Cult.DAO have both stated that they will launch Layer 2 this year. If successful and their ecosystems grow, they will be included in the L2 narrative like YFI and FXS.

Layer 2 Ecosystem Projects

The fast and cheap network brought by the Cancun upgrade will also promote the development of projects built on L2. For example:

GMX, GNS, RDNT, JOE, etc., in the Arb ecosystem.

SNX, PERP, KWENTA, etc., in the Op ecosystem.

And other projects in the zkRollup ecosystem.

ZKS, STARK, SCROLL

These three have not issued tokens. If they do issue tokens (in any form), they will be as important as ARB and OP, or even better, because the crypto industry views zkRollup as a more advanced Rollup solution. Additionally, keep an eye out for airdrops, as there is a high probability of them.