As Ethereum gas prices continue to skyrocket, decentralized finance protocols are striving to implement Layer 2 (L2) scaling solutions, and Synthetix is the latest to launch.
Synthetix, the DeFi-based synthetic assets protocol that tracks the value of real-world assets, is about to launch its Optimistic Ethereum mainnet, entering a new era for the project, according to a recent blog post.
Protocol founder Kain Warwick, who penned the post, added that there were a number of challenges, such as the migration from the current platform to the high speed, low-cost Layer 2 network.
“One of the most critical is how to gracefully transition from L1 to a protocol running on both L1 and L2 simultaneously.”
Layer 2 solutions generally involve taking some of the load off the root Ethereum chain and processing it on sidechains to save on transaction costs and improve speeds. Average gas prices recently hit an all-time high of over $16, which puts Ethereum-based DeFi out of reach for all but the whales.
Synthetix has been testing Layer 2 scaling with Optimistic Ethereum, an independent L2 technology provider, since September 2020, offering airdropped SNX tokens as incentives for those participating on the testnet.
According to a tweet earlier today, the DeFi protocol is also poised to launch its Layer 2 staking upgrade called Castor which, after a slight delay, has now been slated for January 14, at 23:00 UTC.
Unfortunately we’ve had to delay the Castor release by ~22 hours, and it will now be deployed at 23:00 UTC on Thursday, January 14. https://t.co/nlbgvZ99pI
Castor will usher in two primary changes as the first step to full Layer 2 integration. It will include two smart contracts enabling deposits on Layer 1 and withdrawals on Layer 2, which is using optimistic rollups in addition to the migration to a new SNX escrow contract that supports the L2 transition.
Warwick proposed a transition plan for this week’s launch which begins with Phase 0 – a one-way SNX bridge from L1 to L2, including escrowed SNX as mentioned above.
The transition to the next step, Phase 1, will likely take 4 to 6 weeks, the post added, and this will introduce the exchanging of its stablecoin, sUSD, to other synthetic assets and Chainlink oracle support.
Phase 2 is a two-way SNX bridge from L1 to L2 while the third and fourth phases will synchronize the two networks and depreciate mining tokens on Layer 1.
SNX Price Soars
As momentum for the new launch and evolution of the network gathers steam, SNX prices have been on fire. On Wednesday, Jan. 13, the token hit an all-time high of just over $16, according to Coingecko.
SNX has been one of the best performing DeFi tokens of 2020, surging 560% over the 12-month period. January has seen the token pump even higher with a gain of almost 100% since New Year’s Day to today’s current price of $14.77.