The US cryptocurrency exchange Kraken announced on October 24 that it will launch its own Ethereum Layer2 network called Ink in Q1 2025.
Kraken's move may be an attempt to replicate the huge success that the US-listed exchange Coinbase had when it launched its L2 network Base last August.
Notably, like Base, Kraken's Ink has also announced that it will use Optimism's OP Stack technology for its construction, and Uniswap and Worldcoin have also favored OP Stack technology. Let's explore this further.
What is OP Stack?
OP Stack can be understood as a set of open-source software components that allow anyone to use Optimistic rollups to build their own Layer2 blockchain on top of Ethereum. It moves most of the computation and storage off-chain, while relying on Ethereum to ensure security and finality. Technically, Optimism's main benefit is that it significantly saves users on-chain costs. The OP Stack consists of four main components:
- Mainnet: OP Mainnet is a low-cost and fast Ethereum Layer2 network that is EVM-compatible;
- Contracts: Smart contracts that implement the core logic and functionality of the OP Stack. OP contracts include the State Transition System (STS), Fraud Prover (FP), State Commitment Chain (SCC), and Canonical Transaction Chain (CTC);
- Services: Providing data availability, data synchronization, and communication services between Layer1 and Layer2;
- Tools: Facilitating the development, testing, deployment, monitoring, and debugging of blockchains based on the OP Stack.
Why is OP Stack so popular?
Regarding this, cryptocurrency researcher He Yi analyzed in a post on the 24th that the main reason for the popularity of OP Stack is the first-mover advantage of OP Superchain:
If I'm not mistaken, when Kraken first decided to launch its own L2 last year, the technical selection was all focused on examining ZK solutions, including Polygon CDK, ZKSync, and Nil Foundation.
Today, unexpectedly, they ultimately chose OP. Currently, heavyweight star projects like Coinbase, Kraken, Uniswap, and Worldcoin have all adopted Optimism's solutions. Apart from having strong connections, the main reason is that the OP Superchain, due to its first-mover advantage, has established a network effect that cannot be resisted by some performance or technical indicators.
On the other hand, He Yi also pointed out why Arbitrum's Orbit technology did not compete with OP Stack:
Arbitrum's Orbit also has a place, but its biggest mistake in competing with OP Stack is that it chose to issue its own L3 instead of releasing everything in parallel with its L2 like OP. From Arbitrum's perspective, it is to give its self-issued L3 more freedom, such as allowing the use of non-ETH as Gas first. But there is a very serious ethical problem here - you Arb and OP both recognize Ethereum as the father, I Uniswap and Worldcoin are no worse than you, it's fine to recognize Ethereum as the father, but why should I recognize you Arb as the father, isn't Ethereum my grandfather then?
Becoming an Arb L3 requires paying two taxes, one to Arb and then one to Ethereum, who can bear that.
OP just provides a technical solution, using OP does not create a direct subordinate relationship with OP, and has a lot of autonomy, but using Arb will directly create a binding relationship between the upper and lower layers, which is not something any major project would want to have.
Will OP explode soon?
As He Yi mentioned, OP Stack technology is now widely adopted by star projects like Base, Unichain under Uniswap, Ink, and Worldcoin, but it does not seem to have had a big stimulating effect on the OP token price so far.
According to CoinGecko data, since March this year when Bitcoin broke its historical high of $73,000, OP has fallen from its historical high of $4.69 to the current $1.72, and has hardly risen in the past month, with a market cap of $2.155 billion.
The possible reasons may include:
- Ethereum has performed poorly in this bull market, and apart from the Base chain, the various Layer2 ecosystems and innovations have failed to attract user participation;
- There are too many L2 projects in the market, the competition is too fierce, even if there is capital inflow, it will be dispersed;
- Although OP Stack is widely adopted, it is just a technology based on Optimism, and currently cannot expand the application scenarios for the OP token or bring innovation to the OP ecosystem.
