Ethereum's Cancun Upgrade Approaches: How to Position Before the Layer2 Boom?

Ethereum Cancun Upgrade Approaches: How to Position Before the Layer2 Boom?

With Ethereum's Cancun upgrade (EIP-4844) drawing near, the crypto market is focusing on the Layer2 track. This upgrade is seen as a key milestone in Ethereum's scaling roadmap, poised to significantly reduce transaction fees on Layer2 networks and boost throughput. On the eve of this explosion, investors and developers are pondering: which projects deserve attention? How to position early?

The Cancun Upgrade: A 'Fuel Fee' Revolution for Layer2

The core of the Cancun upgrade is the introduction of a new temporary data storage space called 'Blob.' Unlike the current method of permanently storing transaction data on Ethereum's mainnet, Layer2 networks can publish compressed transaction data to Blobs at a lower cost. According to Ethereum Foundation research, this mechanism is expected to reduce Layer2 gas fees by an order of magnitude or more. For users, this means significantly lower costs for transfers and interactions on networks like Arbitrum and Optimism, leading to a qualitative leap in user experience.

Progress Review of Major Layer2 Projects

Currently, the Layer2 ecosystem features a multi-power landscape, with projects accelerating iterations ahead of the Cancun upgrade:

• Arbitrum: As the leading Optimistic Rollup by total value locked (TVL), Arbitrum has launched the Orbit chain, allowing developers to build custom sub-chains. Post-upgrade, its cross-chain communication and data availability costs will be further optimized, potentially sparking a new wave of growth for DeFi protocols within its ecosystem.
• Optimism: Leveraging the modular design of OP Stack, Optimism is advancing its 'Superchain' vision. Its native token, OP, is used for governance and ecosystem incentives. After the upgrade, transaction fees on OP Mainnet are expected to drop significantly, attracting more high-frequency trading applications.
• zkSync Era: As a representative of ZK Rollups, zkSync Era offers theoretical advantages in security. Its recently launched ZK Stack also supports customizable chains. The Cancun upgrade will reduce the cost of submitting proofs, thereby improving network economics.
• StarkNet: Also based on ZK technology, StarkNet uses the Cairo language and has unique designs in privacy and scalability. Post-upgrade, its transaction confirmation speed is expected to further improve, paving the way for high-frequency scenarios like gaming and social media.

Investment Opportunities: From Infrastructure to Application Layer

On the eve of the Layer2 explosion, positioning strategies can be approached from two dimensions:

1. Infrastructure Tokens: Directly holding native tokens of major Layer2 projects (e.g., ARB, OP) is a straightforward strategy. These tokens benefit from increased network activity and often have governance and staking functions. With transaction volumes surging after the Cancun upgrade, the value captured by these tokens is likely to grow.

2. Leading Applications within the Ecosystem: DeFi protocols, DEXs, and lending platforms on Layer2 will directly benefit from lower fees and higher throughput. For example, GMX on Arbitrum and Velodrome on Optimism see protocol revenue highly correlated with network activity. Investors can focus on the native tokens of these applications or participate through liquidity mining.

Additionally, infrastructure projects like cross-chain bridges and data indexers are worth noting. According to L2BEAT data, the total value locked in Layer2 has already exceeded hundreds of billions of dollars, and the Cancun upgrade is expected to drive this figure even higher.

Risks and Challenges

Despite the optimistic outlook, positioning in Layer2 requires caution. First, the specific timeline for the Cancun upgrade may still be delayed due to testnet issues. Second, the Layer2 track is highly competitive, and some projects may be phased out due to technological or ecosystem shortcomings. Finally, market sentiment and macroeconomic changes can have short-term impacts on token prices.

Risk Warning: The above content is for reference only and does not constitute investment advice. The cryptocurrency market is highly volatile; invest with caution. Make decisions based on your own risk tolerance and fully understand the fundamentals of relevant projects.