Crypto Exchange Kraken May Develop Its Own Layer-2 Blockchain
Kraken, a leading cryptocurrency exchange, has sparked rumors of potentially launching its layer-2 scaling network. The speculation emerged after a job listing seeking a senior cryptography engineer was unveiled, featuring responsibilities that include overseeing the “design and implementation of layer 2 solutions.” The post also emphasized Kraken’s commitment to exploring and supporting new technologies to enhance cryptocurrency scalability, security, and privacy, including “Layer 2 technologies, zero-knowledge proofs, and multi-party computation,” among other on-chain scaling solutions.
Potential Launch of Kraken’s Layer-2 Network
Industry sources suggest that Kraken might be in discussions with prominent players such as Polygon, Matter Labs, and Nil Foundation to collaborate on building a layer-2 blockchain. These entities are actively involved in developing Ethereum layer-2 solutions, with Polygon offering sidechains, optimistic rollups, and ZK rollups, Matter Labs pioneering ZK Sync, and Nil Foundation working on zkOracle in partnership with Lido Finance. While media outlets have reached out to Kraken for confirmation, the exchange has neither confirmed nor denied the rumors surrounding the potential launch of a Layer-2 network, stating that the company is constantly exploring opportunities for innovation and expansion without providing specific details at the present time.
It is worth noting that in compliance with a court order issued in June, Kraken is expected to share over 42,000 client accounts with the Internal Revenue Service (IRS) this month. Additionally, in response to the U.S. Securities and Exchange Commission’s (SEC) allegations concerning its staking-as-a-service program, Kraken opted to settle the case and discontinue the service for US customers, despite denying the accusations.
Assessing the Viability of Layer-2 Solutions
The prospect of Kraken venturing into building its layer-2 network has stirred mixed reactions within the crypto community. While some expressed concerns about potential fragmentation resulting from numerous layer-2 solutions, others welcomed the move, anticipating enhanced user and developer flexibility. The competition among different layer-2 solutions also holds the potential for improved solutions and reduced fees. Notably, existing top layer-2 protocols include Optimism, Arbitrum, zkSync, and Starnet.
Furthermore, Coinbase, a significant competitor of Kraken, recently introduced Base, its own layer-2 blockchain, which has rapidly gained traction, amassing over $550 million in total value locked (TVL) since its launch. Nevertheless, the rise of fraudulent projects on Base, such as SwirlLend and Magnet Finance, has raised concerns about scams and money laundering activities within the platform. Amidst these developments, the various trade-offs between scalability, decentralization, and security among layer-2 solutions suggest that a wider range of options could lead to striking a more favorable balance and offering users greater flexibility.
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