Gate, a leading cryptocurrency exchange, has unveiled its proprietary Layer 2 (L2) network dubbed Gate Layer. The launch of this L2 coincides with a significant upgrade to the tokenomics of Gate’s native GT token.
According to the official announcement, Gate Layer is built on the OP Stack and fully compatible with the Ethereum Virtual Machine (EVM). It leverages the company’s established Layer 1 (L1) network GateChain as its secure settlement layer.
The announcement blog claims this newly unveiled L2 network is capable of processing over 5,700 transactions per second (TPS) while generating blocks in just one second. The gas fees on Gate Layer are also dramatically reduced compared to other L2 networks like Base.
Moreover, Gate Layer also leverages LayerZero’s cross-chain infrastructure, enabling effortless asset transfers between major blockchain networks, including Ethereum, Arbitrum, BNB Chain, and others. Underpinning these developments is an upgrade to GateChain’s core protocol, now at version 1.20. The enhancements include support for blob transactions (EIP-4844), alignment with the Cancun EVM upgrade, and compatibility with 12 Ethereum Improvement Proposals (EIPs).
Drastic changes in GT tokenomics
Alongside the launch of L2, Gate has implemented notable updates to its native token GT Token. The token retains its dual deflationary model: quarterly scheduled buybacks and burns, paired with on-chain incineration via the EIP-1559 protocol. Till date, over 180 million GT, equivalent to 60.18% of the original 300 million supply, has been burned.
Despite the drastic update, the price of GT token has shown indifferent price movement. It is currently trading at $16.15, down 3% from the daily high, with a 68% decrease in its 24 hour trading volume–as per CoinMarketCap data.
The current Layer 2 landscape
The launch of Gate Layer marks yet another addition to the increased competition between layer 2 networks. Data from L2beat shows that there are more than 100 layer 2 blockchain networks, with a combined total value locked (TVL) of $54.55 billion.
This has raised questions whether the crypto landscape needs any more layer 2 networks. Since the past year, various prominent voices in the blockchain industry have raised concerns about the increasing number of layer 2 platforms.
In a February post, Crypto With Khan noted that by launching layer 2 networks, “Crypto founders are solving problems that didn’t actually exist.” Out of more than 100 L2s, 60 are rollups and 85 Validiums and Optimiums. However, only the top 5 platforms in this list actually have notable traction, having 75% of TVL among all.
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