Synthetix (SNX) to Activate Layer-2 Staking
In less than 24 hours, Synthetix, a DeFi protocol that allows trustless trading of derivatives called synths, will activate Castor and Layer-2 staking after trialing on the Goerli testnet since September 2020, a press release on Jan 13 reads.
Castor Follows Shaula For Layer-2 Staking
The activation is less than two weeks after Synthetix announced Shaula on Christmas Eve. In a series of upgrades, Synthetix plans to introduce changes to improve user experience and concurrently vent the base layer obstructed by low throughput pushing Gas fees through the roof.
Towards that end, and in lock-steps, Castor will activate Layer-2 staking by integrating Optimism under Synthetix Improvement Proposal (SIP)-102. Optimism is one of the many solutions forwarded by Ethereum developers to ease the base layer by routing transactions through secure, trustless off-chain rails.
Ethereum Gas is Expensive
Optimism powers Optimistic Rollups (ORUs), a layer-2 option that supports smart contracting and is relatively secure. If widely adopted, it could drastically help in driving Gas fees down.
As of writing on Jan 13, the average transaction fees in the Ethereum network averages $5.725, down from a record $16 printed on Jan 12.
Nonetheless, as effective and practical as commentators say, some few challenges directly relate to trustless verification of state transition in the Ethereum virtual machine.
Synthetix developers note that staking via Layer-2 will generally improve user experience since it enables faster transaction processing leading to cheaper Gas costs.
Motivated by the Vitalik Buterin’s rallying call—who also tweaked the Ethereum roadmap to inculcate Layer-2 solutions—advocating for ORUs, Synthetix will pave the way for others to use Layer-2 staking.
Through the Optimism Virtual Machine (OVM), Layer-1 code can be transferred to Layer-2 only with minor modifications.
Castor Trialed from September 2020
After four months of testing, Synthetix developers tested several aspects of Layer-2 staking, including fund depositing and withdrawals.
The team has now created two smart contracts enabling depositing on Layer-1 (the Ethereum base layer) and fund withdrawals on ORUs (Layer-2).
Besides Layer-2 staking, Castor will migrate to a new SNX escrow contract that supports liquidations of escrowed SNX as stated under SIP-60. This is on top of fixing bugs detailed under SIP-105.
As BTCManager reported, the testnet of Optimistic Ethereum went live in late September, with Synthetix, Uniswap, and Chainlink announcing their trialing of the virtual machine.