News & Analyses

WIF flips two Ethereum L2s, Optimism and Arbitrum, on market cap metrics as Dogwifhat price climbs 10%

  • Dogwifhat price has soared nearly 10% to become largest gainer among top nine meme coins.
  • WIF has overtaken two of the biggest L2s on Ethereum, Optimism and Arbitrum, on market capitalization metrics.
  • OP and ARB are last cycle’s narrative, not inspiring much excitement this time around.

Meme coins were the first to hint at what now looks like signs of a broader market recovery. While Pepe (PEPE) price led the pack on Thursday, Dogwifhat (WIF) has since taken the baton, alongside Cat in a Dogs World (MEW), as Solana-based meme coins lead the sector.

Also Read: Meme coins lead way as PEPE, BONK hint at possible marketwide uptrend

WIF dethrones Optimism and Arbitrum

After a climb of nearly 10% on Friday, SOL-based meme coin Dogwifhat has overtaken both Optimism (OP) and Arbitrum (ARB), two of the most propped Layer 2 (L2) networks on the Ethereum blockchain.

WIF flips OP and ARB

Solana’s fast and scalable blockchain technology has played a role in the success of meme coins built on the Solana platform. These include WIF, MEW and Bonk Inu (BONK).  With low transaction fees and high processing speeds, Solana provides an attractive environment for meme coin projects to operate efficiently and engage with a large audience.

Optimism and Arbitrum L2 scaling solutions

Optimism and Arbitrum are among the most famous L2 scaling solutions on Ethereum. This is due to several key factors that have contributed to their popularity within the Ethereum community. These include:

Reduced transaction costs: Both aim to alleviate the high gas fees and congestion issues on the Ethereum network by providing a scaling solution (moving some transactions from the Ethereum mainnet onto L2, thereby enabling faster and cheaper transactions.

Compatibility with Ethereum Virtual Machine (EVM) and existing Ethereum smart contracts makes it easier for developers and users to transition to these L2 solutions without significant changes to their existing infrastructure.

They prioritize security and decentralization in their design through different mechanisms, such as optimistic rollups. This ensures the integrity of transactions while still benefiting from the scalability improvements offered by Layer 2 solutions.

Several prominent decentralized finance (DeFi) projects and decentralized applications (dApps) have already integrated with Optimism and Arbitrum. This highlights the practical utility and benefits of these L2 solutions. It has also validated their credibility and effectiveness.

Community backing has also helped raise awareness and adoption of Optimism and Arbitrum.

Ethereum development FAQs

After the Merge, the Ethereum community is looking at the Sharding upgrade next, which has been slated for sometime later in the year. The development can be summarized in four words, “scalability through more efficient data storage.” The software update will increase the capacity of the blockchain, widening the amount of data that can be stored or accessed. At the same time, all services running atop the Ethereum blockchain will enjoy significantly reduced transaction fees.

A fork is the splitting of a blockchain after developers agree and proceed to implement upgrades. The decision comes after these developers reach a consensus for a software upgrade. The ensuing part will see one part continue with the status as is, while the other one will proceed with new features combined with the former ones. A hard fork basically entails permanent divergence of a new side chain from the original one, while a soft fork is doing the same, only difference being that it is temporary.

EIP-4844 is an improvement proposal for the Ethereum network. The upgrade promises reduced gas fees, which is a valuable offering considering the high transaction cost that continues to daunt crypto players. It has been a long-standing concern for the Ethereum network. The proposal is also referred to as “proto-Danksharding,” with an unmatched ability to increase the speed of transactions on the Ethereum blockchain. At the same time, it helps to reduce the transaction cost as everything becomes decentralized.

Gas token is a new, innovative Ethereum contract where users can tokenize gas on the Ethereum network. This means they can store gas when it is cheap and start to deploy the gas once the market has shifted to the north. The use of Gas token helps to subsidize high gas prices on transactions, meaning investors can do everything from arbitraging decentralized exchanges to buying into initial coin offerings (ICOs) early.

Meanwhile, the contention between Ethereum Layer 2 chains and Solana on matters of scalability continues. Transaction costs were significantly lowered by Ether’s Dencun upgrade. While the successful rollout of the hard fork on the Ethereum mainnet has reduced fees for chains like Optimism and Base relative to Solana, critics argue that this may change with competition among Layer 2 chains. 

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