We are thrilled to announce that layer2.finance v0.1 has launched on the Ethereum mainnet! Layer2.finance tackles the two largest challenges preventing DeFi from reaching mass adoption: the extraordinarily high transaction fees and being very difficult to navigate and use. Layer2.finance is a novel solution that allows people to access all existing DeFi protocols at a fraction of the cost by acting like a “DeFi Public Transportation System”. With Celer’s advanced layer-2 rollup technology, multiple people split the cost of individual layer1DeFi transactions in a completely trust-free and non-custodial way. Enabled by a unified strategy abstraction, Layer2.finance’s community-built and community-hosted “turn-key” UI provides a simple one-stop-shop experience for users to navigate the increasingly complex DeFi landscape.
To celebrate the Grand Opening of layer2.finance v0.1 and showcase just how much we lower these costs, for the next 60 days, layer2.finance will be covering all of the fees associated with using DeFi protocols through L2!. In addition, for the first 500 eligible users, we will reimburse the Ethereum gas costs for depositing funds from L1 to L2! Follow the step-by-step tutorial to get started!
The layer2.finance v0.1 release also marks the beginning of community-driven development. We want to work with the community to create proposals for future iterations of layer2.finance. We hope you enjoy the ride as we democratize DeFi together!
Why layer2.finance? Try DeFi for Free!
After a successful two-week testnet (1972 participants with 370089 L2 transactions) and with the final smart contract audit report, we are ready to launch layer2.finance v0.1, release name London, on the Ethereum mainnet. The first-ever “line” for the “DeFi train” is now open ready for passengers!
In the initial launch, we’ll support three DeFi protocols on Ethereum: Compound, AAVE and Curve, with the plan to continuously add more and more! At a much lower cost, users can deposit funds to AAVE for lending, to Compound for combined lending and automatic $COMP yield farming and to Curve 3Pool for combined liquidity providing and automatic $CRV yield farming.
To allow people to experience the significantly lowered costs, we are happy to announce that all layer2 transactions via layer2.finance will be COMPLETELY FREE [note 1] for ALL USERS for the first 60 days after v0.1 launch.
What about the L1 gas fee charged to deposit from Ethereum layer1 to layer2? Even though the fee is not much more than a simple ERC-20 transfer, we want to stay true to our spirit of opening up the DeFi world to a wider audience and making it more accessible to the current community!
That is why we are offering a limited number of people the opportunity to have their Ethereum L1 gas fees incurred when moving funds from layer1 blockchain to layer2.finance (i.e. “Deposit to L2” step in the tutorial) completely reimbursed . For someone to be eligible, they will need to stay in the layer2.finance system for a minimum of 45 days and the total value of the deposited assets should not be more than $100,000 (sorry whales!). This reimbursement is limited to the first 500 eligible users (addresses) for only one transaction each. The reimbursement ETH amount is calculated based on the moving median of gas price during the 30-day period and will be disbursed every 30 days until the number of eligible users reaches 500.
From v0.1 to a “DeFi Transportation Network”
The launch of Layer2.finance v0.1 is just a start. Layer2.finance will adopt a community-driven and agile iteration cycle to continuously evolve and improve in the following two aspects.
New DeFi Protocol Integration. Just like a brand new railway network in real life, new “lines” reaching exciting new DeFi protocols (“stations”) will be gradually added as the mainnet matures. In the near term, we are planning to add support for Cream, Liquity, yEarn, DODO, Mirror, Alpha Finance, SushiSwap, Uniswap, BarnBridge, 1Inch and we’re open to the community’s proposals on which protocols to focus on supporting first.
Upgrades of Rollup Core. Improvement of the existing core features and additional new releases of them often involve layer2 rollup protocol upgrades and in some cases user migration. Therefore, these will be split out into major releases. Layer2.finance features are driven by community proposals and are actively contributed to by the community developers (brand new UI for example!). We have the following roadmap based on the current plan and feedback from the community.
V1.0 “Budapest” Release (Q2 2021):
- Support Just-In-Time (JIT) strategy position tracking and slippage tolerance. This will allow quick diversification of supported DeFi strategies’ risk profiles.
- Safety compartmentalization of strategies. This will allow quick expansion to exciting and new strategies even if they are new and relatively unproven in the market.
- Asset token and DeFi token transfer on layer2. This allows users to freely exchange positions without going through on-chain execution.
- Multi-chain support. This will make layer2.finance available in other popular blockchains and even layer2s if the community proposals are raised and passed.
- Flexible fee interface. This allows decentralized governance to control how fees are charged.
- Decentralized governance. Any privileged key will be revoked to a governance multi-sig process based on how the community votes on proposals.
- Liquidity mining. Whether, when or how to launch liquidity mining will be determined based on community feedback and proposals. Whether we use the means of liquidity mining or not, the goal is to always increase the network effect of layer2.finance and to save costs for the broader audiences.
V1.1 “Chicago” Release (Q3 2021):
- A Zero-knowledge Rollup version (targeting mid Q3). As layer2.finance accumulates users and adds dynamic and volatile DeFi strategies, the time of aggregation will reduce and the challenge period present in optimistic rollup will start to become a bigger portion of the total latency. To address low-latency requirements for a broader spectrum of strategies and further improve economy of scale with an already large user base, we plan to introduce a ZK Rollup version of layer2.finance.
- Block producer via Celer SGN. Celer’s State Guardian Network will be connected to the rollup chain and act as a layer2 rollup block producer to ensure liveness and fairness of the system with an additional layer of safety assurance.
V2.0 “Paris” Release (Q4 2021)
- Cross-chain DeFi synthesis via cBridge. Via Celer’s cross-chain cBridge, layer2.finance will be able to synthesize a multiple chains’ DeFi ecosystem into a single entry point in a non-custodial and trust-free way. This allows users to stay in one chain and gain access to all other chains’ DeFi protocols without complicated fund management across multiple chains.
- Improvement based on community proposals. At this stage, the protocol community developers along with Celer team will continue to make improvements based on community proposals and approvals.
Low-cost Rollup, Safe Rollout
Just like the real-life public transportation system, we have an emphasis on safety and security. We hold layer2.finance’s system security to the highest standard. Although we have conducted extensive internal testing and external auditing, we recognize that layer2.finance is truly a first-of-its-kind product using advanced technology and we are sailing in uncharted waters. Therefore, on top of the robust safety measure already in place, there is an initial $1.5M soft cap on the rollup chain deposit limit. This “training-wheels” cap will be gradually lifted as the system experiences more tests and usage over time.
Layer2.finance is built with Celer’s optimistic rollup architecture and the rollup contract is fully open-source. In the v0.1 launch, it will start with a single block producer before transitioning to using the decentralized Celer State Guardian Network mainnet at some point in the future. In the initial stage of the launch, we also retain an emergency key to halt the contract to allow fund recovery should any unforeseen security risk happen. As expected, the authority of the key will be revoked down the road and transferred to a governance contract when we have enough run-in of the protocol.
Lastly, we have also launched a bug bounty program to encourage security researchers to help us spot any potential issues early.
With these testing, auditing, and precautions safety measures as well as the bug bounties in place, we hope to have a smooth rollout and we will always keep our communication transparent and open to our community.
However, even with all these efforts, there are still risks you should be fully aware of before using layer2.finance.
Layer-2 scaling rollup technology is new and experimental with just as much risk as it has excitement. Layer2.finance is built on technology that enables new kinds of interaction between layer2 and layer1 with a new L2 state machine that has never been done in any previous DeFi protocols before. The only way to know with any form of certainty that there is absolutely not an unknown risk is for it to stand the test of time. We hope to get there soon as a community to democratize DeFi for everyone.
Contribute to Layer2.finance?
Layer2.finance is built on top of Celer’s layer2 scaling technology and some of the strategies have already been built by our community developers. To learn how to build a strategy adapter to extend layer2.finance to all other DeFi protocols, please watch this tutorial video. We encourage you to participate in ETH Global Scaling Ethereum hackathon and contribute to our open-source repository.
Summary of Resources and Notes
Community-built and hosted Web UI: app.l2.finance
Open Source Smart Contract: https://github.com/celer-network/layer2-finance-contracts
Note 1: To ensure a fair and welcoming environment for DeFi new users, layer2.finance rollup block contract contains an inherent rate limit that may kick for high transaction count users.