Bridging NFTs to L2 scaling solutions
Layer 2 roll-ups are a promising solution to scalability issues on Ethereum. They allow transactions to be much cheaper and faster and enable entirely new classes of applications without compromising security.
However, there is a significant usability hurdle with getting funds onto an L2. Users first need to “bridge” them from Ethereum, and bridging offers a poor UX: it is slow, and expensive. It requires users to trust third-party custodians with their funds. As a result, many users are hesitant to use Layer 2 solutions. T
To address this problem, we need a better way to bridge funds onto Layer 2. Ideally, this solution would be trustless, fast, and cheap. Such a solution would make Layer 2 more attractive to users and help scale Ethereum.
The gift card example
Gift cards are a popular way to give someone cash to spend at their favorite retailer or online platform. Gift cards are a classic way to “bridge” funds into another commerce ecosystem. Even more, interestingly, gift cards are also an artistic canvas.
Retailers commonly brand gift cards with unique mascots and release them as limited editions to make them collectible. It’s not surprising to hear that a collector culture exists around gift cards.
NFTs as bridges
Digital collectibles have gained mainstream attention with the rise of blockchain technology. NFTs, or non-fungible tokens, are a type of digital asset that is unique and cannot be replicated. This makes them perfect for collectibles, as each NFT is a one-of-a-kind piece of digital art. However, NFTs, like any other tokens, are not interoperable, meaning they can be used on the blockchain they are built on. This limits their usage and scalability.
One way to solve this problem is to use NFTs to bridge funds to a second-layer platform. NFTs can be programmed to interact with any smart contract, including the L2 bridging contract. This would allow NFT holders to take advantage of the speed and scalability of the L2 network without giving up the main blockchain’s security. Additionally, this would give NFTs a use case beyond just collecting and trading. Instead, NFTs could be used to purchase goods and services on the L2 network, making them even more useful and valuable.
But the L2 scaling presents the challenge of data availability. While this can be addressed with checkpointing and other methods, it’s important to be aware of the tradeoffs. Another example is the increased risk of fraud and censorship on L2s. While this can be mitigated by careful design and governance, it needs to be considered. Ultimately, scaling is a complex problem, and there’s no perfect solution. We need to carefully weigh the tradeoffs of each approach and work together as an ecosystem to find the best way forward.