How to collect NFTs on Layer 2
NFTs will scale on Layer 2. Here's your guide to capitalize on this opportunity.
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Dear Bankless Nation,
In the second half of this year, we’ve seen three themes dominate the crypto hype cycle: NFTs, ETH killers, and Layer 2s.
All three of these are useful reminders…people want cheap blockspace!
As the NFT boom made headway it soon became apparent that minting NFTs on Ethereum would price out a new generation of collectors that couldn’t shell out serious $$$ on gas fees.
Then came the ETH killer narrative. Ethereum isn’t scalable! Let’s mint NFTs on Solana! An understandable sentiment, but a bit short-sighted.
Then last month we saw the first glimmer of a general-purpose L2 with the potential for NFTs, as value locked on Arbitrum leaped over $3.5B.
And so, we’ve come full circle back to NFTs. The NFT boom still dominates much of Crypto Twitter and new projects are still seeing tens of thousands of trading volume in ETH.
The question on everyone’s mind?
Will NFTs stay on Ethereum, migrate to L2, or go to the ETH killers?
Our resident NFT expert William Peaster is betting on L2s.
Here’s how you can too.
- RSA
P.S. Zerion recently launched some killer NFT features. Just plug in your wallet and start flexing your jpegs.
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Tactic Tuesday
Guest Writer: William M. Peaster, Bankless contributor and Metaversal writer
How to collect NFTs on Layer 2
Ethereum’s layer-two (L2) scaling ecosystem has started blooming in recent months. It’s now clearer than ever that the majority of NFT activity is going to migrate to L2s over time.
This tactic will demonstrate how you can jump on this trend and collect NFTs via the top L2 opportunities around today!
Goal: Learn how to collect NFTs on L2s
Skill: Intermediate
Effort: 1 hour of research
ROI: Varies, but an invaluable experience for the future
A brief intro to Ethereum L2s
“One of the biggest challenges in the Ethereum ecosystem is having low latency and high throughput under tight resource constraints (e.g. CPU, bandwidth, memory, disk space).”
Ethereum is a blockchain for decentralized applications and decentralized payments. To this end, Ethereum makes certain design tradeoffs in order to optimize for accessibility and neutrality.
The flip side? With the huge demand for Ethereum’s limited blockspace, the Ethereum blockchain can’t offer low latency (i.e. rapid transactions) and high throughput (i.e many transactions per second) at the same time.
Not by itself, at least!
This is where Ethereum scaling solutions come in. While a range of scaling solutions exist, the most prominent are known as “layer 2” (L2s), because they metaphorically work on top of Ethereum. These L2s serve as external execution layers for Ethereum, as they offer high throughput and low latency for Ethereum-based transactions albeit outside of the Ethereum mainnet.
The gist? L2s help to decongest demand for Ethereum blockspace proper by expanding that blockspace, offering great transaction UX in the process.
Importantly, some L2s inherit their security directly from Ethereum (like optimistic rollups and zk rollups), while others are dependent on, but not directly secured by, Ethereum (like the Polygon and Ronin sidechains).
Despite their differences, what they share in common is serving as external execution layers for Ethereum.
Accordingly, you can think about L2s as like “scaling legos” for Ethereum. They can be structured in a variety of ways and thus support apps with a range of scaling possibilities. This is why Ethereum experts say we’re entering the modular blockchain era: there is no single monolithic path forward for scaling, rather there will be many possible combinations of modular solutions. (Watch this video for more)
The Layer 2 NFT factor
One of the biggest drivers of demand for Ethereum blockspace lately is the blooming NFT ecosystem.
This ecosystem is early, as is the L2 space at large, so we’ve only just begun to see the magic that can happen at the crossroads of NFTs and scaling. That said, believe this: NFTs and L2s will continue to evolve, side by side and in tandem, and a considerable amount of activity will move to L2s from the Ethereum base layer over time.
Moreover, the early UX clunkiness around L2s will continue to be abstracted away. There will come a time in the not-so-distant future where Ethereum wallets will make using L2s a buttery-smooth experience, to the point that many users won’t even realize they’re using L2s at all.
Yet we’re all pioneers here. We want to know and try the future early. Well, the future of NFTs is L2s, and that future is coming to fruition in the here and now.
As such, let’s walk through some of the main early ways you can collect L2 NFTs today!
Collecting NFTs on L2s
As mentioned earlier, there are a range of different L2s to choose from already. Below, I’ll outline all the main L2 NFT collecting avenues that I’m currently taking advantage of!
Immutable X
Immutable X is the first L2 that explicitly caters to NFTs.
Currently, Immutable X relies on StarkWare-based zk rollups technology, an innovation where many off-chain transactions are “batched” onto Ethereum via zk-SNARK cryptographic proofs. In the future, Immutable X will embrace a “volition” model, in which users can choose between the “zk rollup” mode and a “validium” mode. Validium L2s handle transactions and data off-chain.
That’s the 101, but the cool part is that Immutable X has a marketplace that’s live and able to be used today!
Interested? Here’s how to get involved on Immutable X:
Head to the Immutable X marketplace and press “Connect Wallet.”
You’ll be prompted to set up your Immutable X key. Press “Connect Wallet” again. Your MetaMask wallet will ask you what address you want to connect to. Pick your address of choice.
Complete the sign-in and set-up processes. Then deposit ETH to Immutable X. Once that’s done, you’ll be able to start collecting from some of the early franchises available on Immutable X, like Gods Unchained and Guild of Guardians.
SoRare
SoRare is a global fantasy soccer game. Think fantasy sports trading cards for international soccer teams powered by NFTs and a StarkWare-based zk rollup instead of paper (or whatever is used these days for normal fantasy sports apps)!
Here’s how you can collect Sorare cards:
Head to Sorare and complete the sign up/sign in process.
Input a password to protect your Sorare wallet.
Then go through the club creation process, as depicted below:
Pick your favorite clubs to start up your “Beginner’s Pack,” then open your pack and reveal your initial common cards.
Next, join your first league from the provided options and set up your starters.
Now you can head to the Sorare marketplace. Once you’ve funded your L2 wallet, you can start collecting more cards and playing as you please!
Smol Puddle
Smol Puddle is an experimental and unaudited NFT marketplace built on Arbitrum One. It should be treated with caution because of its experimental nature, but I did want to bring it up here to highlight an early example of an NFT market built on optimistic rollup tech.
If you’re interested in trying, do so with a test wallet and with small sums of ETH.
You’ll need to bridge funds to Arbitrum first. Once you’re done with that, you’ll head to Smol Puddle, connect your wallet, and switch to the Arbitrum network. Then you can buy from the available listings as you would from any NFT marketplace.
Axie Infinity
Earlier this year, hit NFT game Axie Infinity launched its bespoke Ronin sidechain, which is custom-tailored to facilitate breeding and collecting of the franchise’s ever-adorable Axie monsters. Since then, Axie Infinity has been on an absolute tear, experiencing the classic hockey stick growth.
To start using Axie Infinity on Ronin, you can follow these steps:
Start collecting your Axie dream team on the Axie Marketplace!
OpenSea
OpenSea is the world’s leading NFT marketplace by volume. As with many NFT projects this year, OpenSea has started conducting a multi-chain strategy starting out with support for the Polygon PoS sidechain.
Before diving in, you’ll want to deposit ETH and/or MATIC via the Polygon Bridge v2. Once that’s done, you can navigate to the OpenSea marketplace and in the left-hand sidebar select Polygon under the “Chains” category.
Then you can shop just as you would on mainnet!
👩🏫️ Bankless honorable mentions:
Conclusion
Over time, more and more blockchain activity is going to “move up” to L2s, i.e. external execution layers. NFT users will increasingly flock to these solutions for the same reason everyone else does: very fast and very inexpensive transactions.
Accordingly, the time is ripe to experiment with L2 NFTs because the L2 era has finally arrived and novel, early opportunities are starting to abound!
Action steps
📸 Mint an NFT on Immutable X using Swift Mint (good take on it here)
⛓️ Check out the L2Beat analytics dashboard!
🎮 Read “How to make money with Axie Infinity” by Bankless
🔮 Read “How to create and sell NFTs on Polygon” by OpenSea
Author Bio
William M. Peaster is a professional writer and creator of Metaversal—a new Bankless newsletter focused on the emergence of NFTs in the cryptoeconomy. He’s also recently been contributing content to Bankless, DeFi Pulse, JPG, and beyond!
👩🏫️ Recent guides from Bankless:
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Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.
Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here.
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Re Axie, for those with Binance accounts can send funds from Binance to your Ronin wallet without paying ETH gas. Much more cost effective than using the Ronin Bridge.
I would love to see a Layer 2 competitor to HEN! -an artsy NFT space.