Cryptocurrency exchange giant Coinbase has recently implemented a Layer-2 (L2) scaling solution to enable faster and cheaper Ethereum transactions from its wallets as the technology starts to get rolled out on a wider scale.

An announcement on Oct 14 revealed that Coinbase Wallet is integrating with Optimism’s Optimistic Rollup testnet. This will not be on the exchange itself, but the non-custodial wallet and dApp browser to enable users to view balances and transact on the Optimistic network.

The company stated that it was excited to do its bit to help Ethereum scale:

Optimistic About Ethereum

L2 scaling developers at the Plasma Group announced the launch of their Optimistic Ethereum testnet in late September. The team has developed a system called OVM, which is a fully-featured Ethereum Virtual Machine (EVM) compliant execution environment designed for Layer 2 systems.

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The ultimate aim is the reduce congestion on the Ethereum network which is essential for the future growth of the ecosystem. Over the past few months, Ethereum users have become painfully aware of how demand can lead to congestion, which leads to skyrocketing transaction fees.

There were two instances in September when average gas prices surged into double digits as DeFi farmers flocked to the latest yield mining incentives. At the time of press, average transaction fees had dropped to around $2 but this is still way too high to be practical.

Coinbase is the second major centralized exchange after Bitfinex to announce plans to take some of their transactions off the Ethereum main chain, observed industry expert Camila Russo in her latest Defiant newsletter.

At the ETHGlobal Summit, Ethereum co-founder Vitalik Buterin highlighted the need to push wallets as a primary target for the migration to rollups.

“In the migration to rollups, the biggest challenge is user experience … The biggest part of the answer is a comprehensive ecosystem level push and the first push is wallets.”

Layer 2 Options Expanding

Optimistic’s OVM was first tested on Uniswap’s Unipig decentralized Layer 2 exchange, launched as a demo in late 2019.

DeFi protocol Synthetix has been the first real trial of the system when it launched the testnet to the public in late September, offering 200,000 SNX in rewards to participants.

The second phase of the testing process, which enabled deposits with airdropped test SNX tokens and the migration from L1 to L2, was initiated on Oct 14.

Other L2 solutions are already in operation, such as the zkSync payments gateway from Matter Labs, the Ethereum zkRollup exchange and payment protocol Loopring, and the Plasma-enabled OMG Network.