The L2 (Optimistic Ethereum) testing for Synthetix is progressing quite smoothly it seems. The third phase of the testing is now live, and it allows for the claiming of rewards from the OVM L2 to the mainnet Ethereum chain.
Just as quick recap, the Ethereum mainnet is quite congested and unless you have stupendous amounts of money in DeFi the fees are quite prohibitive for active users. This is especially the case for DeFi, where you are trying to maintain collateralisation at a competitive margin and the claiming of rewards. The fees take a good chunk out of your rewards and needs to be taken into account when calculating returns.
There are layer 2 solutions like Optimistic Ethereum (OVM) that do a good chunk of the user interactions on a side chain, and then only touch the main Ethereum chain periodically which allows them to bundle up all the changes that took place in the previous time period. This means that fees are incredibly smaller or even zero (at the moment...) and you gain the security of the mainnet when the changes are written over.
Synthetix is one of the biggest projects that are publicly testing the L2 solution... and has involved it's users on the testnet to help out with any potential problems that might occur through normal usage. It helps that the rewards earnt on the L2 testnet will become available on the mainnet as well or the L2 when it goes properly live.
You might ask why a L2 solution is even necessary give the much heralded launch of ETH 2.0 recently... well, the ETH 2.0 launch is only for the Beacon chain... this will be the chain that will keep the various shards in sync. It is only the beginning of the long road... a great beginning, but only the beginning. The rest of the mainnet scaling is expected to take a good deal longer over the course of 2021.
This means that L2 solutions will still remain a short to medium scaling solution for Ethereum as they will be rolling out on a similar time scale to competing blockchains that aim to usurp Ethereum as the smart-contract king. It is even possible that L2 solutions will form part of the long term scaling solution if the alternative "1.5 and done" solution comes to pass instead of the complete 2.0 upgrade.
So, there is a new button on the L2 Synthetix interface. A nice pink Withdraw button that allows you to extra L2 SNX to the mainnet Ethereum. This is pretty nice given that these tokens were dropped 1:1 to testnet participants! So, an easy doubling... but I think it isn't possible to return them back to the testnet, so in many ways, it is like taking an immediate profit on the basis that SNX is doing okay at the moment on the markets.
On the other hand, I'm pretty curious about what is happening on the L2 testnet in the coming phases. So, I'm probably only going to take out a little bit to take a little profit and to also trigger my acceptance of the rewards from this stage of the trial.
The withdrawal to Mainnet will be delayed by a week for the Synthetix team to detect problems and fraud.
Of course, when you log in to Mintr... it is force of habit to check your collateralisation ratio and if you have the space (over 600% collateralised) then you mint more sUSD to maximise your weekly rewards. So, that is what I immediately did...
However, to claim a withdrawal you need to clear your debt.... so, burn ALL sUSD back to SNX (which you can mint again afterwards...). No problem on L2... YAY for zero gas fees! Except, that I have to wait 24 hours after minting before I can burn! Sigh... I guess that this will be something for tomorrow. I had better make a note on my calendar. It can be quite easy to forget all these little things across different crypto projects!
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