Web3

Crypto exchange OKX joins L2 frenzy with own Polygon-based blockchain

Crypto exchange OKX joins L2 frenzy with own Polygon-based blockchain

X1, a new L2 from OKX, will run on Polygon technology. Credit: André Nunez/DL News

Singapore-based crypto exchange OKX launched on Tuesday a beta version of a new, in-house blockchain dubbed X1, becoming the latest exchange to try to smooth its users’ transition to the Ethereum ecosystem.

OKB, the token issued by OKX, is up 2% over the last 24 hours, while most major cryptocurrencies have fallen over the same time period.

So-called Layer 2 blockchains such as X1 have existed for years, giving people a way to use Ethereum while dodging its notoriously high transaction fees. They have become critical to Ethereum’s future, and several have launched this year, including a highly-anticipated crop running on zero-knowledge technology.

Just this year, however, the companies building Layer 2 blockchains have started partnering with crypto exchanges eager to participate in the L2 boom.

The trend began in August, when US-based crypto exchange Coinbase launched its own blockchain built on top of Ethereum.

That blockchain, Base, was built using technology from Optimism, the second largest L2 behind Arbitrum.

Base has since proven popular: as of Tuesday, it was the third-largest L2 when measured by user deposits, according to L2BEAT, trailing only Arbitrum and Optimism.

Meanwhile, Kraken, another US-based exchange, is currently looking for a Layer 2 company to partner with in order to release its own Ethereum-based blockchain, according to a report from CoinDesk.

The Polygon partnership

OKX has partnered with Polygon, which launched a zero-knowledge Layer 2 earlier this year. In August, Polygon released its Chain Development Kit, or CDK, for developers interested in building their own blockchain based on Polygon technology.

As Coinbase did with Optimism, OKX said it will contribute to further development of Polygon technology, pledging “substantial engineering resources.”

In another detail that echoes the earlier alliance between Coinbase and Optimism, blockchains built using Polygon’s CDK are expected to eventually become interoperable, creating a network akin to the “superchain” of Optimism-based Layer 2s.

“Looking ahead, Polygon CDK-deployed chains can interoperate and coexist within a larger network of ZK-powered L2s in the Polygon CDK ecosystem,” Polygon co-founder Sandeep Nailwal said in a statement. “We’re excited to collaborate with OKX’s team to advance this technology and drive the success of the X1 network.”

OKB will be used to pay transaction fees on X1, according to OKX. In a statement, Jason Lau, the company’s chief innovation officer, said X1 would contribute to the “mass adoption of Web3.”

“X1 will be a key pillar of our efforts to educate and bring our users onchain and into the world of Web3,” Lau, said. “This scalable and accessible network is perfect for developers, who can build on X1 to deliver user friendly world-class consumer Web3 applications, all while maintaining interoperability with other networks and ecosystems.”

Aleks Gilbert is DL News’ New York-based DeFi Correspondent. Reach out to him with tips at aleks@dlnews.com.

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