To address this, Cardano is currently undergoing a major transformation towards improved scalability by making use of Layer-2 (L2) solutions. These developments will improve the network’s speed, privacy, and composability tremendously. Importantly, they lay the foundation for increasingly robust and nimble decentralized finance (DeFi) activity. Cardano’s strategic vision goes much further than just one platform, with an eye toward creating a pluralistic ecosystem of interoperable L2 innovations. The mainnet launch for all of these L2 advancements is expected before the end of this year.
Unified Interface Layer
On Cardano, they’re focused on building a common interface layer for easy interoperability across multiple L2 solutions. This method prepares the way for different protocols to talk, and work alongside, each other seamlessly. Input Output Global (IOG) highlighted this vision during a recent research session:
"The goal is to offer a portfolio of solutions optimized for different use cases—ranging from DeFi and privacy to high-throughput applications—underpinned by shared standards that ensure seamless cross-protocol interaction." - Input Output Global (IOG) research session
Through the establishment of commonly accepted standards, Cardano is working to create a more connected ecosystem. This will enable L2 solutions to interoperate seamlessly, increasing the network’s efficiency and flexibility.
Zero-Knowledge Innovations and Hydra Versions
zkFold batches thousands of transactions into one compressed submission, achieving unparalleled efficiency. Eryx is actively deploying a ZK bridge. This bridge is designed to provide secure communication between Cardano chains, enhancing the interoperability and security across the entire Cardano ecosystem.
Cardano features two versions of Hydra: Hydra Head and Hydra Tail. Hydra Head operates with state channels of predetermined fixed small groups. Unlike the aforementioned projects, Hydra Tail uses a rollup model to process significantly more transactions per second. This variety of approaches showcases Cardano’s focus on delivering specialized solutions suited for different use cases.
Midgard and Broader Scalability Goals
Meanwhile, Anastasia Labs is bringing Midgard, a Cardano-native optimistic rollup that brings even more L2 capabilities to the network. This project further highlights Cardano’s commitment to enabling innovation in their ecosystem.
In addition to increasing throughput, Cardano’s ultimate goal is to continue towards a new era of scalability via layer-2 solutions. Cardano is going further than one-dimensional frameworks for layer-2s. By making interoperability its key focus area, it’s smartly setting itself up for long-term growth and adoption. These L2 solutions are primed to make DeFi’s operations a far more adaptive experience. They will represent a massive step forward in user experience and allow new types of experiences to blossom within the Cardano ecosystem.
