Cardano founder Charles Hoskinson has expressed a desire to work with Kraken, one of the largest crypto exchanges in the world. This comes as the Layer 2 blockchain market is heating up and major players in the space are delving into developing their own L2s.
Cardano Founder Wants To Build An L2
Last week, news broke that Kraken, a US-based crypto exchange, is looking to build its own Layer 2 blockchain. The reports which cited people familiar with the matter said that the exchange is yet to decide what network to partner with to realize this dream.
In line with this, Cardano founder Charles Hoskinson revealed his willingness to work with the exchange in an X (formerly Twitter) post. The post which included a link to a report that Kraken is still scouting for network partners included a tag of Kraken co-founder Jesse Powell, saying “I’m game if you are.”
— Charles Hoskinson (@IOHK_Charles) November 12, 2023
The move by Kraken comes just months after another US-based crypto exchange Coinbase launched its own Layer 2 network called Base. This looked to have sparked fierce competition between these heavy-weight exchanges and Kraken is stepping up its game in response.
If Kraken does move forward with Cardano, they could end up building a side chain that would run parallel to the network. An example of this is Hydra developed by IOHK, the developer behind Cardano, which is a Layer 2 network that uses isophormic state channels that make up what is referred to as ‘heads’. This way, Hydra functions as a Layer 2 network allowing for faster speeds, lower fees, and better scalability and throughput.
Can Kraken Competed In The Saturated Layer 2 Blockchain Space?
The Layer 2 blockchain market is already packed full of established players and if Kraken were to develop its own Layer 2 network, there is no doubt it would be dealing with a lot of competition. One of these players, Coinbase, is already a direct competitor, and adding a Layer 2 network would increase the competition between the two.
For example, the Base network has already seen its Total Value Locked (TVL) rise to $349 million in a matter of months and is still on the low end. Older L2 players such as Avalanche, Polygon, and Arbitrum all currently boast TVLs above $1 billion, with over 500,000 daily active users between the three of them. In addition to this, there is a lot of competition amongst L1s which currently dominate the market.
However, Kraken, which is ranked as the 3rd exchange in the world with the highest trust score, according to data from CoinMarketCap, could be up to the task, the same way Coinbase did with Base.
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Featured image from Watcher Guru, chart from Tradingview.com