Building out of the IOTA Bubble

The full article was originally published by Soonlabs on Medium. Read the full article here.

How the Soonaverse L1/L2 strategy will transform crypto

You may have heard us talk about L1 development from time to time. But what exactly does that mean? When we refer to the L1, we’re talking about building technology directly on the Tangle for the IOTA and Shimmer networks. L2 on the other hand, refers to the blockchains that will run on top while periodically posting their state to the Tangle. The most talked about L2 blockchain in the IOTA ecosystem right now is the Shimmer EVM.

In this piece we’ll review a few reasons why the Soonaverse has directed so much of its resources to building on the L1 instead of exclusively on the upcoming L2 like most ecosystem projects.

More Than Just Another EVM

One of the goals of every project is to grow and sustain itself. In the crypto space that means choosing a base layer that will stand the test of time. We chose IOTA because of the unique advantages the Tangle could provide in its final form. Advantages that other blockchains will never be able to replicate, which is why an EVM can only be a short term fix, a stopover in the overall journey towards IOTA 2.0. Over reliance on it will end in failure. Why? Because if someone builds a truly novel EVM product that gains a lot of attention, then it’s in the team’s best interest to port that project over to the most popular EVM chains to gain a much wider audience and not just stay on the Shimmer EVM. This means that anything you can find on the Shimmer EVM, you can find pretty much anywhere.

Right now, at the time of writing this, there’s over 80 EVM compatible chains: https://defillama.com/chains/EVM. There’s also something really interesting about all of them besides Ethereum and BNB Chain. They all have large spikes in their % of total value locked when they launch (usually with very large incentive programs that are worth well over $100 million). The unfortunate part is that every single one of them has been constantly losing market share because there’s nothing that meaningfully differentiates them from Ethereum or one of its many rollup solutions.

This is one of the theses we have at SoonLabs. Why should our EVM chain have a different outcome even though it’s basically the same playbook that’s been run by nearly a hundred projects over the last two years? Our answer is that we need to leverage the genuine uniqueness of IOTA and Shimmer to create solutions that are impossible to build anywhere else.

We Are The Future Frontier of Crypto

Building on the Tangle can give teams a chance to create solutions that can’t be reproduced on other blockchains. We’re still very early, but the future is looking promising when it comes to IOTA 2.0. The Tangle, by design, will always be more decentralized than any L2 built on top of it. Additionally, the feeless nature of the L1 will allow projects that build directly on it to have the lowest fees, and even in some cases, make it completely feeless. Something no L2 is capable of, and will never be capable of.

As scalability improvements of the Tangle continue, there will become a point where transaction volume will become much greater than any singular L2 blockchain. This will result in more composability. This composability will become increasingly important after L1 scripting is integrated into the Tangle. The ability to program directions into the Tangle and then call on any data available in the most scalable DLT in the world will allow us to power new economies that we can’t even fathom today. Even though the final version of IOTA and Shimmer isn’t available today, the Tangle is, so we should begin building on it right now knowing that the centralized execution strategies that are currently implemented will soon be phased out and projects will become fully decentralized once scripting is available.

NOW is the time to begin prototyping new technologies to gain an upper hand over everybody else in the entire crypto space. Some ideas that will soon be possible after L1 scripting is available include:

  • A fully decentralized (and optionally feeless) token and NFT trading via UTXO LP pools
  • Lending and borrowing once a good oracle solution is available
  • Creating an easy to use UI for quickly spinning up nodes
  • Using those previously mentioned value transactions to create a mana marketplace
  • After addresses become more permanent we can get rid of MetaMask completely and have everything purely on Tangle (you could even have an easy to remember handle for your address like andrew.iota).

Once the Tangle allows these new possibilities, and the Soonaverse is completely decentralized, all the application developers in the IOTA ecosystem won’t even need to interact with the Soonaverse UI or libraries. They can simply send a message on the Tangle saying, “Hey, sell this token” and the L1 scripting will automatically get it fulfilled without anybody’s permission.

Our Approach to L2: Building on Shimmer EVM via Service Modules

Even though the Shimmer EVM isn’t the endgame for the Soonaverse, we will are still investing heavily into building out L1/L2 cross capabilities via service modules. At the time of writing, the Soonaverse is integrating roughly 20 different service modules and solution partners into the platform many of them are being built on the Shimmer EVM. We’re excited to be providing so many new experiences to our users. As many of our followers know, we already have iotabee, the leading DEX in the IOTA ecosystem, as our DEX service module. After the release of the Shimmer EVM, we’ll begin integrating various types of DeFi protocols. The current lineup (subject to change) includes lending/borrowing, yield generators, leveraged trading, and stablecoin creation through depositing top tier digital asset collateral. More about this SOON.

All of these prospects make us thrilled about the launch of the Shimmer EVM and all the new fun stuff we’ll be able to do!

The founders of the Soonaverse have been IOTA supporters for over 5 years now and we believe that the Tangle and everything you can do with it will solidify our position in the entire crypto space. The Shimmer EVM will bring a gust of outside capital and pump the TVL on the chain for a limited time, which is important and a necessary part of our evolution. However, if history has shown us anything, it’s that if we can’t simultaneously provide an L1 solution that integrates all of these L2 services into a unique product offering, that pump will be both short-lived and ultimately fleeting. The only way to have staying power is to develop unique solutions on the L1 that other blockchains simply can’t replicate. And that’s what we’ll do.

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