Thread by @Rewkang

One of the most commonly noted downsides of Optimistic Rollups as a L2 scaling solution is the 1 week exit period

This can be ameliorated by liquidity providers which market make both chains allowing for near-instant settlement

1% fee for 50% implied rate
0.30% for 15%

https://twitter.com/iam__vance/status/1308106211733118976

The implied rate is the rate of return that liquidity providers expect for locking up their capital to provide near-instant settlement (they lock their token X on L2 through the exit gateway for 1 week and provide you some token X which already exists on L1)

Probably starts near 1% fee as opportunity cost in low risk yields are high in crypto currently, but as competition grows and more capital enters this space, this will probably trend lower to 0.2 - 0.4% over the next year or two

The narrative has started picking up for other L1s recently, and I think they will see a lot of growth in the short term, but they lose a lot of value prop to a fully functioning OR layer.

I think it will be fairly simple to get liquidity to move to L2 through incentives

The incentive war will shift from between dapps on ETH to dapps across ETH L1 , L2 and other L1s.

@ProjectSerum @UniswapProtocol @CurveFinance have huge warchests of incentives to fire with. What other projects will be able to compete with those?

Actually, rates at first might be lower because projects with large treasuries (@synthetix_io , @AaveAave @UniswapProtocol ) would be willing to provide expedited exit liquidity for cheap since they care more about growing the network rather than optimizing their yield