BlackRock Set to Introduce L2 Network Compatible with Ethereum?
Asset management giant BlackRock is reportedly exploring the possibility of introducing its own Layer-2 (L2) network that would be compatible with Ethereum. This move comes after BlackRock’s recent forays into leading cryptocurrencies such as Bitcoin and Ethereum, signaling a strategic shift towards further tokenization by contemplating the launch of a native L2 network.
While BlackRock has primarily utilized Ethereum’s blockchain infrastructure, discussions have not extended to other potential Layer-1 (L1) solutions. The company’s potential development of a private L2 chain could be imminent; however, it may not be inherently integrated with other assets.
The success of BlackRock’s Exchange-Traded Funds (ETFs) this year is seen as a significant driving force behind the firm’s interest in establishing a Layer-2 blockchain network. Nevertheless, the process of creating an L2 network is expected to present certain challenges along the way.
BlackRock’s existing involvement with Circle and its access to USD Coin (USDC), a prominent stablecoin, have led analysts at TokenTerminal to speculate that the asset manager might be gearing up to launch its own chain, possibly resembling a tokenless protocol akin to Base.
One of the primary hurdles that BlackRock could face in launching an L2 network lies in navigating the regulatory landscape governing blockchain technology. Even if the firm were to develop a Layer-2 chain that aligns with Ethereum’s ecosystem, it would still be subject to gas fees. Moreover, transitioning between Ethereum and L2 networks necessitates the use of bridges, which are identified as potential weak points vulnerable to exploitation.
Despite these challenges, the sheer scale and resources at BlackRock’s disposal suggest that the firm could indeed overcome obstacles in establishing its own Layer-2 network. The move towards launching a native L2 network underscores BlackRock’s continued interest in expanding its footprint within the rapidly evolving cryptocurrency space.
