Kraken eyes expansion with Layer 2 network plans: Details

Kraken, a renowned U.S. cryptocurrency exchange, is in active discussions with leading blockchain technology firms to spearhead its own Layer 2 network.  In what could be seen as a strategic shift towards enhancing blockchain infrastructure, Kraken’s plans suggest a move to augment its service offerings, echoing a trend by Coinbase earlier this year.

The search for technology partners

Delving into the specifics, Kraken is reportedly engaging with notable entities such as Polygon, Matter Labs, and Nil Foundation, exploring the potential adoption of their technologies for its upcoming network. These talks remain highly confidential, with the details yet to be made public as deliberations continue. However, Kraken’s quest for a collaborative venture highlights its initiative to stay at the forefront of technological advancement within the cryptocurrency exchange domain.

A Kraken spokesperson conveyed the exchange’s commitment to innovation in the industry, stating, “We’re always looking to identify and solve for new industry challenges and opportunities.” Yet, they withheld any further information at this juncture.

The competitive drive

The impulse for expansion by major crypto firms into blockchain development signifies a broader competitive landscape where brand establishment and customer retention are pivotal. In February this year, Coinbase, a key player and Kraken’s competitor, successfully deployed its own Layer 2 network named Base, leveraging the OP Stack courtesy of the Optimism team. This development represents a broader canvas of crypto exchanges transitioning from just trading platforms to becoming blockchain innovators.

Polygon and Matter Labs have both been pivotal in developing Ethereum scaling solutions, offering their bespoke technologies to emerging blockchain projects. Kraken’s active recruitment for a “Senior Cryptography Engineer” with expertise in cutting-edge cryptographic protocols, including zero-knowledge proofs, indicates the company’s dedicated effort to deepen its involvement in on-chain scaling solutions.

This move by Kraken signals a significant drive towards diversifying its services and potentially unlocking new revenue streams. The adoption of Layer 2 solutions is not merely a technological upgrade; it represents a strategic repositioning in the competitive crypto market.