Cardano is launching a new innovative permissionless Layer 2 (L2) solution, Midgard, to address scalability issues in the Ethereum (ETH) network. As revealed in its 2024 summit in Argentina, Midgard would be based on a trustless mechanism without a central sequencer, unlike Arbitrum or Optimism.
Cardano aims to surpass Ethereum through this new Layer 2 solution, as it will provide users with a strong layer of security and decentralization. This is particularly important in the Layer 2 space where multisignatures are the norm.
Cardano’s much-criticized Extended Unspent Transaction Output of EUTxO will play a critical role in Midgard. EUTxO will eliminate centralisation risks and allow Midgard to run independently without relying on withdrawal schemes and centralized deposits.
The new layer 2 solution by Cardano will enhance crypto transactions with trustless “fraud proofs”. Analysts predict this could be a game-changer in the DeFi landscape as it could redefine user expectations in terms of security features. The CEO of Anastasia Labs, Philip DiSarro that Midgard embodies Cardano's decentralised and efficient blockchain vision.
In Midgard, every transaction will be free of external interference as the Layer 2 solution won't require multi-signature operators. Such a permissionless model is a unique concept in the crypto market and could evolve the system.
Midgard relies heavily on Cardano’s architecture, and hence it can't be replicated by Sui or Ethereum blockchains. Central to this lies in Cardano's small block size, UTxOs management, etc features.
The new layer 2 solution has been accepted by the crypto community with enthusiasm with the Cardano founder Charles Hoskinson supporting Midgard’s vision. He shared the news of the launch on social media and highlighted how this would impact DeFi's future.