What is Ink?

Kraken's Ink is a Layer 2 blockchain built on Optimism's OP Stack that bridges centralized exchanges and decentralized finance (DeFi), enabling faster, cheaper transactions with one-second block times and seamless cross-chain interoperability.

The cryptocurrency exchange landscape transformed significantly when Kraken launched its layer-2 rollup network, built on top of the Ethereum blockchain, in December 2024. This development marked a major shift for one of the oldest cryptocurrency exchanges, joining competitors like Coinbase in the race to make DeFi more accessible through dedicated blockchain infrastructure.

Ink is a cutting-edge Layer 2 (L2) blockchain built on Optimism's Superchain and released by Kraken. Unlike traditional standalone blockchains, Ink operates as a scaling solution that processes transactions off the main Ethereum network while maintaining the security guarantees of the underlying blockchain.'

The blockchain serves as a seamless bridge to DeFi, empowering users to move onchain with confidence and ease. Rather than creating another isolated network, Kraken designed Ink to integrate deeply with existing DeFi infrastructure while providing the familiar user experience that centralized exchange users expect.

Ink leverages Optimism's open source, MIT-licensed OP Stack codebase, positioning it within the broader Ethereum ecosystem. This technical foundation provides several key advantages:

Speed and Performance: Ink will offer one-second block times from day one and focus on bringing it down to sub-second blocks, making it one of the fastest Layer 2 solutions available. This speed enables real-time DeFi interactions without the delays typically associated with Ethereum mainnet transactions.

Cross-Chain Interoperability: As part of the Optimism Superchain, Ink benefits from native interoperability features. The Optimism Superchain will facilitate interoperability throughout its ecosystem and beyond, allowing liquidity to easily move between the chains that make up the Superchain.

Security Model: The blockchain inherits Ethereum's battle-tested security while adding additional layers of protection. Ink is implementing permissionless fault proofs, with Gelato and Kraken running challengers, making Ink the first Superchain network to feature multiple challengers at launch.

The comparison between Ink and Coinbase's Base reveals interesting strategic differences. As of Nov. 4, 2024, with a total value locked (TVL) of $2.43 billion, Base currently holds the largest market share among all L2 chains. However, Ink takes a different approach to market entry and monetization.

Unlike Binance's BNB and Coinbase's Base, Ink will not release its own token. Instead, the chain will focus on building robust DeFi infrastructure and added functionality for Kraken's exchange. This strategy allows Kraken to avoid the complexities of token economics while focusing on user experience and functionality.

Kraken's approach to generating revenue from Ink follows the established sequencer model. Kraken will act as Ink's sequencer, meaning Kraken will be arranging transactions in a roll-up before sending them to Ethereum and earning revenue for the service.

This model has proven profitable for other exchanges: Coinbase, for example, generated $53 million in sequencer revenue with Base in just the second quarter of 2024. Kraken agreed to receive 25 million OP tokens (worth about $58 million) as part of a deal to build on the OP Stack.

Traditional DeFi applications often present barriers to mainstream adoption. Complex wallet setups, gas fee management, and fragmented liquidity across multiple chains create friction that deters many users. Ink addresses these challenges by leveraging Kraken's existing user base and infrastructure.

By eliminating or reducing the friction points that have made such transitions challenging, Ink may enable users to move easily between the two worlds. The blockchain serves as a gateway that allows Kraken's 10 million users to access DeFi applications without the typical complexity.

One of Ink's key differentiators lies in its deep integration with Kraken's existing services. Users can seamlessly move assets from their Kraken exchange accounts to participate in DeFi protocols without complex bridging procedures or external wallet management.

This integration extends to Eco's cross-chain infrastructure, where platforms like Ink can benefit from unified stablecoin experiences across multiple blockchain networks. The combination of Layer 2 efficiency and cross-chain interoperability creates new possibilities for streamlined DeFi operations.

The Superchain is a network of L2 chains, known as OP Chains, which share security, a communication layer, and an open-source technology stack. This architecture enables unprecedented levels of interoperability between different blockchain networks.

The Superchain model offers several advantages over isolated Layer 2 solutions:

Shared Liquidity: Interoperability lets chain operators and app developers seamlessly connect to the Superchain - unlocking shared users, liquidity, and tooling from day one.

Unified User Experience: The objective of the interoperability solution is to make the Superchain operate like a single blockchain — allowing users, assets, and developers to move seamlessly across networks.

Technical Standards: Key components include: Message Passing Protocol: This enables secure cross-chain messages, allowing data and transactions to flow freely within the Superchain. ERC 7802: A standard token bridging interface that aims to proliferate and simplify cross-chain token transfers.

The Superchain's native interoperability features align perfectly with the growing demand for cross-chain messaging solutions. With Interoperability on mainnet next year, data and assets will move between chains without needing to go through L1.

This capability becomes particularly valuable when combined with stablecoin infrastructure. Traditional stablecoin deployments create isolated pools of liquidity, but cross-chain messaging protocols enable unified experiences that abstract away underlying complexity.

Comprehensive support: Beyond access to a rich library of documentation, tutorials and code samples designed to accelerate the development process, builders will have access to expert guidance, hands-on workshops, special events, robust technical support, private community channels and opportunities for financial support.

The platform's focus on DeFi creates opportunities for specialized applications. DeFi focus: Ink is all-in on DeFi. We want to support your efforts to build products that help users access exciting new opportunities onchain.

Ink's architecture ensures seamless migration for existing Ethereum applications. EVM (Ethereum Virtual Machine) Support: Any smart contracts compatible with Ethereum and other L2 solutions can be deployed on Ink without modifications.

This compatibility extends to existing DeFi protocols and infrastructure, including stablecoin systems that require reliable cross-chain functionality for optimal user experiences.

When comparing Layer 2 solutions, several key metrics matter for users and developers:

Transaction Speed: Arbitrum and Optimism account for over 60% of the growing layer 2 sector, but Ink's one-second block times provide competitive advantages for time-sensitive DeFi operations.

Cost Efficiency: Layer 2 solutions dramatically reduce transaction costs compared to Ethereum mainnet. Users experience significantly reduced gas fees compared to Ethereum's mainnet, making it a cost-effective solution.

Security Guarantees: Layer 2 solutions handle transactions off the main chain in a separate layer. This approach reduces the burden on the main chain by offloading the computational and data storage work.

Different Layer 2 solutions employ varying approaches to transaction validation. Primarily, Optimism and Arbitrum differ in how they approach fraud-proof mechanisms. Optimism rollup protocols employ a single-round fraud-proof mechanism that verifies transaction validity on Ethereum's mainnet.

Ink's implementation of permissionless fault proofs with multiple challengers represents an evolution in this space, potentially offering enhanced security guarantees.

Ink's design makes it particularly suitable for several DeFi use cases:

Lending and Borrowing: Those fast processing times will facilitate a wide range of activities on Ink, including perpetual futures trading, decentralized lending, and yield farming, among other transactions.

Cross-Chain Asset Management: The Superchain's interoperability features enable sophisticated multi-chain strategies without the complexity typically associated with bridge-based solutions.

Institutional DeFi: With Ink, Kraken hopes to bring institutional credibility into the decentralized space, creating opportunities for traditional finance institutions to engage with DeFi protocols.

Ink's integration within the Superchain creates opportunities for enhanced stablecoin experiences. Modern stablecoin infrastructure benefits from unified cross-chain messaging protocols that enable seamless asset transfers without fragmented user experiences.

The combination of Kraken's established compliance framework and Ink's technical capabilities could support advanced stablecoin use cases that require both regulatory compliance and technical sophistication.

Kraken launched its layer-2 network, called Ink, on Wednesday. The blockchain, which is built with Optimism's OP Stack, was planned to go live in early 2025, so the release is ahead of schedule.

The accelerated launch timeline demonstrates Kraken's confidence in the technology stack and market opportunity. "We like to move fast. We like to be secure with it, though," Koller said.

Initial adoption metrics show promise for ecosystem development. The platform launched with more than a dozen apps, which will soon go live. These apps have been developed for sectors like advanced financing platforms and real-world assets.

The success of Ink could influence how other centralized exchanges approach blockchain infrastructure. The model of building on established Layer 2 frameworks rather than creating standalone blockchains may become the preferred approach for enterprises entering Web3.

Ink's participation in the Superchain contributes to broader interoperability standards that benefit the entire Ethereum ecosystem. Optimism will also continue to support Ethereum-wide interoperability standards like EIP 7683, to ensure that UX throughout the L2 Ecosystem improves in tandem with the Superchain.

These standards become particularly important for platforms like Eco that rely on seamless cross-chain functionality to deliver unified stablecoin experiences across multiple networks.

While Ink offers significant advantages, it faces challenges common to emerging Layer 2 solutions:

Liquidity Bootstrapping: New networks require time to build sufficient liquidity for optimal user experiences. Though early usage is modest (~$8.5 million TVL), Ink aims to differentiate through product-first rollout and eventual Kraken Wallet integration.

Network Effects: Success depends on attracting both developers and users to create sustainable ecosystem growth.

Currently, Kraken will initially act as the sole sequencer for Ink, managing transactions and earning revenue, but plans to decentralize this function over time. This centralized approach enables rapid deployment but requires careful planning for eventual decentralization.

For existing Kraken users, accessing Ink should be relatively straightforward through integrated exchange interfaces. The platform aims to abstract away complexity while providing access to sophisticated DeFi capabilities.

Kraken Wallet natively supports unified multi-chain access to all networks that have been enabled. The Ink testnet is fully supported in the latest version of Kraken Wallet.

Developers can access comprehensive documentation and tools through Kraken's developer portal, with additional support for projects building on the platform.

What makes Ink different from other Layer 2 solutions?

Ink differentiates itself through deep integration with Kraken's exchange infrastructure, one-second block times, and a focus on bridging centralized and decentralized finance without issuing a native token.

How does Ink ensure security?

Ink inherits Ethereum's security model while implementing permissionless fault proofs with multiple challengers, creating additional security layers beyond the base Optimism framework.

Can existing Ethereum applications run on Ink?

Yes, Ink supports the Ethereum Virtual Machine (EVM), allowing any smart contracts compatible with Ethereum to run without modifications.

What is the relationship between Ink and the Optimism Superchain?

Ink is part of the Optimism Superchain, enabling native interoperability with other chains in the network and access to shared liquidity and development tools.

How does Ink compare to Coinbase's Base?

While both use the OP Stack, Ink focuses on DeFi bridging without a native token, while Base has achieved larger TVL through broader market adoption and token-based incentives.

What are the transaction costs on Ink?

As a Layer 2 solution, Ink offers significantly lower transaction costs than Ethereum mainnet, with fees typically measured in fractions of pennies for standard operations.