One of the little hidden problems with Centralised Exchanges (CEXs) is the fact that withdrawal fees can be a bit of a mixed back and generally not something that one really takes into account until the moment that you actually try and withdraw your crypto assets into your own private wallets. Now, for the exchanges that I use, Binance and FTX have proven to have the most acceptable withdrawal fees. Meanwhile, I have found that Kucoin, MXC, Coinbase, Crypto.com and CoinList have withdrawal fees that verge from slightly unsettling to hideously painful!
Of course, if you are transacting in gigantic amounts... the withdrawal fees aren't that big a deal... but for most people, they are. Combined with the fact that most of the easy on-ramps for fiat are operated by these CEXs, it means that a great amount of low-medium retail investment money is going to be stuck on exchange... just because the barrier to exiting is just that little bit higher from the withdrawal fee amount.
Add to this that the withdrawal fees are almost always denominated in the withdrawal asset and NOT the actual native blockchain coin which can be a little bit annoying at times. Plus, they often don't update in real time, which means that they need to be a little bit on the high side in case there are network fee spikes due to congestion... or withdrawals go offline for a little bit.
So, I've been playing around on the L2 Ethereum for quite a while... mostly on xDAI, Polygon and Optimistic Ethereum and I have definitely enjoyed the experience of the faster and lower cost networks. Of course, they come with the different trade-offs that come with using a sidechain or Layer 2... these being either more centralisation in network and bridges (Polygon) or 7 day delays in withdrawal to L1 due to the way that Optimistic Rollups work (OE).
Playing around on more Layer 2s has been a bit hampered by the lack of easy L2->L2 bridges (Cbridge and Hop Protocol are the only ones that I'm familiar with). Especially painful moments are if the L2->L2 bridge involves an intermediary L1 stop... with all the attendant gas problems thanks to NFT congestion on the Ethereum mainnet.
What I have been wondering about is why exchanges haven't been offering L2 withdrawals. It could definitely be a problem with the speed with which Ethereum L2s have been rolling out... but OE and xDAI have been around forever... and Polygon has also been around for a while as well. I think it is likely a problem of how and where to place liquidity for the CEXs in order to cover all possible options for withdrawal.
That said, I was really quite happy when Crypto.com offered a deposit/withdrawal service on Polygon last month! For me, this is really quite handy... as Crypto.com is one of my preferred fiat on-ramps (due to the VISA debit card) but not a preferred withdrawal service. Binance WAS my preferred fiat->crypto on ramp... but they have had problems with SEPA for quite a while, and I'm finished testing out a different option via FTX (write up coming soon...).
... and of course, even more recently... Arbitrum! I was looking for a way to easily bridge to Arbitrum (Optimistic rollups L2, similar to Optimistic Ethereum). This could be the easiest way to explore that particular new launch!
So, I have ignored Crypto.com for quite some time... but they really have stepped up the game with the L2 withdrawals and deposits at the same time that Binance is fumbling with regulators. I hope this opens up the doors for other exchanges to follow in their footsteps to start rolling out Ethereum L2 withdrawal and deposit options... L1 is now too tricky for most people to use in a rational way, and direct to L2 is what most of us need!
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Handy Crypto Tools
Ledger Nano S/X: Keep your crypto safe and offline with the leading hardware wallet provider. Not your keys, not your crypto!
Binance: My first choice of centralised exchange, featuring a wide variety of crypto and savings products.
Kucoin: My second choice in exchanges, many tokens listed here that you can't get on Binance!
FTX: Regulated US-based exchange with some pretty interesting and useful discounts on trading and withdrawal fees for FTT holders. Decent fiat on-ramp as well!
MXC: Listings of lots of interesting tokens that are usually only available on DEXs. Avoid high gas prices!
Coinbase: If you need a regulated and safe environment to trade, this is the first exchange for most newcomers!
Crypto.com: Mixed feelings, but they have the BEST looking VISA debit card in existence! Seriously, it is beautiful!
CoinList: Access to early investor and crowdsale of vetted and reserached projects.
Cointracking: Automated or manual tracking of crypto for accounting and taxation reports.
Stoic: A USD maximisation bot trading on Binance using long-term long strategies, powered by the AI/human system of Cindicator.
StakeDAO: Decentralised pooled staking of PoS assets.
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Layer 2 protocols were something that the ethereum network had been demanding for a long time, a second layer network so that people can continue making their transactions without paying those ridiculous gas prices, there is one of the projects that have been losing the confidence of the investor, and is Loom network, a second layer network that was in the spotlight but due to the lack of scalability, its changing trajectory, the lack of communication and transparency made it miss very promising opportunities, so Matic (Polygon) made him bite the dust.
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Ah, Loom! That is a blast from the past! I vaguely remember getting some tokens a long while ago... can't even remember where from, might have been Poloniex!
They are the only exchange I know that allows L2 withdrawals. This is great news! Are there any fees included when moving funds over to Arbitrum?
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I'm hoping it is just the L2 fees only in ETH (or the equivalent in the withdrawal token). I'm going to take it for a proper test drive later this week as I want to see how Arbitrum compares against Optimistic Ethereum... both are similar types of L2.
Is this helpful if I don't have any matic? I have tokens on crypto.com and have heard the fees are steep but have yet to withdraw any yet.
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Ethereum ERC20 tokens can be used (LP and all of that DeFi) stuff on Polygon. If you don't really have a use for the tokens, then there isn't too much difference leaving them on Crypto.com or Polygon (other than the philosophical aspect of having your own tokens in your own hands). There is no guarantee which L2 or L2s will be dominant or if projects migrate mainly to another chain (although Ethereum is a long way ahead at the moment), so there is the risk that you might need to migrate again if Polygon doesn't prove to be a good way (I think it uses Plasma PoS, and wants to migrate to a proper rollups solution having bought out Hermez).
Matic tokens are staked as part of Plasma on the Ethereum MAINNET, so less use on the L2.
Ummm. Sounds a bit beyond me. Seems I might as well stay on Crypto.com and accept the fees if I want to move on.
Thanks for the extra information.
!PIZZA
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Sorry, I just realised I might not have been completely clear. On Polygon, MATIC is used to pay for transactions. Other L2s still keep ETH or DAI.
@bengy! I sent you a slice of $PIZZA on behalf of @gillianpearce.
Did you know you can earn $PIZZA through Hive-Engine Diesel Pools? (4/10)
I must be terrible at this crypto lark. I have:
3.963472 ATOM
40.816314 ALGO
4.296856 XTZ
24.61435437 DAI
I just let it sit there, supposedly earning rewards. I also have 0.00011787 BTC, along with small amounts in such things as Sushiswap and Filecoin. In total, this morning, my Coinbase account is worth £220.73. Do you think I have enough to retire?
Yep, most definitely... although, you might need to cut back a bit on some luxuries and expenses!
Like food?
Yep, that is most definitely a luxury!
@bengy! I sent you a slice of $PIZZA on behalf of @pixresteemer.
Did you know Pizzabot in Discord has a bunch of useful commands? (6/10)