Fiat onramps

Integrations between fiat onramps and Kchannels can provide very tangible benefits to end users and the entire ecosystem. The goal is to onboard large numbers of users quickly, smoothly, and cheaply without negatively impacting Layer1 Mainnet.

Onboarding today

As everyone knows, an important and difficult challenge in the blockchain ecosystem is the process of onboarding users and the transition from fiat to crypto. Today, the final step in the process is the transfer of assets at Layer1 Mainnet from the onramp's wallet to the user's wallet. The user is forced to wait for confirmations at the end of an already complex process, whereas the onramp incurs gas costs. At scale (think mass adoption of Ethereum), these gas costs will be significant, and the transfers will create congestion on Mainnet.

Onboarding with Kchannels

There is a simple way to address this with Kchannels. Instead of transferring the cryptoasset from the onramp's Layer1 wallet to the user's Layer1 wallet, the onramp can instead transfer assets instantly from its channel to the user's channel. The user might already have an open channel that can be used to receive the funds; if not, then the onramp can easily create one on his behalf (without retaining any rights to it).

Such a process means that the user is onboarded directly into Layer2 as opposed to the Layer1 onboarding we're accustomed to. This could be a significant innovation because it would be one of the things that make mass adoption of blockchains possible. Imagine a sudden, large influx of crypto newbies who have just heard about a cool new dapp. Today, such a crush of new users would create congestion on Mainnet, driving up gas prices, increasing delays, and hurting other users and dapps (perhaps including important DeFi projects). If instead these new users were onboarded directly into Layer2, their arrival would be barely noticeable.

Layer2 environments

We believe that, in the future, there will be a great variety of Layer2 environments (such as Kchannels), and that most users will onboard directly into one of them. While remaining open and permissionless, Layer1 Mainnet will be primarily used for things that require full blockchain security directly on the base layer, as opposed to simple things like small-to-medium asset transfers.

At Layer2, the key thing is to let users easily move their assets to and from Mainnet, avoiding any sort of friction or lock-in. It's likely that it will also be easy to move assets directly between Layer2 environments, avoiding clunky transitions that involve Layer1 and thereby improving UX.