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In late July 2024, Igloo Inc., the parent company of blue-chip NFT collection Pudgy Penguins, announced that it is developing an Ethereum-based layer two (L2) chain called Abstract, which aims to be “the blockchain for consumer crypto.”
Introducing Igloo Inc, the parent company to @pudgypenguins and @OverpassIP.
Our mission is to create the largest onchain community, driving the consumer crypto revolution.
More information below. pic.twitter.com/Ic0EPr0C35
— Igloo (@IglooInc) June 22, 2024
The company also said that renowned tech investor Peter Theil’s Founders Fund has backed the project in a funding round, reported to be around $11 million.
What is Abstract L2? In this article, we explore what makes it different from the plethora of L2s in the market.
Key Takeaways
- Abstract is a ZK L2 built on top of Ethereum using the ZK stack.
- Abstract will use EigenLayer’s data availability solution EigenDA.
- Investors expect the Pudgy Penguin brand to attract users to Abstract L2.
- Abstract L2 is looking to make interacting as seamless as possible with its focus on native account abstraction.
- As of late July 2024, Abstract L2 is available as a public testnet for developers.
What Is Abstract L2?
Abstract is a zero-knowledge (ZK) L2 built on top of Ethereum. The L2 is built using the ZK stack – a standardized, shared, and open-source development solution for ZK rollups built by ZKsync.
Igloo’s L2 will be EVM-compatible, which will allow developers to seamlessly migrate their smart contracts from other EVM-compatible chains.
Being a ZK rollup, Abstract will submit validity proofs to the Ethereum L1 which proves the validity of the transactions that occurred on the L2.
At the time of writing, optimistic rollups dominate the L2 landscape with Arbitrum (ARB), Base, and Blast (BLAST) currently the biggest Ethereum-based L2s in the world, in terms of total value locked.
Unlike ZK rollups, optimistic rollups do not submit validity proofs to the L1. Instead, optimistic rollups assume that all L2 transactions are valid and allow anyone to challenge the validity of transactions for a given time period.
Furthermore, Abstract’s modular architecture will also use EigenLayer’s data availability solution EigenDA.
What Makes Abstract L2 ‘the Blockchain for Consumer Crypto’
Pudgy Penguins Brand to Help Consumer Crypto Adoption
Abstract is being developed by the team that created the Pudgy Penguins NFT collection.
Pudgy Penguins is one of the few NFT collections to break the barrier between the crypto and non-crypto world. In 2023, Pudgy Penguins collaborated with US retail chain Target to sell plushies, figurines, and other collectibles.
According to founder Luca Netz, Pudgy Penguins sold over 1 million toys in the first 12 months of its retail debut.
There is belief in the market that Igloo has the experience and an existing community to draw first time crypto users to the space.
Over 1,000,000 toys sold in the last 12 months as @pudgypenguins continues it's expansion in retailers all over the world.
Who would've thought that the Consumer Crypto revolution was going to be lead by fat flightless birds. pic.twitter.com/E8jmSICwlt
— Luca Netz 🐧 (@LucaNetz) May 12, 2024
Abstract L2 Double Downs on Account Abstraction
On a technical level, Abstract L2 is looking to make interacting as seamless as possible with its focus on native account abstraction.
In simple terms, account abstraction technology allows users to interact with crypto blockchains in a convenient and user-friendly way by removing friction points such as gas fee payments and tedious wallet setup processes.
“Native Account Abstraction on Abstract fundamentally changes how accounts operate by introducing the concept of Smart Accounts and Paymasters,” said Abstract.
Smart accounts or smart wallets are a new generation of crypto wallets expected to make on-chain transitions “smoother than ever.” Smart wallets can be created with a click of a button, do not require tedious secret recovery phrases management and can be accessed seamlessly using passkeys stored on your devices or cloud.
Meanwhile, paymasters are smart contracts that will introduce gasless experiences to the on-chain world. This is made possible by allowing decentralized applications to pay gas fees on behalf of their users.
Abstract said:
“Your project can start preparing for native AA (account abstraction) support. We highly encourage you to do so, since it will allow you to onboard hundreds of thousands of users (many new Wallets are smart accounts by default, providing way smoother experience for users). We expect that in the future even more users will switch to smart wallets.”
The end goal of the work we're doing for @AbstractChain is to make the crypto user experience better.
Our space tends to focus on what has been done in the past rather than what the ideal experience can be.
It's time to change that.
— cygaar (@0xCygaar) July 25, 2024
Why Are Investors Interested in Abstract L2?
If you are wondering why investors are interested in Abstract L2, let’s consider the investment rationale of firms that has recently invested in the project.
Founders Fund Bets on Pudgy Penguin
On X, Joey Krug, partner at Founders Fund, highlighted the “unique distribution advantage” that Pudgy Penguin creators Igloo have at their disposal.
“Most platforms in crypto pay massive amounts to acquire users, but Pudgy actually has a negative CAC (customer acquisition cost),” Krug said.
“It’s also impressive how they have premium shelf-space in these stores, which is notoriously hard to get, and that they’re bringing in both crypto natives and people where this is their first interaction with crypto. It’s also a positive, light-hearted, and fun way to onboard.”
Krug went on to praise Pudgy Penguin founder Netz as “one of the best marketers on the planet.”
Meanwhile, Krug’s colleague Bridget Harris said:
“Pudgy’s distribution edge is by far the best we’ve seen in the crypto space and beyond. They’ve created the most lovable brand in crypto by far – one that appeals to everyone, not just cryptonatives.”
“With Abstract, their edge for builders is having a massive + bought-in community and distribution edge the second the developer starts, rather than having to bootstrap the ecosystem/community from scratch,” she added.
We at @FoundersFund are so proud to back @PudgyPenguins @AbstractChain @IglooInc 🧵 // https://t.co/px2pumhpvA pic.twitter.com/c9P4BtPXcd
— Bridget (@bridge__harris) July 23, 2024
Fenbushi Capital Joins Founders Fund
Asia-based crypto venture capital firm Fenbushi Capital also participated in Igloo’s funding round alongside Founders Fund.
Their investment director, Clarence Zhou, said:
“After building an incredible community and having successful product launch in traditional retail, Pudgy now expand its footprint to consumer focused blockchain. In web3, marketing and user retention is super challenging. That’s why we need Abstract to really help Dapps with market distribution. Super excited to see how it goes.”
We at @Fenbushi are excited to share that we have invested in @PudgyPenguins, @IglooInc , and @AbstractChain, along with @FundersFound, @1kx, and others 🎉 See what our investment director says below about why we invested 👇🏼 https://t.co/VQSiRNdAiJ
— Fenbushi Capital (@fenbushi) July 24, 2024
Not Everyone Is Convinced About Abstract & L2s
A section of the crypto community was not convinced about another L2 in the market. After all, Ethereum’s plan to find scale using L2s has given us a plethora of L2 options to choose from.
According to L2BEAT, there were 72 L2 chains in the world as of July 26, 2024.
“So you’re saying you’re working on the same thing everyone else is?” asked pseudonymous X user Oxshakib to an Abstract L2 contributor named cygaar.
Meanwhile, X user Andy wrote:
“Yes. Picked a great name, but how will you make it better? Will you use certain chain abstraction tools? Gas paymaster sponsorships? I want to be bullish but how much better can the UX be compared to other L2s given the design constraints of EOA wallets for example…”
Earlier on July 13, 2024, Justin Bons, Ethereum critic and founder of Netherland-based crypto investment firm Cyber Capital, slammed L2s, saying that “L2 scaling roadmap is doomed to fail.”
L2s are not the future of scaling!
All major L2s are centralized & can steal user funds!
Instead of scaling ETH, we are spinning up hundreds of far inferior competitors
This has led to the fragmentation of UX, liquidity & culture; ETHs "L2 scaling" roadmap is doomed to fail: pic.twitter.com/32bKPvys57
— Justin Bons (@Justin_Bons) July 13, 2024
The Bottom Line
As of late July 2024, Abstract L2 is available as a public testnet for developers. There has been no announcement about its mainnet launch yet.
Igloo has ambitious plans to go beyond NFTs and into L2s. Will we see a superior breed of L2 or will it be the same product in a different wrapper? We will be waiting.
FAQs
What is the goal of Abstract L2 blockchain?
What is Pudgy Penguins?
References
- Igloo Inc. (Igloo)
- Igloo on X (X)
- Peter Thiel’s Founders Fund leads $11 million round for Pudgy Penguins’ parent as it builds new Layer 2 blockchain (Theblock)
- Total Value Locked All Chains (Defillama)
- Pudgy Penguins on X (X)
- Luca Netz 🐧 on X (X)
- Abstract. Introduction (Docs.abs)
- Abstract. Signature Validation (Docs.abs)
- cygaar on X (X)
- Joey Krug on X (X)
- Bridget on X (X)
- Bridget on X (X)
- Fenbushi Capital on X (X)
- L2BEAT – The state of the layer two ecosystem (L2beat)
- 0xshakib on X (X)
- Andy on X (X)
- Justin Bons on X (X)
