Transak Finance, a team of developers building fiat-to-crypto payment bridges, launched fiat onramps for popular Ethereum L2s Arbitrum and Optimism on Dec. 22.
The bridges represent a significant milestone in the adoption of L2s, enabling users to directly transfer value onto the networks using their local fiat currency and card providers.
Without the fiat bridge, transacting on L2 would require users to transfer assets onto the Ethereum network before bridging them onto Arbitrum or Optimism, racking up significant gas fees in the process.
Arbitrum is currently the largest L2 by total value locked (TVL) with $2.41B or 44.7% of total Layer 2 market share. Optimism ranks fifth with $399M or 7.4% of the sector’s TVL.
However, social media commentators have balked at the fees and restrictions placed on transactions executed using Transak’s bridge.
Twitter user “santandret” recoiled at the service’s 7.5% fees, while “Chris_HKG” noted that credit card transactions are capped at $500 each. “I think I will stick to ETH mainnet gas fees, at least it goes to the network,” they added.
Although the service is not currently offered to U.S. residents, Optimism states it is working on alternative solutions for American users in partnership with other teams.
Transak is an India-based firm that was incubated in Ethereum-focused tech firm ConsenSys’ accelerator program, Tachyon.
Transak stepped out on its own in 2020, launching on-ramps enabling direct crypto purchases using the fiat currencies of nearly 30 different countries via a partnership with API Payments firm Wyre during that May.
While the firm initially positioned itself as a business-to-consumer marketplace facilitating cryptocurrency purchases and sales, it quickly secured integrations as a fiat bridge for the Matic and Wazirx networks. Transak has expanded to enable direct fiat access to top DeFi service providers, including Metamask, Aave, and Index Coop.
In March 2021, Transak raised $650,000 in a seed round that was led by ConsenSys, The Loa, and other angel investors. The firm has since looked to expand support for leading DeFi networks, announcing support for Avalanche, Terra, and Moonriver among others in recent months.