Are you ready for an explosive journey that takes you deep into the inner workings of modern blockchain technology?
Since the beginning of crypto casinos, the industry has continued to evolve and one of the booming trends is the increase in Layer 2, mining, and yield farming. If you have ever wondered how these concepts impact your gaming experience, then we are here to take you through the ins and outs of these booming blockchain technologies.
Here are three concepts that are shaping the efficiency, security, and rewards within online crypto gambling platforms today.
- Layer 2: Solutions can enhance transaction speed and reduce costs. In some cases, a layer 2 crypto can make deposits and withdrawals near-instant.
- Mining: Secures Proof-of-Work (PoW) blockchain transactions and generates new crypto coins, which are used in casino payments and bonuses.
- Yield Farming: Allows players to earn passive income through staking and liquidity pools.
If we have piqued your interest, then great. Read on, and we’ll give you a brief, but detailed overview of how these technologies are shaping and will continue to shape the future of the crypto iGaming industry. We also delve into farming in crypto casinos, which offers you the chance to earn interest on your investment.
What Is Layer 2?
In the world of blockchain tech, layer 2 refers to a secondary blockchain solution built on top of a layer 1 architecture. The transaction occurs on the layer 2 level before being submitted to the main layer 1 blockchain ecosystem.
How it Works
Layer 2 networks process transactions separately from the main blockchain, reducing congestion.
- Rather than verifying each transaction individually, they will place the transaction into a batch of multiple transactions and confirm them collectively on the Layer 1 ecosystem.
- With batches of transactions gathered into one larger transaction and then sent to the layer 1 crypto blockchain, the transaction fees can be split. Batching reduces transaction fees as costs are shared across multiple transactions.
Here are two examples of layer 2 cryptos speeding up crypto casino gaming:
Bitcoin Lightning Network (BTC L2)
Speeds up transaction times using off-chain solutions. As the transaction occurs off-chain, the process also reduces network fees. With Lightning, casinos can accept microtransactions, allowing players to deposit smaller amounts.
Plus, since Lightning transactions are not broadcast to the entire blockchain, they provide better privacy than traditional Bitcoin transactions.
Ethereum – Arbitrum (ARB)
These are rollup-based Layer 2 solutions for Ethereum that batch transactions before submitting them to Ethereum’s Layer 1. They allow faster and cheaper transactions compared to Ethereum’s Layer 1, which can be slow and expensive during high network congestion.
For casinos, Ethereum Layer 2s (like Arbitrum, Optimism, or Polygon) are particularly relevant because they enable low-cost, high-speed transactions for blockchain gaming deposits, withdrawals, and smart contract interactions.
Why It Matters for Crypto Casinos
- Faster deposits & withdrawals: You can take advantage of near-instant transaction processing, eliminating long wait times for your casino balance to top up. Although many casinos already use layer 1 cryptos with a single confirmation,
- Lower transaction fees: when using layer 2 cryptos, you will spend less on blockchain gas fees when transacting with crypto casinos, thanks to the shared fees with other users sharing the batched transactions across a single fee.
- Scalability: One of the key layer 2 gaming benefits is that blockchain ecosystems are able to support more games, players, and high-volume transactions without network congestion. The future of crypto and its continued mass adoption has posed scalability issues, but thanks to layer 2 cryptos, the pressure on the layer 1 ecosystems is being reduced.
- Enhanced security: Layer 2 inherits the security of the main blockchain, ensuring safe transactions. Plus, with some layer 2 crypto like BTC L2 off-chain transactions not broadcasting your transaction, this adds an added layer of privacy when sending and receiving crypto. Just as a side note, our example of Arbitrum does not use an off-chain solution as it still published transactions on the layer 1 ecosystem.
Real-World Casino Example
Some crypto casinos integrate Layer 2 networks like Polygon or Lightning to allow instant deposits and withdrawals with minimal fees, improving the overall player experience. Additionally, crypto wallets like Metamask, OKX Wallet, and Phantom now offer Layer 2 support, allowing users to deposit funds into their casino accounts with reduced gas fees and instant confirmation.
With Layer 2 adoption increasing, more casinos are expected to integrate these solutions, making crypto gambling more efficient, cost-effective, and scalable for both operators and players.
Crypto Mining – How It Fuels Casino Transactions
Crypto mining is a process that uses high-spec computer technology, such as ASICs or GPUs to solve cryptographic puzzles and validate transactions in Proof-of-Work (PoW) blockchains. For example, Bitcoin (BTC), Bitcoin Cash (BCH), Litecoin (LTC), and Dogecoin (DOGE).
Before we dive deeper into the topic of crypto mining, there is one point you should be aware of. You will often see mining rigs referred to as nodes, however, it is also helpful to understand the different types of nodes that operate on a blockchain ecosystem.
- Mining Nodes: Mine blocks (crypto), validate transactions, and store a copy of the blockchain on their system.
- Full Nodes: These nodes do not mine blocks or earn fees for validating transactions. They exist simply to store and verify the entire blockchain history, ensuring all transactions comply with consensus rules.
- PoS Validator Nodes: On PoS-based blockchains (Ethereum 2.0, Solana, Avalanche, Polygon, etc.), validator nodes confirm transactions and add them to the blockchain. They earn a fee for each validation.
- Lightning Network Routing Nodes: In Bitcoin’s Lightning Network, routing nodes facilitate off-chain transactions by forwarding payments between users, but they do not mine blocks. Instead, they earn small fees for helping route transactions efficiently.
These are just a few examples of nodes. As you can see, just because there is a node that exists on the network, it does not mean the node mines crypto.
How It Works
For mining to be possible, crypto organisations set up mining nodes (computers) and add them to a blockchain network. The mining nodes themselves are typically powerful computers that validate blockchain transactions and generate new coins when they solve cryptographic puzzles to add new blocks and earn rewards.
Quick Facts
- Mining usually requires high-end processing technology to compete.
- Miners compete to solve cryptographic puzzles to confirm transactions.
- Once solved, the transaction is added to the blockchain as a new block.
- Miners receive rewards in newly minted cryptocurrency as an incentive.
Mining methods:
- Proof of Work (PoW): Requires solving complex mathematical problems.
- Proof of Stake (PoS): Validators stake crypto to confirm transactions. Cryptocurrencies using this mining method include Ethereum 2.0 and many new blockchains use PoS.
Why It Matters for Crypto Casinos
- Ensures transaction security: Every crypto deposit and withdrawal undergoes a rigorous validation process through mining or staking. The process helps to ensure transactions are legitimate and prevent fraudulent activities such as double-spending or unauthorized alterations.
- Supports casino operations: The cryptocurrencies used in blockchain gaming are created and sustained by mining. Without the miners in place, we wouldn’t be able to use crypto to fund crypto casinos and benefit from the privacy and anonymity offered.
- Environmental impact concerns: As the world becomes more environmentally conscious, there are crypto casinos that have a mandate to reduce their carbon footprint. As a result, due to traditional PoW mining requiring higher energy absorption, some cryptocurrency casinos are pushing PoS-based blockchains.
Crypto Yield Farming – Earning Passive Rewards
Yield farming is a DeFi (decentralized finance) method used by everyday crypto enthusiasts who want to earn a passive income by lending or staking their crypto assets via exchanges, wallets, or farming in crypto casinos.
Think of it like placing your money into a high interest bank account, except you are earning interest not on the value of your crypto, but the number of cryptos you stake. Therefore, crypto price volatility is still something you have to be aware of before committing to staking.
Quite often, crypto staking rewards offer higher interest rates compared to the traditional banking methods. You also have time-limited options to stake crypto. Quite a few staking options use a system whereby the longer you commit your crypto to staking, the higher the interest rate.
How It Works
Users lock their crypto into smart contracts on DeFi platforms, and in return, they earn rewards in the form of interest, additional tokens, or governance rights.
Some Popular yield farming platforms include:
- Uniswap: A decentralized exchange where users provide liquidity and earn fees.
- Aave: A lending protocol that offers interest-bearing crypto deposits.
- PancakeSwap: A Binance Smart Chain-based DeFi platform for yield farming.
Why It Matters for Casino Players
- Crypto staking rewards: Some casinos allow players to stake crypto holdings and earn rewards.
- Loyalty programs funded by farming: Casino cashback and VIP perks often leverage yield farming pools.
- Passive income for players: Even when not gambling, players can grow their crypto by participating in farming opportunities.
How Crypto Casinos Benefit from Layer 2, Mining & Farming
Crypto casinos are evolving rapidly, offering players a more efficient and rewarding gaming experience. By leveraging blockchain technology, they enable lower fees and faster transactions, ensuring seamless gameplay and quick withdrawals.
Mining contributes to security and transparency, reinforcing fair play and fostering trust in the platform. Additionally, yield farming introduces new earning opportunities, allowing players to generate passive income while engaging with the casino ecosystem.
Looking ahead, the future of crypto casinos points toward deeper blockchain integration, providing even more ways to earn and interact within a decentralized gaming environment.
Want to Learn More About Crypto?
If you want to learn more about crypto and how it works, check out the mBticasino YouTube Channel where you’ll find videos covering how crypto is leading a revolution, top crypto wallets, and more. You can also head over to our blog, where we walk you through the inner workings of modern blockchain technology, explain how crypto works, and talk in-depth about the crypto casino scene via our Crypto Blog Category section.