Dogecoin, the OG meme coin, is one of the most popular crypto assets on the market. The coin is ranked 11th among the cryptocurrencies based on market cap alone.
DOGE entered the market in 2013 as a satirical jab at Bitcoin in its early days. However, the coin has since established a loyal community, with new additions coming out frequently. One of these changes came in the form of Dogechain.
Although the Layer 2 chain solution is not built on the Dogechain blockchain, several users associate it with the DOGE brand. The Ethereum-compatible blockchain was developed using Polygon Edge technology.
However, now that Polygon has decided to discontinue the Polygon Edge faction, it is unclear how Dogechain will continue its operations. Top leaders from both the Dogecoin and the Dogechain communities have explicitly stated that the two are not affiliated.
To use DOGE on Dogechain, users must first bridge their tokens to wDOGE (wrapped DOGE). Although these scaling benefits do not directly help DOGE, traders can still leverage the functionality after bridging DOGE to wDOGE.
As the chain expands its usage, it can indirectly and directly support DOGE’s cause. But will it make a significant enough difference to propel Dogecoin to new heights by 2024?
However, before that, learning more about Dogechain and its features is crucial.
Understanding Dogechain and its Features
Dogechain is an L2 solution that aims to solve the issue of more transactions congesting a network. L2 chains are like side roads built on a blockchain that conducts off-chain transactions to reduce the pressure on the main network.
L2 chains provide improved scalability by processing thousands of transactions off-chain. It enables faster transaction completion while preserving reduced fees. Furthermore, Layer 2 solutions are highly secure, with several security methods.
As an L2 solution, Dogechain inherently boasts these benefits as well. Besides this, the solution allows users to stake wDOGE for more rewards.
Additionally, developers might create P2E (play-to-earn) games to entice gamers. In addition, the platform allows for the creation and trade of NFTs. While these advantages are not limited to Dogecoin users, the DOGE community can use them to achieve new heights.
Potential Benefits of Dogechain for Dogecoin
Dogecoin’s current consensus process is PoW (proof-of-work). Because of the structure’s age, transactions complete slowly during high network usage.
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In addition, high network congestion increases transaction fees, making Dogecoin less appealing. Above all, Dogecoin is primarily used as a P2P payment system without any smart contract functionality, limiting its use cases.
Dogecoin can address these issues with its Layer 2 functionalities. By converting DOGE into wDOGE, users can access NFTs, DeFi, and more smart-contract-powered apps. Moreover, Dogechain opens up the possibility of a quicker and cheaper transaction process for DOGE users.
Challenges and Uncertainties Surrounding Dogechain
Currently, the biggest challenge facing Dogechain is the shutting down of Polygon Edge. The solution was developed using Edge technology, and there is no official news about how Dogechain will continue its operations.
Aside from this, Dogechain is still in its early phases. To achieve long-term stability, the solution must overcome its flaws. Big names like Polygon POS and Lightning Network already serve the same audience as Dogechain. Thus, outperforming these chains is a significant challenge for the L2 solution.
The solution must also decide its security model and tokenomics to survive. L2 must brace for unexpected events to become a household name, as Polygon shut down Edge months after Dogechain’s launch.
Outlook for Dogecoin in 2024
In terms of the broader cryptocurrency market, Dogechain has a long way to go. The solution is not offering use cases that are not already being offered by well-established names.
As for its unofficial association with Dogecoin, the connection cannot help the solution enough to keep it afloat. Even Dogecoin has been struggling to maintain its position among the top 10 cryptocurrencies.
DOGE has lost 2.25% of its value in the past year, while most of its competitors have found value during the period. With regulatory changes upcoming, the overall market sentiment surrounding DOGE is lukewarm.
However, it does not mean that the success of Dogechain will not help Dogecoin, and vice versa. Despite the officials confirming no connection between the projects, they have an indirect affiliation.
If Dogechain manages to find a base platform and technology after Polygon Edge shuts down, it can emerge as a promising figure in the L2 industry. The Dogecoin community can also leverage the platform to address the issues posed by its use of PoW technology.
On the other hand, there are several hurdles that Dogechain must overcome. The chain is not unique, faces massive competition, and is not big enough to tackle abrupt regulatory changes.
Even then, it can potentially affect the market if it stays afloat in the upcoming years. The L2 solution should remain on crypto enthusiasts’ radar for a while to come.
If you are interested in more detailed forecast for Dogecoin in terms of performance in 2024 and beyond, checkout our Dogecoin price prediction.
In Conclusion
Although there is no direct affiliation between Dogechain and Dogecoin, the brands share superficial similarities that portray them similarly in users’ minds.
With Dogecoin struggling to overcome its PoW issues, leading to rising transaction fees and slow finality, Dogechain emerges as the ideal solution to help out the meme coin. The DOGE community can use the chain to access NFTs, DeFi, and similar use cases.
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However, for that to happen, Dogechain must overcome the issue of Polygon Edge getting shut down. If the L2 chain manages to find an ideal solution, it can propel DOGE’s market performance in 2024.
Even then, it is highly advisable that users go through its whitepaper, tokenomics, and official documents before making any investment. The growing competition in both the L2 and the crypto scene makes it tougher for Dogecoin and Dogechain to stand out.
Both projects suffer from simplistic primary use cases and must find a way to overcome this if they wish to remain relevant and sustainable.
