Layer 2
What are layer 2 solutions and how do they help projects scale
Summary
A layer-1 network refers to a blockchain such as Bitcoin, Ethereum, etc. At the same time, a layer-2 protocol is a third-party integration added on top of on of those layer-1 blockchains to make it more efficient and scalable.
Projects like Ethereum have networks that have become so popular that they suffer congestion and high gas fee's
Ethereum can process 15 transactions per second, and transactions have high gas fee's. Polygon, a L2 solution for Ethereum, has clocked over 9 million transaction in a single day
What is Layer 2 (L2)?
Layer 2 solutions help crpytocurrency projects scale by processing transactions off of the Mainnet (Layer 1) while still maintaining the same security measures and decentralization as the L1. This increases transaction speeds and reduce gas fees. Popular examples of Ethereum layer 2 solutions are Polygon, Loopring and optimism.
Layer 2 solutions offer:
Higher transaction processing capacity
Lower gas
Faster confirmation time
Types of L2
ZK-rollup
'Zero Knowledge' ZK roll-up technology confirms ownership of a piece of detailed information without revealing the actual data. It bundles hundreds of transactions and processes them more efficiently.
Payment channels
A payment channel or state channel is a bilateral communication between users, helping them to interact in a blockchain.
Sidechains
A sidechain is a separate blockchain which runs in parallel to Ethereum Mainnet and operates independently. It is connected to Mainnet (L1) by a two-way bridge. They use their own consensus mechanism, which is the protocols, algorithms, or other computer systems that allow cryptocurrencies to work. Polygon, with their token Matic, is an established L2 solution for Ethereum that uses sidechains.
Plasma
Plasma is a framework for building decentralised applications (‘dApps’) that are meant to be secure, scalable and swift. Plasma allows dApps to achieve this through the creation of ‘child’ blockchains, which are connected to the ‘parent’ blockchain through a smart contract. The child chains also have their own consensus mechanisms.
Popular L2 projects
Polygon - we will do our next article on this L2 solution.
Polygon is a popular layer 2 solution. According to their website, Polygon is:
Polygon is a decentralised Ethereum scaling platform that enables developers to build scalable user-friendly dApps with low transaction fees without ever sacrificing on security.
Other popular layer 2 projects include:
Loopring
Optimism
Metis
Arbitrum one
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