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- L2 solutions facilitate the much-anticipated scalability
- Making it crucial with the growing adoption of blockchain networks.
Though the concept of blockchain itself is a revolution, it also possesses some more innovations over it. With the continued development in the technology, Layer 2 (L2) solutions turned out to be the similar breakthrough to become revolution in the digital ledger technology. L2 solutions facilitate the much anticipated scalability which becomes more crucial with the increasing adoption of any blockchain network.
Ethereum, for instance, faced scalability issues with the growing user base and number of projects operating simultaneously over the blockchain. With the inception of Layer 2 scaling solutions, Ethereum increased rapidly and helped reduce its burden. This change eventually led to an increase in transaction speed and decline in gas fees.
Layer 2 scaling solutions use different methods to achieve the desired milestone of utmost efficiency in terms of speed. Though these solutions share the work-load from the parent chain, they also ensure to have similar security during the operations.
Seeking the scaling within a blockchain, there could be two possible scenarios:
- At the base blockchain network, or
- To deploy a sidechain.
Since the main blockchain network could be disturbed, the other solution of deploying a sidechain along with blockchain turned out to be the potential solution.
Layer 2 solutions also differ in terms of their distinct operational methods. These are Zero-Knowledge or ZK Rollups, Optimistic Rollups and Plasma. These types are prominent in the Ethereum network.
Zero-Knowledge rollups act as data bundles that facilitate collateralization by leveraging smart contracts over the main chain. However, it could not directly leverage the smart contracts. In the meantime, the data gets shifted off-chain for further computation and processing. With the deployment of ZK-Rollups, the transactions per second could go up to 2,000 TPS. It also acts better in storage than Layer 1.
Optimism L2 solutions resolve the issue of leveraging smart contract capabilities. However it compromises on other factors, such as transaction speed. Other expected features from a general blockchain stays within the solution be it security and decentralization.
Both the leading blockchain networks, Bitcoin (BTC) and Ethereum (ETH) possess the scaling solutions. Popular Lightning network protocol on Bitcoin blockchain network is layer 2 solutions. It helps the network by taking the transaction data from and after processing it off-chain, brings back the information on-chain.
Fundamentally, the Bitcoin network did not hold smart contract comparability. But with the inception of the Lightning network, smart contracts could be introduced over Bitcoin, the recent successful example of the same is Bitcoin Ordinal Inscriptions. Lightning network facilitates core benefits of instance payments, low transaction fees, scalability and inter-blockchain swaps.
As far as Ethereum network is concerned, Optimism, Arbitrum and Starkware are well-known names of Layer 2 solutions on the smart contract blockchain network.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
