What is Layer 2?
Enhancing Scalability, Security, and Efficiency with BLOX Network
Last updated
Enhancing Scalability, Security, and Efficiency with BLOX Network
Last updated
Layer 2 (L2) blockchains are scaling solutions designed to increase transaction throughput without sacrificing decentralization or security. Typically built on top of Ethereum (Layer 1 or L1), these solutions aim to handle transactions more efficiently in terms of cost and speed.
While L2s function as their independent chains, they are considered "extensions" of Ethereum. Users can submit transactions directly to L2 chains, which process them more efficiently than Ethereum itself. Under the hood, L2s create "batches" of transactions and periodically submit these batches to Ethereum as a single transaction. This approach can include information on thousands of transactions within a single Ethereum transaction.
L2s typically deploy smart contracts on Ethereum to handle the verification of these batches, ensuring that all transactions are valid. Because this verification process occurs on Ethereum, L2s are often said to inherit the security of Ethereum.
Layer 2 solutions come in various forms, each with different relationships to Ethereum and trade-offs in terms of security, scalability, and decentralization:
Rollups:
Optimistic Rollups: Assume transactions are valid by default and only run computations in the case of a dispute.
ZK-Rollups: Use zero-knowledge proofs to verify the correctness of transactions off-chain before batching them onto Ethereum.
State Channels: Allow participants to transact off-chain, only recording the final state on Ethereum, reducing on-chain interactions.
Sidechains: Independent blockchains that run in parallel to Ethereum but have their own consensus mechanisms, connecting back to Ethereum for security and data availability.
Polygon zkEVM: Sends all transaction data to Ethereum, ensuring high security but higher costs.
Arbitrum: Uses Optimistic Rollups to achieve scalability by sending transaction state differences to Ethereum.
As one of the first and most widely used blockchain platforms, Ethereum faces significant scalability challenges. The network currently supports around 15 transactions per second, which is insufficient for global-scale applications. This limitation leads to network congestion, increased transaction fees, and delayed transaction processing times during peak periods.
During periods of high demand, Ethereum's gas prices can skyrocket, making transactions expensive and sometimes prohibitively so for smaller transactions. This variability in transaction costs can deter users and developers, especially those looking to operate microtransaction-based applications.
Ethereum's shift from proof-of-work (PoW) to proof-of-stake (PoS) in Ethereum 2.0 has experienced multiple delays. These delays can create uncertainty in the developer community, impacting long-term planning and the deployment of new applications and services.
