Blockchain infrastructure has advanced to embody an ecosystem of layer-1 and layer-2 networks.
On this article we’ll discover the distinction between the 2, and how layer-2 networks and different scaling strategies like sidechains try to deal with the scalability challenges of layer-1 blockchains.
Merely put, layer-2 networks are blockchain networks that reside atop a layer-1 community reminiscent of Ethereum, with the layer-1 community offering the bottom layer of infrastructure and safety for networks constructing on it, validating transactions and attaining consensus.
The layer-2 networks use quite a lot of applied sciences to deal with scalability bottlenecks on the layer-1 blockchain, that are attributable to throughput and transaction prices.
Ethereum, for instance, at the moment handles round 14 transactions per second (TPS), per blockchain explorer Etherscan. Visa, by comparability, processes round 65,000 transactions per second.
Scalability points are most pronounced during times of excessive community exercise, when blockchain networks face elevated transaction charges (often known as gasoline charges), together with community congestion and lowered transaction instances.
In 2017, Ethereum creator Vitalik Buterin recognized the “scalability trilemma” for blockchains, arguing that they face the problem of processing 1000’s of transactions per second whereas remaining safe and adhering to the ethos of being decentralized, that’s, run with out the necessity for centralized management.
The “scalability trilemma.”
The idea, imported from computer science, is {that a} community can solely ever give attention to two of those ideas by making concessions on the expense of the third.
Ethereum’s resolution to the issue of scalability is to give attention to making its personal layer-1 blockchain community as safe and decentralized as potential, whereas outsourcing scaling to layer-2 networks constructed atop its infrastructure.
How do scaling networks work?
Scaling networks deploy quite a lot of completely different options to assist tackle the scalability challenges of the layer-1 community.
These networks embody bundling transactions or processing transactions off-chain, utilizing sidechains or layer-2 rollups.
Sidechains
Sidechains are blockchains that run independently of the layer-1 chain, with their very own consensus mechanism and token.
They hook up with the layer-1 blockchain via a bridge, which makes use of a sensible contract to “lock” belongings from the layer-1 chain and mint a mirror picture of these tokens on the sidechain, with the worth of these tokens pegged to the locked asset.
These mirrored tokens are then used to carry out transactions, after which they are often destroyed, releasing the locked tokens on the layer-1 chain.
Rollups
Rollups take a special method, by rolling up (therefore the title) a number of transactions, presenting them to the layer-1 blockchain as a single transaction that may be processed far more shortly than the person transactions.
There are two foremost sorts of rollups: optimistic rollups and zero-knowledge (zk) rollups.
Optimistic rollups assume that the entire rolled-up information is legitimate, permitting individuals to contest transactions after the actual fact to find out whether or not they’re legit or not. The contested transaction is submitted on to the layer-1 community to settle the dispute, with each events standing to lose staked tokens ought to they be proved improper.
Zero-knowledge rollups make use of zero-knowledge proofs, a cryptographic method that can be utilized to show that one thing is thought with out revealing the recognized data straight. Transactions are rolled up into batches which are executed off-chain, with the finished batch submitted to the layer-1 chain utilizing a zk-proof that demonstrates the proposed state modifications are right.
Ethereum scalers you must know
There are a selection of various layer-2 and sidechain networks constructing atop or alongside Ethereum, every with their very own most popular technological resolution to scale the layer-1. Per CoinGecko information, the next are the biggest Ethereum chains by whole worth locked (TVL), as of November 2024.
Base
Incubated by crypto trade Coinbase, Base is constructed atop Ethereum scaling resolution Optimism. It shortly established itself as a number one participant within the layer-2 house following its launch in August 2023, surging to over a million addresses in simply 11 days. In line with Coinbase CEO Brian Armstrong, the trade has no plans to launch a token for Base, and is trying to make Base “one thing that’s a lot broader” than a Coinbase-led mission.
Arbitrum
Created by Offchain Labs, Arbitrum leverages optimistic rollups to scale Ethereum, with a claimed 40,000 tps versus Ethereum’s extra stately 14 tps. In March 2023, Arbitrum launched its native ARB token for governance, handing management of the mission over to a decentralized autonomous group (DAO) made up of neighborhood members.
Polygon
Previously often called Matic Community, Polygon takes a multi-pronged method to scaling, deploying a number of options together with its foremost POS Chain (sidechain), Plasma chains, zk-rollups and optimistic rollups. It aspires to be greater than only a scaling resolution, billing itself as a platform for launching interoperable blockchains. In September 2024, it completed its migration from its unique native token MATIC to a brand new token, POL.
Optimism
Launched on mainnet in January 2021, Optimism—as its title suggests—makes use of optimistic rollups, which assume that each one transactions within the rollup are legitimate. Optimism additional compresses the information in its rollups utilizing a sequencer, earlier than submitting transaction information to the principle Ethereum chain. Validators for every rollup are given every week to question the rollup in the event that they imagine that it comprises fraudulent information.
Scroll
A comparatively new entrant to the layer-2 house, Scroll launched on mainnet in October 2023. The platform makes use of zkEVM expertise to batch proofs, leveraging “bytecode-level compatibility” with Ethereum Digital Machine help to make sure that EVM functions and instruments are suitable “out-of-the-box.” Scroll launched its SCR token in an October 2024 airdrop.
Blast
Launched by a workforce led by Tieshun “Pacman” Roquerre—founding father of NFT market Blur—in February 2024, Blast differentiates itself from different layer-2 networks with options together with native yield for ETH and stablecoins. The layer-2 performed an airdrop of its native token BLAST in June 2024
The way forward for layer-2 networks
Layer-2 networks kind a key a part of Ethereum’s “rollup-centric roadmap,” according to Ethereum co-founder Vitalik Buterin, who hopes to make use of layer-2 options to extend the blockchain’s capability to deal with over 100,000 transactions per second.
Buterin has outlined plans to converge Ethereum’s two scaling methods, sharding and layer-2 protocols, in what he described as “The Surge.” This roadmap would see layer-2 blockchains implement cryptographic options reminiscent of SNARKs (Succinct Non-interactive Argument of Information) to make sure the integrity of transactions. Buterin additionally seeks to make sure that layer-2 networks inherit Ethereum’s core ideas of trustlessness, openness, and censorship resistance.
Layer-2 networks aren’t simply confined to Ethereum. In June 2024, coders at BitcoinOS claimed to have verified a zk-proof on the Bitcoin mainnet for the primary time, opening up the potential for using rollups to scale Bitcoin. Solana can be seeing rising layer-2 exercise, reminiscent of through the gaming-centric Sonic SVM network.
In the meantime, new layer-2 networks proceed to spring up on Ethereum. In October 2024, decentralized trade Uniswap introduced plans to develop its own layer-2 network, Unichain, utilizing Optimism expertise, plus centralized trade Kraken will launch its personal Optimism-based layer-2 called Ink.
