Layer-2 solutions are a series of innovations built on top of public blockchains to increase their scalability and efficiency, especially for micro-transactions or actions.
These solutions, often referred to as Layer-2 Solutions, aim to increase the number of transactions per second (TPS) of the blockchain by expanding block capacity or simplifying the method of recording transactions.
Get to know Layer-2
Layer-1 Solution plays an important role in improving blockchain scalability and utility. Without them, blockchains often suffer from problems such as congestion, slow transaction speeds, and high fees.
Layer-2 Solution is a solution by shifting transactions from mainnet to alternative platforms that offer faster and more cost-effective processing.
Below are some popular Layer-2 serving blockchains such as Bitcoin and Ethereum.
Lightning Network
Lightning Network functions as a layer-2 solution tailored for the Bitcoin blockchain. This facilitates much higher transaction speeds and almost instant payment settlement with minimal fees.
Users can open channels between parties in the Lightning Network , allowing them to make Bitcoin transactions without immediately completing the transaction on the mainnet. After the channel closes, the latest status is broadcast to the Bitcoin mainnet.
Optimistic Rollups
Optimistic Rollups is a layer-2 solution designed for the Ethereum blockchain. They execute off-chain transactions before publishing a condensed version of the blockchain's latest state to the mainnet.
The accuracy of optimistic rollups is validated through cryptographic proofs , resulting in significant reductions in gas fees . Optimism Protocol adopts optimistic rollups to expand Ethereum effectively.
ZK-Rollups
Zero-knowledge ZK-Rollups offer a solution to reduce gas fees while increasing transaction speed. These rollups provide cryptographic proof of the validity of pending transactions without disclosing the transaction content.
This allows the mainnet to accommodate more data, thereby increasing the overall utility of the blockchain.
Sidechains
Sidechains are independent blockchains designed to speed up transaction processing while leveraging the security features of the main blockchain.
An example layer-2 sidechains solution for Ethereum is the Polygon ecosystem.
As a conclusion
Layer-2 represents an important advancement in blockchain technology, addressing issues of scalability and efficiency.
By leveraging innovative approaches such as Lightning Network, Optimistic Rollups, ZK-Rollups, and Sidechains, these solutions pave the way for increased blockchain functionality and wider adoption in various applications.
Also Read
Understanding Scaling Solutions in Cryptocurrency
What is Layer 2 on the Blockchain
DISCLAIMER : This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
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