Bittime - The Ethereum world has recently been busy discussing "Layer 2" as a solution to overcome blockchain scalability problems. Through this article, we want to help you understand the concept of Layer 2 with a clear explanation.
Apart from that, you also need to know what blockchains use Layer 2 narratives. What are they? Keep reading this article, OK!
What is Layer 2 Narrative? How is it different from Layer 1?
Try to imagine blockchain as a highway. Ethereum and Bitcoin are the main highways (layer 1) that are the foundation for various other networks (layer 2) to be built on top of. Transactions on this layer 2 network can still be completed on the main blockchain.
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Ethereum itself has a dual role. Apart from being layer 1, Ethereum also acts as a provider of "data availability" (data availability layer) for layer 2.
In other words, layer 2 stores its transaction data in Ethereum, allowing users to check the network status or submit objections to transactions at layer 2.
Also read: What is Layer 2 in Blockchain? How Layer 2 Blockchain Works & Coins
Why Do We Need Layer 2?
A blockchain should ideally have three properties: decentralized, secure, and scalable. However, the blockchain trilemma states that a blockchain can only have two of these three properties optimally.
Ethereum is currently capable of processing more than 1 million transactions per day. However, when usage demand spikes, transaction fees can become prohibitively expensive. This is when layer 2 comes into play.
Benefits of Layer 2 Ethereum
- Lower transaction costs: Layer 2 processes transactions outside of Ethereum's layer 1, so transaction costs can be kept much lower.
- Maintained security: Even though they are processed outside layer 1, layer 2 transactions still rely on the security of the Ethereum network, so your assets are protected.
- Wider innovation opportunities: With lower transaction costs and the ability to handle more transactions, layer 2 paves the way for the development of new, more innovative applications.
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How Layer 2 Works
Layer 2 is not a single network, but rather a term for various Ethereum scalability solutions. Each layer 2 solution has its own characteristics and security model.
One popular layer 2 solution is “rollups”. Rollups work by collecting hundreds of transactions into one single transaction on Ethereum layer 1.
Also read: What is Kinto? Ethereum Layer 2 Protocol Using RWA Narrative
That way, layer 1 transaction fees which are usually expensive can be shared among all users in a rollup, so that it becomes cheaper for each user.
Transaction data in rollups is still sent to Ethereum layer 1, but the execution process is carried out separately on the rollups network.
This is what keeps transactions in rollups safe, because to cancel transactions in rollups, hackers must be able to cancel transactions in Ethereum itself - something that is very difficult to do.
Types of Rollups
- Optimistic Rollups: Optimistic rollups assume that all transactions that occur are valid. However, if there is suspicion about the validity of the transaction, verification will be carried out to confirm it.
- Zero-knowledge Rollups: Zero-knowledge rollups use validity proofs to prove the validity of transactions without the need to send all transaction data to Ethereum layer 1. This makes zero-knowledge rollups more efficient in terms of data usage.
6 Best Layer 2 Blockchains
After understanding the concept of Layer 2 and its benefits, you may be wondering, "Which Layer 2 is best?" The answer depends on your needs. Here's a quick summary of the 6 leading Layer 2 blockchains today:
Arbitrum One
The Optimistic Rollup solution promises a similar experience to interacting directly on Ethereum, but with much lower transaction fees.
Optimism
Fast, simple and secure Optimistic Rollup, compatible with the Ethereum Virtual Machine (EVM). Optimism not only increases the scalability of Ethereum technology, but also the scalability of crypto's noble values through retroactive funding of public goods.
Boba Network
Optimistic Rollup is a derivative of Optimism that focuses on reducing gas fees, increasing transaction throughput, and expanding smart contract capabilities.
Base
A secure, cost-effective and developer-friendly Ethereum Layer 2 solution, with the goal of bringing billions of new users to the world of web3. Base is built on the open-source OP Stack and developed through the Coinbase initiative.
zkSync
The ZK Rollup solution aims to leverage Ethereum's scalability and crypto value for mainstream adoption, without compromising security or decentralization.
Starknet
Validity Rollup Layer 2 solution that offers high throughput, low gas fees, and security equivalent to layer 1 Ethereum.
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Conclusion
Layer 2 was an important breakthrough in Ethereum's development. With layer 2, Ethereum is expected to be able to overcome the problems of scalability and high transaction costs, so that it can be increasingly used by the wider community.
At Bittime, we will continue to cover the latest developments surrounding Ethereum layer 2. Don't forget to keep following our articles!
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To be able to buy crypto assets on Bittime, make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application.
Learn Complete Guide How to Buy Crypto on Bittime.
Monitor price chart movements of Bitcoin (BTC), Ethereum (ETH), Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.
Also read:
Layer 1 vs Layer 2 Blockchain, What's the Difference?
Superchain Optimism: Understanding Layer 2 Pools
What is Linea: Blockchain Layer 2 Made by Consensys
Base Becomes Top Choice in Layer 2, Outperforms Other Tokens
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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