Layer 2 blockchains are revolutionizing the way networks like Ethereum are used. But, What exactly are they and why are they key to scaling cryptocurrencies without sacrificing security?
In this article, we explain in detail what Layer 2 solutions are, why they came about, how they work and what impact they have on the blockchain ecosystem.
Limitations of Layer 1 blockchains
The main blockchains, known as Layer 1, such as Ethereum or Bitcoin, were designed to offer maximum security and decentralization.
However, this robust design has limitations when it comes to handling large volumes of transactions quickly and cheaply.
Limited scalability
Ethereum, for example, can process approximately 15 to 30 transactions per second (TPS).
This limited capacity creates bottlenecks when the network is saturated with many simultaneous operations, slowing down the entire system.
High costs due to congestion
When the demand for transactions grows, fees known as “gas fees” increase dramatically, as users compete for priority in processing. This makes interaction with the network more expensive and limits accessibility to small investors or ordinary users.
Unsmooth user experience
The combination of slowness and high costs directly affects the experience in decentralized applications (dApps) such as DeFi platforms, NFT marketplaces or blockchain games, making mass adoption and everyday use difficult.
What are Layer 2 solutions?
Layer 2 solutions are protocols or networks that operate on a Layer 1 blockchain to improve their performance.
Its main objective is to increase processing capacity and reduce costs without compromising the security or inherent decentralization of the base network.
These second-layer networks act semi-independently, processing many transactions outside the main chain and then consolidating the results there.
This frees up the workload of the main blockchain, while maintaining cryptographic integrity and protection.
Main types of Layer 2 on Ethereum
There are different types of Layer 2 solutions, each with its own technical characteristics. Here are the most common ones:
Rollups (Optimistic and ZK)
Rollups group together hundreds or thousands of transactions and process them outside of Ethereum. They then send a compressed and validated summary to Layer 1.
- Optimistic Rollups: They assume that transactions are valid by default and only check if there is a dispute (proof of fraud). Examples: Optimism and Arbitrum.
- ZK-Rollups: They use cryptographic tests (zk-SNARKS) to verify the validity of each batch of transactions before publishing them in Layer 1, offering instant confirmations and greater efficiency. Examples: ZKSync, StarkNet.
Sidechains
They are independent blockchains that run parallel to Ethereum and are connected by bridges.
They offer greater flexibility and speed, but have a lower level of security because they are not directly dependent on the Ethereum consensus.
State channels
They work by opening a private channel between two users, allowing multiple instant and economic off-chain transactions.
Only when the channel is closed is the state in Layer 1 updated. They are ideal for microtransactions or recurring payments.
An example is the Lightning Network in Bitcoin.
Advantages of using a Layer 2
Layer 2 solutions bring clear benefits for both end users and developers:
Faster and cheaper transactions
By processing operations outside the main chain, commissions are drastically reduced and confirmation time drops from minutes to seconds or milliseconds.
Increased capacity for dApps
Decentralized applications can scale without congesting the main network, allowing for the development of more complex products with a better user experience.
Scalability without sacrificing security
Layer 2 inherits the security and cryptographic guarantees of Ethereum, since the final data and validations are anchored in the base blockchain, protecting against fraud and censorship.
Current Use Cases and Featured Projects
These Layer 2 solutions are already being used by large projects and communities to make blockchain more accessible and efficient:
- Optimism and Arbitrum: They are the most popular Optimistic Rollup solutions, widely adopted in the DeFi ecosystem to improve the scalability of protocols such as Uniswap, Synthetix or Aave.
- ZkSync Era: Platform based on ZK-Rollups that stands out for its speed and low costs, used for instant payments and NFT markets with high demand.
- Polygon PoS: The best-known sidechain, which offers full compatibility with Ethereum (EVM), ideal for projects looking for a fast and flexible experience with lower costs.
Conclusion
Layer 2 solutions represent a fundamental step in bringing Ethereum and other blockchains to real mass adoption, overcoming current limitations without sacrificing security or decentralization.
At Unknown Gravity, we are betting on these technologies to build the future of blockchain, facilitating scalable, efficient and secure projects.