Layer 2 Scaling Solutions
The provision of a secure and decentralized distributed database technology with the ability to provide a clear transaction process was the primary focus at the time of the introduction of the blockchain technology concept using Bitcoin (BTC) in the year 2009.
However, the basic concern of the unscalable nature and the low transaction speeds of the layer 1 blockchains were uncovered by the very rapid growth rate of the blockchain ecosystem.
Third party layer 2 protocols uses a layer 1 blockchain which can also be referred to as a mainnet or primary such as Bitcoin and Ethereum as the base protocol.
What are layer 2 solutions?
Solutions designed to maintain the security measures and decentralization of a mainnet while inducing scalability to an application by processing transactions off the mainnet are known as layer 2 solutions. A decrease in the transaction fees (gas fees) and an increase in the transaction speed is experienced by the layer 2 solutions. Solutions such as the Polkadot, Immutable X, and Polygon are popular examples of the layer 2 solutions on the Ethereum mainnet.
Why are layer 2 solutions important?
The fact that layer 2 solutions maintain the integrity of the Ethereum blockchain and allow for complete security, decentralization and clarity of transactions while providing the properties of being scalable, increasing the transaction speed and also decreasing the carbon footprint (which is because of a reduction in energy used which is reflected as gas fees) makes them very important.
The Ethereum blockchain which is arguably the safest blockchain and the most used comes with the shortcomings of having expensive gas fees and slow transaction speeds (13 transactions per second). Layer 2s which are designed using the Ethereum mainnet as a base protocol keeps transactions scalable, safe and fast.
Each layer 2 solution has its benefits and disadvantages in the aspects of gas fees, security, transaction speed, scalability and functionality. These important factors are not totally met by any of the solutions currently, although scaling solutions called rollups have been designed to aid improvement on all these important factors.
Layer 1 vs. Layer 2: What are The differences
The layer 2 which is the network used for off-chain transactions is connected to the main blockchain network or the layer 1 in charge of on-chain transactions.
What are layer 2 rollups?
Layer 2 rollups are scaling solutions that send transaction data onto the Ethereum blockchain while performing transactions off the mainnet. This unique feature offered by the rollups gives it the ability to get secured by the security measures put in place for the layer 1.
Each layer 2 rollup possess three (3) properties:
- Reduction in gas fees due to off-chain transactions
- Maintain of high security due to the storage of transaction data on the mainnet
- Enforcement of proper transaction execution on layer 2 by a rollup contract found on layer 1, with the use of transaction data stored on the mainnet
Users are basically required to stake a bond in the rollup smart contract, thereby encouraging them to perform proper transaction verification and execution. The reduction in fees, expansion in participation and increase in transaction speed are properties of rollups that makes them very useful.
Rollups are classified into two based on their security measures:
- Optimistic rollups which runs computation in the act of a challenge through a fraud proof and assumes the validity of transactions by default
- Zero-knowledge rollups which submits proof validating a transaction to the main- chain after running off-chain computation.
What are Optimistic Rollups?
Optimistic rollups are designed to perform side by side on layer 2 with the Ethereum blockchain without performing any calculation by default. They instead validate a transaction by submitting its new state to the Ethereum mainnet when the transaction is complete.
Transactions are made more efficient due to reduction in gas fees because optimistic rollups transactions are written into the Ethereum mainnet.
The following are some of the advantages of the optimistic rollups:
- Reduction in the cost of gas
- Increase in transaction speed
- Capable smart contract
- Possession of strong security as guaranteed by the Ethereum mainnet
Some of the disadvantages of the optimistic rollups include:
- Challenge periods can linger for weeks thus increasing withdrawal time
- The rollup automatically initiates a fraud-proof and analyzes a transaction’s computation using available written data if it discovers fraudulent transactions, thereby leading to lengthier withdrawal time when
Several optimistic rollup applications that can be integrated into your dapps are available. They include:
- Fuel Network
What are Zero-knowledge Rollups?
Thousands of transactions are taken off the Ethereum main chain and a cryptographic proof which is also known as Succint Non-interactive Argument of Knowledge (SNARK) is created by the zero-knowledge rollups. This process is known as validity proof and it is sent to the Ethereum mainnet.
Zero-knowledge rollups uses the validity proof alone instead of all transaction data thereby decreasing the cost of transaction due to a decrease in the required data. This function is because the smart contract for a zero-knowledge rollup stores the transfer data on layer 2.
Due to pre-approval of the validity proof and pre-authorization of a transaction by the zero-knowledge rollup, minimal pauses are observed when assets are transferred to layer 1 from layer 2.
Using the zero-knowledge rollups has a lot of benefits which includes:
- Immediate transfer for short distances
- Invulnerability to optimistic rollup prone attacks
- High security and decentralization
The disadvantages that can be experienced while working with the zero-knowledge rollups includes:
- The difficulty of computing validity proofs for small applications that perform little actions on-chain
- The unavailability of the Ethereum Virtual Machine (EVM) support in some zero-knowledge rollups.
Zero-knowledge rollup applications that can be integrated to your DApps includes:
- Polygon Hermez
- Immutable X
- Matter Lab zkSync
- Aztec 2.0
The future of layer 2 solutions
Great potential to enact better change on the blockchain ecosystem has been discovered in the Ethereum layer 2 solutions. Users possess the ability to make transactions quickly while maintaining the safety measures used on the Ethereum mainnet at little or no cost because of these layer 2 solutions.
Layer 2 solutions possess the ability of being a key factor for the promotion of a multichain world therebyaking developers responsible for the sustainability of growth without compromising the key factors of decentralization, scalability and security that makes up the blockchain ecosystem.
There will have to be constant correspondence, collaboration and innovation by the entire crypto industry so as to bring the layer 2 scaling solutions and DApps into the mainstream thereby aiding with the world’s transition to a decentralized economy.