General Information

Blockchain Layer 2 solutions: What are they?

November 3, 2021

Being one of the most popular and trusted blockchain, Ethereum and its community have grown rapidly in size and number. Knowing about blockchain and the Ethereum ecosystem, you must have heard about “Layer 2 solutions”. These scaling solutions proved their popularity with “$1 Billion locked up in secondly-layer scaling”. However, what is a blockchain layer 2 solutions and why do we need them?

Ethereum ecosystem Layer 2 scaling solution

What is a L2 solution?

As explained in the name itself, layer 2 solutions are different network layers that run on top of Ethereum's main chain. While optimizing Ethereum Mainnet, these layer 2 solutions do not require any changes in the base; rather, they stay and work on the Ethereum network as smart contracts. Additionally, layer 2 can interact with the main chain without any modifications.In this system, the second layer is centered around a server (or a group of servers). Each of these servers can be indicated as a node, block producer, operator, or similar name. There is no restriction when it comes to the nodes’ owner: it could be one individual or a whole enterprise. This is all dependent on the implementation of the solution. In general, when working on second-layer solutions redirect all the transactions and submit them to the layer 2 nodes rather than directly submitting them to the Mainnet.Although there are a variety of applications and different implications of the Layer 2 solution, they all try to achieve similar goals: moving the transactions off the chain. As such, L2 solutions are able to improve the transaction processing rate as well as lower the total gas fee. This results from the high usage rate of Ethereum, which eventually pushed the blockchain to its capacity limits. This means that the cost of using the Ethereum Mainnet has risen considerably.

Why do we need L2 solutions?

L2 solutions are developed to solves two problems of the Ethereum main chain: low scalability rate while having a pocket-burning gas fee.

  • Expensive gas fees

When the Ethereum network is busy, the transaction speed suffers. This can lead to poor experience from users. Additionally, since transaction senders aim to outbid one another, the busier the Mainnet, the higher the transaction fees. Moreover, with 6 years of development, Ethereum has grown rapidly and so does its community. The blockchain is facing an expensive price for using the network, which in turn, creating a need for a “scaling solution”. However, in Layer 2, transactions are handled off the Ethereum Main chain while keeping all the advantages of a decentralized security system of Ethereum.

  • Scalability – speed

The high demand for Ethereum blockchain does not only caused the nonviable gas prices but also affecting the transaction fees. Second layer solutions address the low scalability by aiming to increase transaction speed as well as transaction throughput. This makes L2 solutions a necessity to enable the mass adoption of Ethereum networks.To resolve the current issues in the Mainnet, Ethereum did present its solution: Ethereum 2.0 with Sharding and the protocol update to Proof-of-Stake (PoS). However, this scaling solution lacks a secured timeline. The rollout has been suffering delays since its first phase. Eventually, the full transition to Ethereum 2.0 is far beyond reach.

Blocks in blockchain ecosystem

BLOOCK – your L2 solution

Ethereum Blockchain Management Software Solution Online

Working on top of the Ethereum network, BLOOCK maximizes the value of the Ethereum connection while minimizing all the frictions.

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Separation block

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