Since the conception of Bitcoin, blockchain has become more popular. Due to this popularity, the blockchain space is experiencing rapid expansion as new solutions are being launched. The constant launching of new solutions has led to the problem of scalability. This is one of the major pillars of blockchain technology, with others being decentralization and security. To solve the problem of scalability, blockchain uses underlying structures. These structures are called Layer 1 and Layer 2 and they optimize the performance of blockchain technology. Let’s learn more about the latter.
Layer 2 Blockchain: what to know?
Layer 2 blockchain is a secondary framework that is built and operated on top of an existing Layer 1 blockchain structure. This aims to enhance its scalability and operations. Also, it enables Layer 1 protocol to shift a part of its transactional load to an adjacent network. This takes charge of the processing requirements for every transaction and moves it back to the major blockchain for final processing. When a huge chunk of processing power is moved to an external network, it makes the base layer decongested. If the base layer is decongested, it becomes more scalable.
Take Polygon and Ethereum as an example. Polygon protocol is an interoperability layer 2 solutions for Ethereum blockchains. Users can put Ethereum tokens in a Polygon smart contract. They can also interact with these tokens within Polygon and withdraw them to the Ethereum main chain to finish transactions. Also, Bitcoin has a Layer-2 structure called the Lightning Network. This structure was created to enhance transaction speeds in the Bitcoin network.
What are the most used Layer-2 Blockchain protocols?
Here are some of the most popular layer-2 blockchain protocols:
Nested blockchains
Sidechains
State channels
Rollups
Zero-knowledge rollups
Optimistic rollups
1. Nested blockchains
Nested blockchain is made up of the main and secondary chains. These chains are designed so that a chain can function on top of the other. Essentially, the main chain assigns tasks and controls all the parameters. On the other hand, the secondary chain performs all transactions the main chain assigns.
2. Sidechains
The sidechain is a blockchain that is linked to the primary blockchain with a two-way peg. It is similar to a forest, where the trees act as sidechains, while the forest is the primary chain. They are built to assist the main blockchain by processing a large batch of transactions. To learn more about blockchain I advise you to attend conferences on bitcoin.
3. State channels
State channels allow users to interact in the blockchain network. Hence, they can execute transactions without the influence of primary chains. This makes them spend minimal time and leads to fast processing rates.
4. Rollups
Rollups execute computations from the primary chain. Here, transaction details transfer happens after a specific time interval. This helps to maintain accurate records. Rollups also execute transactions without disturbing the primary layer.
5. Zero-knowledge rollups
Zero-knowledge rollups perform computations from the chain before they submit the primary chain’s validity proof. Once the proof of validity is submitted, funds will be released. This means that the transaction has been validated and confirmed by the primary chain.
6. Optimistic rollups
Optimistic rollups make sure that every transaction executed on the blockchain is valid. Most times, this type of layer-2 protocol takes a lot of time to confirm these transactions. This delay gives them enough time to resolve a problem if any arises.