What is the prospect of Layer2? An article explaining the current mainstream Layer2 projects

What is the prospect of Layer2? One article explains the current mainstream Layer2 projects! Blockchain technology continues to develop, with Ethereum achieving a record 2 million daily transactions in January 2024. However, scalability issues between layer-one (L1) chains like Bitcoin and Ethereum still limit its widespread adoption.

Thus, Layer 2 (L2) solutions emerged: a series of technologies designed to speed up transactions and reduce costs, without compromising the security and decentralization properties of leading L1 networks. According to data from L2Beat, L2 scaling solutions have transformed Ethereum, processing 11-12 times the transaction volume of Ethereum itself.

Source: L2beat.com

This article explores the L2 ecosystem, including its key innovations, challenges, and future directions. Friends who need it can take a look with the editor of this site!

1. The Origin of L2

As more and more users transact on L1, these networks become slower and more expensive. Solving scalability issues on L1 often means compromising between security or decentralization, two characteristics that all blockchains aspire to have. Among the three desired blockchain characteristics of scalability, decentralization, and security, the tradeoff of choosing only two is known as the “blockchain trilemma.”

Solving the three blockchain problems is particularly important for Ethereum because it has become the preferred L1 for building decentralized applications (dApps). Of these three desired characteristics, Ethereum chose security and decentralization at the expense of scalability.

In order to expand the number and types of use cases for Ethereum, it must be economically feasible to build more complex dApps.

L2 solutions emerged as a way to solve these problems, increasing transaction throughput, reducing costs, and improving user experience. The goal is to achieve this while leveraging the security and decentralization of the underlying L1 blockchain.

2. Core technologies and frameworks

The total locked value (TVL) of the L2 ecosystem now exceeds US$46 billion, including a variety of technologies and frameworks with unique characteristics. Let’s look at some of the most important technologies in more detail:

Rollups (aggregation chain) - There are two types of Rollups: Optimistic Rollup and Validity/Zero knowledgeRollup. Optimistic aggregation chains assume by default that transactions are valid. They provide mechanisms to prevent fraud by enabling network participants to challenge transactions expected to be fraudulent using "fraud proofs" to prove that they are invalid. In contrast, the validity aggregation chain uses "validity proofs" to prove the validity of every transaction submitted to the base layer. These two types of aggregation chains provide higher throughput and lower fees than L1.

State channels - State channels allow participants to conduct off-chain transactions by locking a portion of the blockchain state into a multi-signature contract. Participants can trade freely outside the chain, and the final state is settled on the chain. State channels offer near real-time transactions and low fees, but are somewhat limited in functionality and number of participants.

Plasma (sharded chain) - Plasma is a framework for creating hierarchical sidechains anchored to the main chain. The Plasma chain can process transactions off-chain and only submit regular updates to the main chain, reducing the burden on the L1 network. Similar to optimistic aggregation chains, Plasma chains use fraud proofs to challenge suspicious transactions.

3. Examine the L2 ecosystem

The L2 ecosystem is developing rapidly, and numerous projects and initiatives are working to expand the main L1 blockchain. While there are solutions working to bring scalability to Bitcoin, such as the famous Lightning Network, which leverages state channels to provide faster and cheaper transactions on the network, no L2 solution for general-purpose computing has yet emerged on Bitcoin plan.

On the other hand, Ethereum has given birth to a thriving ecosystem of L2 solutions. We will highlight the main players and briefly describe them.

1) Validity aggregation chain (also known as zero-knowledge aggregation chain)

Starknet: Validity aggregation chain with the fastest growing developer community, with local account abstraction and its own A programming language (Cairo) that optimizes the ability to exploit validity proofs.

zkSync: Another leading validity aggregation chain with native account abstraction running on the Ethereum Virtual Machine (EVM).

Scroll: EVM-compatible validity aggregation chain focused on native-level compatibility with existing Ethereum dApps and tools.

Polygon zkEVM: Developed by L2 extension veteran Polygon, zkEVM is an EVM-compatible validity aggregation chain.

Linea: Powered by Consensys, the company behind MetaMask, Linea is a validity aggregation chain that can be used directly through MetaMask.

2) Optimistic aggregation chain

Arbitrum: Measured by total locked value (TVL), it is the largest optimistic aggregation chain and is compatible with EVM.

Optimism: The second largest optimistic aggregation chain as measured by TVL, compatible with EVM.

Base: Measured by TVL, it is the third largest optimistic aggregation chain and is compatible with EVM.

Many of these projects are still in their early stages and often involve a period of centralized control known as the "training wheels" phase, which allows for controlled system updates and bug fixes. While initially necessary, these training wheels should eventually be removed to enable the intended decentralized and trustless operation.

The adoption of L2 solutions is steadily growing in various fields including decentralized finance (DeFi), non-fungible tokens (NFT) and on-chain gaming. The most commonly used L2 types tend to be optimistic aggregation chains and validity aggregation chains. However, the integration of L2 solutions is not without challenges.

4. Challenges and Solutions

Although L2 solutions have great potential, there are still some challenges that need to be overcome to realize their full potential. From a user perspective, interacting with the L2 network can be slightly more complex, requiring additional steps such as bridging assets and managing multiple wallets. Improving the user experience by better integrating wallets, simplifying onboarding, and providing a more intuitive interface will be critical to driving mainstream adoption.

That’s why Starknet provides built-in account abstraction features that allow for a smoother user experience, such as transaction signing through facial recognition and fingerprint recognition (for example, Braavos wallet provides both features). On Starknet, making Ethereum scale means a Web2-style user experience is as important as cheaper, faster transactions.

5. Prospects of L2

As the L2 ecosystem matures, we can foresee a wave of innovation, such as the local account abstraction function on Starknet. Hybrid solutions have begun to emerge that combine the advantages of different L2 technologies, providing dual benefits for optimistic aggregation chains and effectiveness aggregation chains. Advances in proof of validity (such as STARKs) further improve the scalability and privacy of L2 networks.

Looking forward, the future of L2 solutions is closely related to the overall development of blockchain technology. As L1 networks continue to evolve and new consensus mechanisms such as proof of stake are promoted, L2 solutions will need to adapt and integrate seamlessly with these changes.

In the coming years, we will see a boom in L2 solutions tailored to specific use cases and application areas. Some predict that L2 networks will eventually become the primary layer for user interaction, with L1 serving as a secure settlement layer. Others envision a multi-layered blockchain architecture, with L2 solutions evolving in parallel with each other and sometimes with a third layer (L3) chain on top, to create a scalable and interoperable ecosystem.

6. Conclusion

As the L2 ecosystem continues to evolve, collaboration and contributions among developers, researchers, and users are crucial to developing powerful and user-friendly L2 solutions. .

By embracing the potential of L2 technology, the blockchain community can overcome the limitations of L1 networks and open up new possibilities for decentralized applications. The road ahead is filled with challenges and opportunities, but with the right approach and a shared vision, we can build a scalable and inclusive blockchain ecosystem that empowers individuals and transforms industries.

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