What is Layer2?

According to data from Dune Analytics, as of the end of 2022, the average daily number of transactions on the Ethereum main chain has exceeded 1.7 million, and the average daily number of transactions for Layer2 solutions has also continued to increase, even surpassing Ethereum. This means that Layer2 has achieved huge transaction volume in just a few years and has become a part that cannot be ignored in the Ethereum ecosystem.

It can be seen that Ethereum Layer 2 has strong development momentum, but what is Layer 2? What exactly does it do? Lets come look.

01
What is Layer2?

Blockchain has a famous "triple problem", that is, the development of a blockchain is difficult to take into account security, decentralization and scalability.

Take Ethereum as an example. Although it has done well enough in terms of decentralization and security, as users become more and more However, its slow transaction speed, high transaction fees, and deterioration of user experience have always been problems that need to be solved. Therefore, improving the scalability of Ethereum has gradually become the focus of the industry.

Generally speaking, if a road is overcrowded, there are usually two methods to choose. One is to expand the road itself to improve vehicle circulation; the other is to build a viaduct when the road itself is difficult to expand. , increase liquidity.

Correspondingly, there are two ways to improve the scalability of the public chain: one is to expand the main network itself (layer 1), and the other is to put some work on layer 2 to Achieve network expansion. Specifically:

First, if the main network itself is expanded, it is called an on-chain expansion solution, that is, the Layer 1 solution. The expansion is mainly achieved by increasing the transaction capacity of the blockchain itself;

The second is Ethereum Layer 2 expansion, which refers to the second-layer network outside the Ethereum main network and is a type of Ethereum expansion plan. It is equivalent to establishing a "viaduct" on the Ethereum main network to solve the problems of congestion on the Ethereum main network and high transaction fees.

However, it is difficult to achieve the expansion in one step in the Layer 1 solution chain. After finally achieving the expansion, application scenarios with higher performance requirements have appeared again. We need to constantly surpass ourselves, and the demand development is endless.

Therefore, many Layer2 solutions have emerged, but each solution is not exhaustive and has its own advantages and disadvantages.

Another point worthy of attention is that in theory, all public chains can build Layer 2 expansion plans, but according to the current development situation, except for Ethereum, the mainnets of other public chains can basically Carrying the current development needs, Layer 2 is not an urgent need for these public chains, nor is it the main focus of the market. So the Layer2 currently mentioned by everyone usually defaults to Ethereum Layer2.

02
Classification of Layer2

The current solution of Ethereum Layer2 Which ones are there?

Since 2017, when Ethereum first caused network congestion due to CryptoKitties, people have begun to explore Layer 2.

After several years of development, many solutions have been proposed for Layer 2 expansion. In the early days of Ethereum’s development, Ethereum’s founder Vitalik Vitalik believed that sidechain, Validium, and Plasma technologies were the solution to blockchain expansion. The best solution to the problem. However, time and practice have proven that in the context of the explosion of DeFi, Layer 2 expansion solutions such as side chains, state channels, and Plasma cannot meet the requirements of the market.As of now, Rollup has become the most promising solution. .

Rollup is mainly divided into two types: Optimistic Rollup and ZK Rollup, and in the current market performance, users are relatively supportive of these two solutions. For example, the recently popular Atrbitrum uses Optimistic Rollup.

The main working principle of Rollups is to calculate a large number of transactions off-chain, then package them into a batch transaction, and then transmit it back to Ethereum.

Due to the current development advantages of Rollups, the industry now basically defaults that when we discuss Ethereum Layer 2, we are actually discussing Rollups.

03
Summary

The development of Layer 2 has gone through many years, from the initial proposal to the explosion in the mid-term, and now it is clear that the modular development route will be combined with Rollup. It not only benefits from Ethereum’s huge ecology, but also promotes Ethereum. The ecology further develops and grows.

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