Key differences between blockchain Layer 1 and Layer 2 scaling solutions
The viability of the current blockchain depends significantly on scalability. Blockchain scalability refers to the platform’s capacity to handle both a growth in the volume of transactions and the number of network nodes.
The Blockchain Trilemma, which involves striking a balance between decentralization, security, and scalability in the blockchain infrastructure, exists although blockchain is establishing itself as a new pillar of the international economy.
Blockchain performance can be completely impacted by the growing use cases and adoption of the technology. Due to this growing utilization, blockchains may experience performance deterioration and lack scalability.
The foundation blockchain is often referred to as the layer-1 network. Because it serves as the primary network of the ecosystem. The term “on-chain networking” is also frequently used to describe these Layer-1 scaling methods. Some crypto protocols can process and finish transactions on their blockchains, making them layer-1 protocols. Additionally, they have native tokens of their own that are used to pay transaction fees. The primary benefit of layer 1 is that it doesn’t call for any customization of the existing architecture.
Read our previous article for more information on Layer 1.
A network or system that runs on top of the underlying blockchain protocol to improve its scalability and efficiency is referred to as layer 2. This method calls for transferring a portion of the blockchain protocol’s transactional burden at layer-2 scaling to modify the system architecture. Once the network processing burden has been managed, it simply reports the results back to the primary blockchain for finalization.
The primary blockchain that serves as the base layer becomes less crowded and ultimately more scalable by abstracting the majority of the data processing into different designs.
Examples of layer-2 used on the Ethereum blockchain network are Polygon and Immutable X.
How Layer-2 functions
In layer 2, three techniques have been applied: rollup, sidechain, and state channel.
Layer-2 off-chain transactions are combined and sent as a single transaction on the main chain using zero-knowledge rollups, which are the most popular variant. To verify the accuracy of transactions, the system uses Proof of Validity. On the main chain, which is connected by smart contracts, assets will be kept. The roll-up process will then be verified by the smart contract. The original network can have security using this technique.
Blockchain sidechains are separate networks with their validators. Smart contracts serve as a link between the sidechain and the main chain as well as a means of validating the sidechain network. The sidechain can manage the assets on the main chain, thus you must ensure that it is functioning properly.
A State channel is a two-way channel of communication for the parties to a transaction. The parties connect it to an off-chain transaction channel and encrypt a portion of the underlying blockchain. Typically, a pre-negotiated or multi-signature smart contract is used to do this. Without immediately sending the transaction data to the underlying distributed ledger or main chain, the parties subsequently carry out the transaction or collection of off-chain transactions.
The final status of the channel is broadcast to the blockchain for validation when each transaction in the set has been completed. This method exists to speed up transactions and expand the network’s total capacity.
How do Layers 1 and 2 differ from one another?
The importance and emphasis they place on the blockchain is the primary distinction between layer-1 and layer-2 scalability solutions.
While layer 2 is responsible for adding third-party networks on top of the primary blockchain, layer 1 is responsible for enhancing the blockchain’s architecture.
Large-scale protocol updates can be solved most efficiently at Layer 1. The validator must be persuaded to accept changes via a hard fork when employing this strategy, though. A faster technique to improve scalability is through layer 2.
The scaling solution has two sides, layer 1 and layer 2, respectively. They, therefore, have a plan to speed up the blockchain network and make it more tolerant of a user base that is expanding quickly.
Many blockchain networks are experimenting with layer-1 and layer-2 scaling solutions on blockchains to boost scalability without sacrificing security or appropriate decentralization because these tactics do not outperform one another.
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