Scaling Space-Ethereum Layer 2 Solutions
The future of the blockchain industry is interoperable networks. Layer-2 solutions are at the forefront of the ongoing revolution.
As Ethereum’s popularity grew, more dApps and users joined the ecosystem. This all caused network congestion since the miners couldn’t process the ever-increasing amount of transactions, which led to abnormally high gas fees threatening to make Ethereum a “whale chain.”
The Need for Layer 2
Since the latest crypto bull run and the all-time-high gas fees, the urge for an effective Layer 2 solution has become greater than ever. That’s why we can see numerous new projects and technologies aiming to solve Ethereum’s scalability challenges. The main idea is to transfer a portion of congestion from Ethereum’s chain to other chains to prevent the clogging of the main chain. Some of the most common solutions that are created to do this are:
- Sidechains
- State Channels
- Plasma
- Rollups
Layer 2’s Are Leveling Up
But currently, it’s fair to say that layer 2 platforms are the most significant growth area in DeFi, perhaps in the broader blockchain space. Layer 2 platforms use various technologies such as Plasma and rollups to process transactions off the Ethereum main chain. They periodically update data about the state of smart contracts and accounts, handling far greater throughput than Ethereum. Layer 2 platforms alleviate traffic on the Ethereum network, with the added bonus of significantly lower fees.
A Layer2 solution runs on top of the main chain (Layer 1 or L1) of Ethereum. It exists on the Ethereum network as a smart contract and does not need changes to the base level protocol to interact. Layer2 solutions have different functions, like scaling payments, off-chain computation, or smart contracts. However, they all have one similar feature — to move most of the transactions off the chain. This allows Layer2 solutions to improve the transaction processing rate (TPS) while lowering the gas fee. As the Ethereum network gets congested and incurs high gas fees on even simple transactions, many Layer2 solutions have come up in the crypto space to solve the inherent issues.
Arbitrum
A product of Off-chain Labs, Arbitrum interoperates closely with Ethereum to allow Solidity developers to easily cross-compile their smart contracts. The platform consists of three main components — Compiler, EthBridge, and Validators.
As the name says, the Compiler compiles a set of smart contracts written in Solidity into a single executable file that can run on the Arbitrum Virtual Machine (AVM). EthBridge is a decentralized application (dApp) deployed on Ethereum that serves as a bridge between Arbitrum and Ethereum networks. On the other hand, Validators are responsible for working almost entirely off-chain and keeping track of the state of the AVM. It is also important to note the platform doesn’t have a native token and has no plans to launch one soon.
Furthermore, Arbitrum also supports a sidechain aggregation of transactions called rollup technology. It is set to launch on May 28, 2021, with developers’ support from Alchemy. Additionally, the platform has a huge list of partners including Graph Protocol, OKEx, ChainLink, to name a few.
Optimism
Optimism is a Layer2 scaling protocol designed to make transactions affordable and faster for Ethereum users. With only a few exceptions, developers can build Solidity smart contracts that can run on Optimism. Additionally, off-chain codes like wallets and UIs can interact with Layer2 contracts of the platform. The mainnet public launch of the Optimism network was scheduled for March, which didn’t happen, and now the project is expected to launch in July.
The platform has a strong partnership with SynthetiX as it recently allowed SNX token holders to stake on Optimism Layer2 solution. Additionally, Optimism has partnered with Etherscan and Rubicon.
Polygon (formerly Matic)
Polygon is a framework for building and connecting Ethereum-based blockchain networks. The platform provides all necessary tools and components, which developers can utilize to create optimized instances of Ethereum. These instances combine standalone blockchain features like scalability, sovereignty, and flexibility with Ethereum’s security and developer experience.
As Ethereum delays its transition to ETH2.0, the Polygon network is growing at an exponential rate. Despite the ongoing slow market, the native Matic token’s price is hovering around the $2 price range. Besides, the platform has a reputable list of partners, including Graphlink, Umbrella Network, Mogul Productions, Kambria Open Innovation, and many more.
xDAI Chain
xDai Chain is an Ethereum-based sidechain that allows users to process fast and inexpensive transactions. The platform uses a Proof-of-Stake (PoS) consensus mechanism that enables users to stake the native xDAI token on the network to become validators. xDAI is a stablecoin whose value is pegged to the US Dollar.
The xDai ecosystem continues to flourish as it integrates and partners with different projects and platforms. The platform has a huge list of partners that includes renowned names like Chainlink, HOPR, Ramp Network, Ankr, Unifty, SushiSwap, and many more.
Summary
Blockchain developers have long been aware of the need for faster and cheaper transactions. This is especially true for Ethereum, as its programmability allows for many implementations that are hindered by its current state. While none of these solutions are completely ready to go, many of them can be used to some extent. Additionally, the scalability problem will be significantly eased once the network shifts to its Eth2 version.
L2 projects are the only solution to the growing concern of Ethereum and Ethereum-based protocols. All the above-listed platforms will bring a dramatic change to the blockchain ecosystem. However, all are still in their testing stage, and it might take them some time to launch their solutions.
forbitswap is an open-source decentralized finance space protocol an advanced transaction builder made simple — a system where anyone can swap tokens, trading, contribute tokens to a pool and earn fees, or list a token on forbitswap. Also, readily manage a range of various activities, That’s at the core value of what makes forbitswap protocol a more robust and transparent financial infrastructure.
Exchange | Docs | Twitter |Telegram| Tutoial| Reddit|Facebook |Github|
