An Overview of Layer 2 Solutions

Key Takeaways

• Although they are not a true layer two solution, sidechains are the simplest scaling solution. A sidechain is a separate, more scalable blockchain that operates alongside the main chain. Although they achieve scalability, they do not benefit from the security of the main chain.
• Rollups are true layer two scaling solutions that operate on the back of the main blockchain. They achieve scalability by batching multiple transactions, while applying compression techniques to strip out non-essential data to save block space. Computations for transactions are also moved off-chain, leaving only essential data to be stored on the main chain.
• There are two main types of rollups: optimistic rollups and zero-knowledge rollups (ZK rollups), which differ in how they deal with invalid and fraudulent transactions.
• All of these solutions can achieve transactions per second in the range of 2,000 to 7,000+, more than 100x faster than Ethereum’s current fifteen TPS.
• Sidechains and optimistic rollups have significant disadvantages, in contrast to ZK rollups that achieve scalability without sacrificing much.

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