Layer-2

Layer-2 projects like Polygon enhance scalability by building a new computational layer to decongest the Layer-1 chain (mainchain). They aim to enable a high throughput of transactions while keeping the high level of security of the Layer-1 blockchain. The main forms of Layer-2s are optimistic rollups and Zero-Knowledge (ZK) rollups.

Layer-1 blockchains like Ethereum have strong security, but they lack the ability to scale due to higher transaction costs and low throughput, becoming more expensive and slower as user activity on the blockchain increases. For example, Ethereum processes only seven to 11 transactions per second (tps), and as more people use the blockchain, the network becomes congested, leading to higher transaction fees. This causes a bidding war, making transactions on the network incredibly expensive at times.

Many Layer-2 solutions for Ethereum aim to solve its scaling issues. Ones of note include Arbitrum, Metis, and Optimism.