What is Layer 2 Blockchain Development? And how do they work?
Layer 2 Blockchain Development
What is Layer 2 Blockchain Development? And how do they work?
Layer 2 or second layer blockchains stand out as one of the main areas of development in the blockchain industry in recent years, presenting themselves as a solution capable of improving transactional capacity, lowering costs and bringing more scalability benefits to blockchain infrastructures.
In this article, we explain what layer 2 blockchain are , what their main characteristics are, how they work, their relationship with blockchain scalability and we present the main Layer 2 that are part of the ecosystem.
Introduction to Layer 2 blockchains:
The origin of second layer networks stems from the need to bring greater scalability to blockchains , one of the main problems that prevents greater adoption of the technology and its solutions in the real world.
Layer 1 blockchain , such as Bitcoin and Ethereum, are limited in their ability to process transactions per second , which can lead to long wait times and high fees for transactions, especially during times of congestion and high volume. use.
Layer 2 blockchain help scale these Layer 1 blockchains in transactional terms , facilitating the execution of a greater number of transactions, with greater speed and at much lower costs.
The 'Blockchain' , explained by Ethereum creator Vitalik Buterin, talks about how decentralisation, security and scalability fail to be a set of inherent premises for the current state of blockchain networks , thus driving the need of solutions that integrate these three premises natively in general terms , as the second layer or Layer 2 networks are presented.
What are Layer 2 blockchains?
A second layer, or Layer 2, blockchain is a secondary solution that is built on top of or in parallel to an existing blockchain to improve its scalability, transactional efficiency, and privacy .
Layer 2 blockchain development does not replace the main blockchain , but rather work alongside it to increase its capacity.
How do they do this? Layer 2 blockchains are built independently of another existing blockchain, such as Bitcoin or Ethereum, which would be Layer 1 blockchains , thus using their infrastructure to guarantee transactions and security , allowing greater performance and transaction capacity. , lower costs and scalability.
How second layer networks work
Layer 2 blockchains use different cryptographic techniques and procedures to build their infrastructure, but in general, their processes aim at the same objective of scalability , which is why they propose the outsourcing of some of the transaction verification and storage processes .
The second layer network is responsible for alleviating the transactional load to Optimise the execution of the network, so it does not mean the application of any type of change to the Layer 1 blockchain on which it is built.
Depending on the implementation carried out or its type, second layer solutions can group transactions outside the main chain (Layer 1), that is, off-chain , so instead of storing all data and transactions on the blockchain Mainly, Base Layer 2 Blockchain Development use a set of nodes or validators to verify data integrity .
To ensure the security and validity of transactions, these scaling networks use proof of validity or fraud to verify transactions , as well as publishing transaction data later at Layer 1 , which is responsible for ensuring the availability of data and verify the status of Layer 2.
Take into account that this premise varies depending on the model and type of second layer network , which we will mention later. Likewise, as it is a growing space, the technology and techniques used can change or transform.
Benefits of Layer 2 networks
Greater speed and capacity in transaction processing
Lower transaction fee costs for users
Greater scalability and efficiency
Interoperability with other blockchain environments
More privacy in transactions, through different mechanisms, encryption and implementations
Differences between Layer 2 and Layer 1 blockchains
The main differences between Layer 1 and Layer 2 networks are:
Functionality : Layer 1 is the base blockchain for making transactions or executing smart contracts, such as Bitcoin or Ethereum, while Layer 2 is built on top of or parallel to an existing Layer 1 blockchain.
Autonomy and security : Layer 1 networks are autonomous, while Layer 2 blockchains are highly dependent on Layer 1 at the security level.
Scalability : while Layer 1 is subject to limited transactional power, Layer 2 is designed to improve scalability, so they have greater transactional capacity.
Costs : Layer 2 blockchains are much cheaper than Layer 1 in terms of transaction fees
Consensus : Layer 2 blockchains may use different consensus algorithms than those used in Layer 1
Types of Layer 2 blockchain
There are different types of second layer networks that are currently making their way into the ecosystem. Let's see what the main types of Layer 2 blockchain are.
Rollups – Groups
Rollups , or pools , are one of the most popular Layer 2 blockchain solutions within the Ethereum ecosystem.
Rollups are a solution that is responsible for collecting batches of transactions outside the blockchain, that is, off-chain, and then groups them to send the data and publish the results in Layer 1. This facilitates the number of transactions per second that can be processed and significantly reduces costs.
There are two types of rollups: optimistic rollups (Optimistic) and zero-knowledge rollups (Zero-Knowledge) . Both work in a similar way, but have a different system for verifying data and processing transactions.
Sidechains – Side chains
Sidechains are blockchains that are connected to Layer 1 (Ethereum), but functioning independently with their own consensus algorithm, validation nodes, production and block parameters, which gives them autonomy to process transactions outside of the chain and scale more efficiently.
This type of second layer network tends to sacrifice some decentralization to gain greater scalability. The compatibility of these networks, in the context of Ethereum, comes through equivalence with the Ethereum Virtual Machine (EVM) and a Bridge for asset mobilization.
State Channels – State channels
State Channels are a second layer solution that facilitates transactions between two parties directly, by allowing off-chain transfers through “payment channels” and ultimately publishing the data in Layer 1.
State channels use cryptography to prove that the summary data generated is the result of a valid set of intermediate transactions, thanks to “fraud evidence . ”
In this way, state channels can scale Base blockchain solutions by reducing the amount of data that must be stored on the main blockchain.
Plasma
Plasma is a scaling solution that works as a framework of separate chains anchored to a “root chain”, using side chains that function as secondary networks to process transactions off-chain, using its own consensus mechanism, combining smart contracts and the Merkle trees for its operation.
Validium
Validium is a Layer 2 solution driven by zero-knowledge proofs, which uses the availability of data and computing to validate and store batches of transactions off-chain. Validium are considered one of the purely off-chain scalability solutions, since block producers are not required to publish transaction data on Layer 1 or Ethereum.