One of the most popular blockchain networks in use today is Ethereum. Thousands of visitors use its services. The total number of decentralized applications (or DApps) developed on the platform in mid-2020 approached three thousand. Furthermore, Ethereum's potential to power the Defi space also highlights the possibilities for a significant increase in the number of applications and users on the Ethereum platform development.
The increasing number of users on the network unknowingly caused Etherum to face some limitations. Transactions on the blockchain take time to complete, regularly satisfy congestion, and promote high gas rates. These limitations were where
Ethereum Layer 2 Solutions came into the picture. So what are Layer 2 solutions and what are the main Ethereum Layer 2 networks on the network?
Ethereum Layer 2 Solutions Overview
Despite how Ethereum is introducing sharding in ETH 2.0, the process is not ready for implementation. Therefore, it is better to rely on Layer 2 solutions to perform operations on the blockchain.
The name provides a significant amount of information about what they provide. Layer 2 is another network that runs on top of the leading Ethereum network. Layer 2 solutions stay on top of the Layer 1 network through a smart contract. Layer 2 can interact with the leading network and not depend on modifications in its basic protocols. Additional features like payment scalability and off-chain computing can be provided by Ethereum Layer 2 scaling solutions.
The need for Ethereum Layer 2 solutions
Development of Ethereum's popularity means that it faces more users signing up for the platform. Additional users lead to increased load on the network. Currently, network capacity is limited and the cost of using network services is increasing. The higher rates come as more users compete to add transactions to the network.
Therefore, Layer 2 solutions play a critical role in addressing network performance issues. Solutions remain in the development phase are solutions for scaling, testing, researching, and deploying Ethereum. The goal of scalability on the Ethereum network refers to improving the speed of transactions along with the performance of transactions. Furthermore, these scaling solutions cannot compromise the decentralized nature and security of the network.
Ethereum also faces problems like high gas fees and slower transactions. Ethereum currently offers two options through Layer 2 solutions and sharding. These solutions address the issues of high transaction fees, scalability, and delays in transaction settlement.
Notable Layer 2 Networks
Since their launch, many Layer 2 solutions have gained attention in the world of cryptocurrencies. Here are the remarkable Layer 2 solutions that solved several critical problems.
Polygon - It is an emerging platform aimed at developing and connecting
blockchain networks based on Ethereum . It has all the tools and components used by developers to create optimized Ethereum instances. Additionally, the platform provides improved flexibility for developers and Ethereum security. Polygon is constantly becoming the preferred Ethereum Layer 2 solution provider and is experiencing incredible market growth.
Arbitrum - Arbitum development has features designed for close interoperability with Etherum. Solidity developers can cross-compile their smart contracts with help of these features. The three components of Arbitum include a compiler, EthBridge, and validators. Arbitum indicates that it is not interested in launching a token because it does not have a native token. Another highlight of Arbitum is that it supports sidechain transaction aggregation or accumulation technology.
Optimism - This is another example of Ethereum's famous scaling solutions that provide improvements in transaction affordability. Furthermore, it can guarantee prolific improvements in transaction speed for Ethereum users. With some limitations, developers here can create Solidity smart contracts One of the highlights of Optimism is the direct collaboration with Synthetix. The platform announced that it would provide participation options to users with SNX tokens.
Immutable-X - Immutable-X is the first Layer 2 scaling solution for NFT on Ethereum. It provides instant business confirmation, zero gas fees, flawless scalability, and provides this without compromising user custody. The protocol operation on top of StarkWare demonstrates the technology and allows users to retain the Ethereum network and services.
X-Dai - is an Etherum-based sidechain and helps users process transactions at cheaper costs and faster speeds. The platform helps users place native xDAI tokens as bets on networks by using a PoS consensus mechanic.The most attractive part of xDAI is that it is a stable coin.
The growth of the xDAI system occurs thanks to its integrations and alliances with other platforms and projects.
Final thoughts
Layer 2 solutions have the optimal solution to address the increasing load on the Ethereum network development. For the widespread adoption of a blockchain network, scalability acts as a promising requirement. Lower transaction fees will encourage more users to start using blockchain.
The various Ethereum Layer 2 solutions here have immense potential. Hence, we see that many blockchain development companies are integrating Layer 2 solutions into their development services. These solutions are the best to provide the resource usage of blockchain networks.