Rollups perform transaction execution outside layer 1 and then the data is posted to layer 1 where consensus is reached. There are application specific layer 2 networks that bring their own set of efficiencies when working with assets at scale.Any updates to scalability should not be at the expense of decentralization or security – layer 2 builds on top of Ethereum.Transactions are rolled up into a single transaction to Mainnet Ethereum, reducing gas fees for users making Ethereum more inclusive and accessible for people everywhere.Increased transactions per second greatly improves user experience, and reduces network congestion on Mainnet Ethereum.The details of how this is done vary significantly between different layer 2 technologies and implementations.Ī specific layer 2 instance may be open and shared by many applications, or may be deployed by one project and dedicated to supporting only their application. For some solutions the layer 2 instance then batches them into groups before anchoring them to layer 1, after which they are secured by layer 1 and cannot be altered. Generally speaking, transactions are submitted to these layer 2 nodes instead of being submitted directly to layer 1 (Mainnet). Depending on the implementation, these layer 2 nodes may be run by the individuals, businesses or entities that use them, or by a 3rd party operator, or by a large group of individuals (similar to Mainnet). Most layer 2 solutions are centered around a server or cluster of servers, each of which may be referred to as a node, validator, operator, sequencer, block producer, or similar term. This can make using Ethereum very expensive. And as the network gets busier, gas prices increase as transaction senders aim to outbid each other. Transaction speed suffers when the network is busy, making the user experience poor for certain types of dapps. Layer 2 is a collective term for solutions designed to help scale your application by handling transactions off the Ethereum Mainnet (layer 1) while taking advantage of the robust decentralized security model of Mainnet.
This category of off-chain solutions derives its security from Mainnet Ethereum. These solutions communicate with Mainnet, but derive their security differently to obtain a variety of goals.
Other solutions involve the creation of new chains in various forms that derive their security separately from Mainnet, such as sidechains, validiums, or plasma chains. Some solutions, known as "layer 2" solutions, derive their security directly from layer 1 Ethereum consensus, such as optimistic rollups, zero-knowledge rollups or state channels. Off-chain solutions are implemented separately from layer 1 Mainnet - they require no changes to the existing Ethereum protocol. In an Ethereum context, sharding will reduce network congestion and increase transactions per second by creating new chains, known as “shards.” This will also lighten the load for each validator who will no longer be required to process the entirety of all transactions across the network. Sharding is the process of splitting a database horizontally to spread the load.
Sharding is currently the main focus for this method of scaling. This method of scaling requires changes to the Ethereum protocol (layer 1 Mainnet ). Implementing scaling solutions is advanced as the technology is less battle-tested, and continues to be researched and developed. You should have a good understanding of all the foundational topics. Keeping the barrier to entry low for node operators is critical in preventing a progression towards centralized and insecure computing power.Ĭonceptually we first categorize scaling as either on-chain scaling or off-chain scaling. While speed and throughput are important, it is essential that scaling solutions enabling these goals remain decentralized and secure. Increasing the network capacity in terms of speed and throughput is fundamental to the meaningful and mass adoption of Ethereum. On the layer 1 Ethereum blockchain, high demand leads to slower transactions and nonviable gas prices. The main goal of scalability is to increase transaction speed (faster finality), and transaction throughput (high transactions per second), without sacrificing decentralization or security (more on the Ethereum vision). This has driven up the cost of using the network, creating the need for "scaling solutions." There are multiple solutions being researched, tested and implemented that take different approaches to achieve similar goals. As the number of people using Ethereum has grown, the blockchain has reached certain capacity limitations.