What is Layer2? What are the leading projects of Layer2?

Layer 2 solution provides higher scalability, lower gas fees and interoperability on top of existing blockchain networks by moving transactions off-chain while remaining decentralized and security. Major Layer 2 technologies include state channels, sidechains, Plasma, Optimistic Rollup and ZKP-Rollup. Leading projects include Polygon, Arbitrum, Optimism, StarkNet and Loopring.

What is Layer 2?

Layer 2 solutions are built on top of the existing blockchain network (Layer 1) and are designed to increase transaction processing capabilities and reduce gas fees while maintaining decentralization and security. It does this by moving transactions to an independent chain or mechanism.

How Layer 2 Works

Layer 2 solutions use different technologies to process transactions:

• Status channel: Bundle transactions outside the chain for processing and submit them to the chain in batches to achieve fast and low-cost transactions.
• Sidechain: An independent blockchain that runs parallel to the main chain, with specific rules and validators, allowing for faster transaction processing.
• Plasma: Use Merkle trees to package transactions, process them off-chain, and only submit them to the main chain in case of disputes.
• Optimistic Rollup: By assuming that the transaction is valid, the transaction is bundled for off-chain processing and submitted to the main chain for verification in the event of a dispute.
• ZKP-Rollup: Use zero-knowledge proof technology to verify the authenticity of off-chain transactions, achieving high throughput and fast confirmation time.

Advantages of Layer 2

• Improved scalability: By moving transaction processing off-chain, Layer 2 solutions significantly increase transaction processing capabilities to meet the needs of high-throughput applications.
• Reduced gas fees: Off-chain processing reduces competition for main chain resources, thereby reducing gas fees, making micro-transactions and frequent transactions feasible.
• Stay decentralized: Layer 2 solutions are built on the principles of decentralization, ensuring transaction verifiability and network robustness.
• Interoperability: Layer 2 solutions can be integrated with different blockchain networks, allowing cross-chain transactions and asset transfers.

Layer 2’s leading project

1. Polygon

• Using Plasma and Optimistic Rollup technology
• High transaction volume and low gas fees
• Integrated with multiple DeFi and NFT protocols

2. Arbitrum

• Using Optimistic Rollup technology
• Strong security records and high throughput
• Integrated with large DeFi protocols like Yearn Finance

3. Optimism

• Using Optimistic Rollup technology
• Supported by the Ethereum Foundation and a large developer community
• Integrated with decentralized exchanges such as Uniswap and Curve So

4. StarkNet

• Using ZKP-Rollup technology
• Ultra-high throughput and extremely low gas cost
• Integrated with game projects such as Immutable X

5. Loopring

• Using state channel technology
• Optimized for DEX trading
• Providing technical support for Gamestop Marketplace

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