Layer 2 solutions to solve the urgent needs of Bitcoin and Ethereum

The blockchain industry has a "Impossible Triangle" problem, that is, security, scalability, and decentralization. Only one of them can be sacrificed to achieve the other two. In order to "solve" this impossible triangle problem, many solutions have emerged, one of which is Layer 2 (two-layer network).

Today, we will briefly introduce Layer 2 (Layer 2 network).

01
How does Layer 2 work?

Layer 2 technology is often referred to as "off-chain" solutions, and its main purpose is to extend the performance of blockchains while retaining the decentralization benefits of distributed protocols.

In order to build a good blockchain ecosystem, we need to do some things in the architecture to balance the needs of security, decentralization and scalability. Layer 2 platforms and protocols process data in a way that reduces the burden on the base layer (root chain) and enhances the scalability of the entire blockchain network by offloading some data processing from the main chain to Layer 2.

Taking ETH as an example, a Layer 2 technology system is a system connected to Ethereum, using Ethereum as the base layer for security and finality. In other words, instead of changing the foundation of Ethereum, we are adding smart contracts on top of the main blockchain protocols that interact with offline activities.

Layer 2 massively reduces data processing on the blockchain by running computations off-chain, When there is a dispute, the base layer (root chain) remains the final arbiter.

02
Layer 2 Technology of Bitcoin and Ethereum

"Lightning Network" is the A "second layer" payment protocol that operates on top of the currency, enabling fast transactions between participating nodes. The idea behind it is this: not every transaction needs to be on the chain.

Thus, the Lightning Network adds another layer to the Bitcoin blockchain and enables payment channels to be established between any two customers on this additional layer. Transactions in these channels are instant and fees will be very low.

Similar to the Bitcoin Lightning Network, people have proposed different solutions to solve the scalability problem of Ethereum, including Casper, Plasma, and sharding. Among them, Plasma uses a second-layer smart contract on the main blockchain and relies on the underlying Ethereum blockchain to achieve its security.

Plasma allows chains within chains, which allows for exponential growth in scalability. It creates "child" blockchains that are attached to the "main" Ethereum blockchain, and these child chains can in turn spawn their own child chains, and so on.

Proof of sub-chain validity is submitted and stored on the main chain. The result is that we can perform many complex operations in the sub-chain hierarchy, while maintaining minimal interaction with the main Ethereum chain (only in the event of a dispute, there will be significant interaction with the main chain), running thousands of Complete application for users.

03
What does Layer 2 mean for the development of the blockchain industry?

Blockchain is evolving into a multi-layered system. Layer 2 can help us create a “usable” blockchain system and expand it to other industries.

Ethereum founder Vitalik Buterin made a calculation for us. He mentioned in the AMA:

If we get 100 times from sharding and 100 times from Plasma, the two Basically providing a 10,000x scalability gain. This means that the blockchain will be powerful enough to handle most applications that people try to deal with.

The above is the detailed content of Layer 2 solutions to solve the urgent needs of Bitcoin and Ethereum. For more information, please follow other related articles on the PHP Chinese website!