Scaling a $500Bn+ Ecosystem: Layer 2 and Other Ethereum Scalability Solutions and Their Current Solution Landscape


 

The following is a present state of the Ethereum scalability ecosystem mini report, which is longer and extra in depth than a typical weblog publish.

By Andreas Freund, EEA Mainnet Interest Group Member

Many enterprises have deserted non-public Blockchain consortia resulting from a number of components: the absence of significant community results in non-public Blockchain implementations –which are inclined to make them costlier and cumbersome to handle inside a consortium of competing entities than a shared database system – in addition to the shortage of accessibility of the DeFi ecosystem with its new and quickly rising, and, due to this fact, very worthwhile asset lessons. Ethereum Layer 2 (L2) scalability options supply a chance to suit the sq. peg of Ethereum Mainnet into the spherical gap of enterprise safety, privateness, and compliance necessities since many L2 options are de facto centralized databases with intelligent cryptography. They may present entry to the world of DeFi asset lessons, permitting Mainnet community results to spill over to enterprise options via these DeFi asset lessons. This makes for a brand new, and symbiotic, relationship between enterprise use instances on L2 and the Ethereum Mainnet via each asset and consumer development.

A Brief Introduction to Layer 2 and different Scalability Solutions for Ethereum

The Ethereum Mainnet has grow to be a sufferer of its personal success in that it at the moment serves as a major bottleneck for the expansion of its ecosystem; community points have arisen resulting from excessive transaction charges and the restricted variety of transactions allowed per block, endangering the financial viability of Ethereum-based protocols, start-ups, and others with sound enterprise fashions. While Eth2, the following model of Ethereum, guarantees a 100x enhance in transaction scalability and considerably lowered transaction charges, its rollout continues to be 12 months or extra away. Ethereum scalability challenges have to be addressed at present if Ethereum needs to retain its management place as the most well-liked, and most used blockchain community on the planet.

Over the final 2 – 3 years a number of varieties of options have emerged that deal with the scaling and transaction price challenges. What they’ve in widespread is that every one carry out the heavy transaction processing off the Ethereum Mainnet (i.e off-chain) in numerous types of centralized or decentralized computing environments, whereas Mainnet is used because the safety and knowledge integrity anchor in numerous types. These options are what’s colloquially known as Layer 2 (L2) as a result of they’re options sitting above the Ethereum Mainnet, additionally also known as Layer 1.

Below is a quick overview of the main scalability answer classes adopted by a quick description of the traits of every answer class:

  • State Channels
  • Sidechains
  • Rollups
    • Optimistic Rollups
    • Zero-Knowledge (zk) Rollups
    • Plasma
    • Validium

 

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