The post Understanding Layer 2 Blockchains: Enhancing Web3 Scalability and Efficiency appeared on BitcoinEthereumNews.com.

Alvin Lang Sep 23, 2024 04:15 Layer 2 blockchains enhance speed and reduce costs on Layer 1 chains like Ethereum, making Web3 more scalable. Layer 2 (L2) blockchains are solutions designed to enhance the performance of existing Layer 1 (L1) blockchains such as Ethereum. Analogous to a secondary road built to ease traffic on a busy highway, Layer 2 technologies aim to make transactions faster, cheaper, and more scalable. Why Do We Need Layer 2? Popular blockchains like Ethereum and Bitcoin often encounter slow transaction speeds and high fees due to network congestion. Each transaction must be processed by every node in the network, leading to delays and inconsistent performance. Layer 2 chains address these issues by processing transactions off-chain, thereby reducing the workload on Layer 1. These transactions are later bundled and sent back to the main blockchain, significantly expediting the process. How Do Layer 2 Solutions Work? Layer 2 solutions alleviate the main blockchain’s burden, allowing users to conduct transactions more efficiently. The process typically involves three steps: Transaction Bundling: Multiple transactions are grouped together. Processing Off-Chain: Transactions are processed off-chain, meaning they do not occur directly on Layer 1. Settlement on Layer 1: The results of these transactions are then sent back to the main blockchain, reducing its load. A useful analogy is an amusement park with long lines for rides (Layer 1). Layer 2 acts as a fast pass line that processes smaller groups more quickly and then checks them in with the main system. Examples of Layer 2 Solutions Polygon (formerly Matic): One of the most well-known Layer 2 solutions for Ethereum, Polygon uses sidechains to help Ethereum scale. It processes transactions off-chain and then updates the Ethereum blockchain with the results. Arbitrum: This solution employs rollups to bundle transactions, verify them off-chain, and then…

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Filed under: News - @ September 23, 2024 4:12 am