As reported by coingape layer 2 scaling solutions on Ethereum have been in the limelight as the DeFi activity in the market picks up considerably. Recently, on August 31, the leading Ethereum scaling solutions provider OffChain Labs announced opening up the Arbitrum One mainnet for the public.
But in a very short time, it has gained massive traction. As journalist Colin Wu explains, the Arbitrum network added over 17,000 unique addresses in a single day. As of now, the total unique addresses on Arbitrum have shot closer to 42,000 recently.
They go on to say the daily transaction volume on the network has moved past $100,000 in just ten days of launch. This is like a more than 300% growth over the last week. The growth in daily transaction volume since the launch of Arbitrum One mainnet is more than 5x.
What is Layer 2 Scaling Solution?
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. Transaction speed suffers when the network is busy which can make the user experience poor for certain types of dapps. And as the network gets busier, gas prices increase as transaction senders aim to outbid each other. This can make using Ethereum very expensive
Therefor given Ethereum has been been suffering from high gas fees due to an overload of its network, many have claimed that Layer 2s will be the silver bullet that fixes Ethereum’s pesky gas problem forever.
At the end of the day layer 2 revolve around questions of scalability. Where scalability basically means or deal with resolving capacity limitations.
As the number of people using Ethereum has grown, the blockchain has reached certain capacity limitations. 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. With the main goal of scalability being to increase transaction speed (faster finality), and transaction throughput (high transactions per second), without sacrificing decentralization or security
Because the layer 1 Ethereum blockchain, high demand leads to slower transactions and nonviable gas prices. Increasing the network capacity in terms of speed and throughput is fundamental to the meaningful and mass adoption of Ethereum. While speed and throughput are important, it is essential that scaling solutions enabling these goals remain decentralized and secure. Keeping the barrier to entry low for node operators is critical in preventing a progression towards centralized and insecure computing power.
Yes – but what is layer 2 I hear you scream! Well 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. 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). Generally speaking, transactions are submitted to these layer 2 nodes instead of being submitted directly to layer 1 (Mainnet). 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. The details of how this is done vary significantly between different layer 2 technologies and implementations.
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