Ethereum is one of the largest blockchain platforms in the world. Which hosts thousands of decentralized applications (DApps). To take advantage of the benefits of blockchain technology, people are increasingly incorporating their businesses on blockchain-enabled platforms such as Ethereum. This is causing traffic congestion in the network. Network congestion slows down the transaction process and leads to higher gas charges.
To deal with these problems, businesses use Layer 2 solutions provided by outside parties. in order to increase the scalability and transaction speed of their applications. and reduce gas charges on the Ethereum blockchain.
This blog post lists the best Ethereum layer 2 solutions that will help run your dApps smoothly and efficiently.
What are Layer 2 Solutions?
The third-party protocols are integrated with layer-1 blockchain to improve network scalability and transactional throughput. These are the scaling solutions that work as an extension of the base layer to improve network efficiency.
When the number of users on a blockchain network increases, the transaction speed plummets drastically, and therefore transaction charges also increase. Most blockchain platform suffers scalability problem due to their dependence on limited network and storage capacity. Ethereum has a transaction per second (TPS) speed of 15 which is far too slow as compared to payment services like Visa which has a TPS of 45,000. As such developers opt for layer 2 solutions to fill this gap in transaction speed.
Best Ethereum Layer 2 Solutions
Here are the 5 best Ethereum layer 2 solutions that you can turn up to increase the scalability of your decentralized application.
Arbitrum
A layer 2 solution, built on top of the layer 1 Ethereum blockchain. It streamlines the automation of smart contracts without compromising Ethereum’s existing security standards. It moves computation and data storage from Layer 1 of Ethereum to back congestion in the network. Which subsequently increases the transaction speed and reduces the transaction fee.
Launched in August 2021 by Offchain Labs, Arbitrum joins Ethereum to form an Arbitrum chainlink between Layer 1 and Layer 2. Which facilitates additional data computational storage for the existing layer. It has been adopted by very popular decentralized finance (DFI) companies including AAVE, Curve, Sushi Swap, Balancer, Band Protocol and UniSwap to ensure faster TPS and lower gas charges.
Optimism
Optimism as a layer 2 scaling solution uses Optimistic rollups technology to bundle all the transactions in a single transaction to reduce the congestion in the network and boost the TPS. It works on the top of layer 1 mainnet. All the transactions are executed on the Optimism sidechain and transaction data is posted to the blockchain for validation. Being the second-largest Ethereum layer 2 solutions, Optimism has a total of $313 million locked into its smart contracts
Polygon (MATIC)
One of the best Layer 2 Ethereum solutions, Polygon takes transactions from the Layer 1 blockchain to increase the speed of the network. Which automatically increases the transaction speed. Covers gas charges without compromising the security and decentralized nature of the platform.
It moves computation and data storage from Layer 1 of Ethereum to back congestion in the network. Which subsequently increases the transaction speed and reduces the transaction fee.
Launched in August 2021 by Offchain Labs, Arbitrum joins Ethereum to form an Arbitrum chainlink between Layer 1 and Layer 2. Which facilitates additional data computational storage for the existing layer.
It works as a sidechain that runs concurrently alongside Ethereum blockchain to facilitate faster transactions at lower gas fees.
Immutable X
Immutable X as a Layer 2 scaling solution is known for its unique ability to launch NFT projects quickly. It works as an integrated sidechain on top of layer 1 Ethereum blockchain to provide a broadband-like highway route for decentralized applications to function smoothly while benefiting from Ethereum security cover. Due to its near-zero fee, Immutable X is the preferred choice for developers to scale their professing efficiency.
It works as a supplement protocol linked as an additional lever of blockchain on Ethereum to ensure optimum throughput while keeping the security and decentralized nature of the platform intact.
Loopring
One of the best Ethereum layer 2 solutions, Loopring facilitates high transaction throughput for non-custodial decentralized exchange and DeFi applications. Built on the Ethereum blockchain it facilitates decentralized exchanges (DEXs) to process thousands of transactions in seconds. One of the best Layer 2 Ethereum solutions, Polygon takes transactions from the Layer 1 blockchain to increase the speed of the network. Which automatically increases the transaction speed.
Covers gas charges without compromising the security and decentralized nature of the platform. It works as a sidechain that runs concurrently alongside Ethereum blockchain to facilitate faster transactions at lower gas fees. It also offers rewards to liquidity providers and operators using Zero-Knowledge Rollup (zk-Rollup) with its native token LRC. The layer 2 protocol scoops up the layer 1 blockchain data and feeds it back in a compact format.
Conclusion
Due to being the largest smart-contracts blockchain, Ethereum (ETH) suffers a lot of scalability problems. Since users are joining the network increases the blockchain is becoming slow and expensive. In terms of cost, Optimism is cheaper than Ethereum itself. ATIC)