Like many other markets, Bitcoin and altcoins have their own shortcomings. However, many of these problems also come with solutions. For example, scalability has been a common issue for several Blockchains. The difficulty of accommodating the increasing number of transactions and data on a blockchain is a major problem for a number of networks. This is where Layer-1 (L1) and Layer-2 (L2) solutions come into play. As Kriptokoin.com, we answered the question “What are the Layer-1 and Layer-2 scaling solutions” in this article.
What are Blockchain Layer-1 scaling solutions?
L1 usually refers to the fundamental level of a Blockchain network. Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC) are all examples of a layer-1 Blockchain. L1-related solutions are usually implemented on the original blockchain. This includes changing mechanisms or rules to increase processing capacity. Having more users on the network with data is suitable for L1 scaling solutions. Prominent L1 scaling solutions include modifying the Proof-of-Stake protocol. Popular cryptocurrencies like Bitcoin and Ethereum currently use the Proof-of-Work (PoW) consensus mechanism. Although this is touted as one of the safest algorithms, it sometimes runs slow. As a result, networks are migrating to the Proof-of-Stake consensus mechanism. Ethereum Blockchain, for example, will release the Merge upgrade in September. Thus, it will transition from PoW to PoS.
Another L1 scaling solution is sharding. This term is quite popular among the Ethereum community. The Ether network is struggling with many scalability issues. Accordingly, Ethereum 2.0 works the same as Tezos, Qtum and Zilliqa. Despite its relatively experimental status in the blockchain industry, sharding is growing as one of the favorite Tier-1 scaling options. This solution actually refers to a method borrowed from distributed databases. It makes it possible to make it more convenient to monitor the entire network. It does this by dividing the state of the entire blockchain network into separate databases known as ‘shards’. Following this, parts are processed by the network to pave the way for many other operations.
What are Layer-2 scaling solutions?
Unlike L1, Layer-2 solutions run on an already existing Blockchain. L2 emerged to reduce the burden on a single blockchain by incorporating a similar architecture. The original blockchains are basically based on secondary networks running parallel to the main chain. Ethereum’s Polygon L2 solution is an example of such projects. Layer-2 scalability solutions consist of state channels, sidechains, and nested blockchains. Sidechains are separate networks with their own validators adjacent to transaction chains. However, the sidechain has the ability to manage assets on the main chain. Therefore, it is quite important that such solutions work well. Additionally, it should be noted that any security breach on the sidechain does not affect the main chain.
Nested blockchains are quite different in that they run inside the main chain rather than on top of it. The nested blockchain architecture usually consists of the core blockchain. This core chain sets the rules for a larger network and allows executions to take place in a network of interconnected subchains. The main chain can serve as the foundation for several Blockchain layers, each utilizing a parent-child link. The main chain assigns tasks to the subchains. Subchains complete these tasks and forward them back to the main chain. Unless it becomes imperative to resolve a dispute, the underlying blockchain does not participate in the network operations of the affiliated chains. Another l2 solution is status channels. This creates a two-way communication environment for transacting entities. It usually includes Blockchain and off-chain transaction channels. The transaction speed and capacity of the crypto network take a hit in this case. The Bitcoin Lightning Network is among the best-known examples of this.
What awaits L1 and L2 solutions in the future?
In the last few years, the crypto industry has witnessed a flawless growth. The increasing number of investors entering the industry has forced the use of L1 and L2 solutions to keep networks functioning. Therefore, as the masses continue to explore cryptocurrency, there is a good chance that more solutions will come to Blockchain networks.
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