Layer 2 Scaling Solution- The Blockchain trilemma

Scaling blockchain refers to understanding and learning how to interact with the blockchain that seems to exists as a single distributed network on the internet. Until now the various solutions like proof of work and proof of stake helped developers to understand how the blockchain work .Scalability was simply archived by working towards building the blockchain by solving complex algorithms using computational power. The expansion of the networks in the digital space in terms of transactions processing speed and power to accommodated new applications relied on solutions like the proof of work and proof of stake . Theses are called the layer1 scaling solutions for a blockchain. They are developed as a result of understanding and learning on how to interact with the blockchain and form a solid knowledge of the blockchain infrastructure.

When it comes to layer 2 scaling solutions there are various options for blockchain technologies to adopt and it is becoming oblivious that each solutions have its own place with each having their own purposes. Major blockchains technology like Ethereum maintain an ecosystem where scalability indicates the ability of a system to promote growth and contain enlargement of the network as the technology is driven by decentralization at its core. This makes it difficult to scale the blockchain itself since transaction in a blockchain network have to be broadcasted to the whole network. Blockchain networks can only do 7–15 transactions per seconds which are small and very slow compared to visa transactions that can do up to 100,000 transactions per second. There are two ways to scale the blockchain, we can either scale the base layer of the blockchain or outsource some of the work to a new layer. here is why we can’t scale the base layer.

The Blockchain Trilemma

The three trilemma factors of a blockchain are Decentralization, security and scalability. In a blockchain architecture improvement on blockchains scalability have a negative effect either on security or decentralization or both. Developers haven’t found a way to maximize all three, if they try to improve one the other two start to lose their benefits. In order to achieve a right trade off developers have to be very creative on how to scale a blockchain.

The most commonly used approach to achieve a scalable blockchain are the Layer two scaling solutions. The idea is to build a framework which can handle transaction off chain.

Rollups- There are two forms of rollups ZKrollups and optimistic rollups. Zero Knowledge rollups are much faster and much more efficient rollups that combines transactions that are conducted on a blockchain into one rolled up transaction.

Optimistic rollups have their own virtual machines which allows them to interact with smart contracts, anything that can be done on a layer 1 can be done by optimistic rollups since its EVM and solidity compatible. The main job of the rollups is to roll up a bunch of transaction into a single transaction and then they can push that to the true blockchain.

Sidechain chains- They are secondary blockchains that run parallel to the main blockchain and use the resource they have to offload the work. They can steal or borrow information from the main blockchain and then use their virtual machine to execute smart contract or validate transactions and then send then the data they have back to the main blockchain for security reasons. A side chain cannot operate without its parent chain, but parent chain does not need a side chain. In the case of Ethereum the Matic or Polygon network is actually a side chain.

Plasma- Plasma uses child chains also called plasma chains which have their own child chains that they can then broadcast important operations to the main chain.

Channels- Channels are a way to lockup your funds and then trade a virtual version of your funds on a network that is much faster. in a channel system we simply use code to make sure we only send what you have actually locked up. the lightning network is an example of layer two scaling solutions using channels for the bitcoin blockchain. Essentially you lockup bitcoins with someone else and then you can send your virtual bitcoins back and forth until you decide to settle up and then push one transaction to the blockchain instead of a whole bunch of them that you would have done otherwise. similarly, to the way a lightning bolt works you can pay anyone that is connect to the person that your locked up with through the network. The downside of channels is that they can only be used for transaction and not smart contracts or virtual machine cods. They are application specific. Lightning network has been a success in avoiding high bitcoin transaction fee while allowing bitcoin to scale and stay secure.

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Layer 2 Scaling Solution- The Blockchain trilemma

The Blockchain Trilemma

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