An example of Layer 1 blockchain is Bitcoin's Lightning Network, a Layer 2 scaling solution that simultaneously takes the load from Bitcoin and reports to it. As blockchain works on an open architecture, anyone that can solve problems faced by a network can build a Layer 2 blockchain. Some examples are Bitcoin, Ethereum, Solana, Cardano and Ripple. Each layer 2 solution features a unique method for mapping transactions back to the concerned base layer. For example, someone who uses digital currency needs to wait until a transaction is final before they can spend their money again. Another example is Ethereum, which is a leading blockchain network that can currently process only 15 to 20 transactions per second, and this costs users to pay higher gas fees to process their transactions at the earliest. TL;DR. Layer 1 refers to a base network, such as Bitcoin, BNB Chain, or Ethereum, and its underlying infrastructure. However, Layer-1 is only responsible for managing the addition and creation of new blocks to the blockchain. Layer 2 sort of acts as an intermediary between the main chain and the information that is to go on it. This means that Layer 2 blockchains are far more cost-effective than Layer 1, which comes down to their more efficient models. Difference between Layer 1 and Layer 2 Blockchain Layer 1 and layer 2 scaling solutions may be distinguished on the basis of their fundamental outline. Recommended lecture: BEST ETHEREUM LAYER 2 INVESTMENTS. Layer-2 solutions can be divided into two categories: Why are layer 2 solutions important? Layer 2's exist to address the scalability challenges of L1 networks, particularly the issue of high gas fees during times of network congestion. You can consider Bitcoin mining devices and ATMs and L0, along with Internet, electricity, and essentials. Layer-1 blockchains can validate and finalize transactions without the need for another network. Layer-1 simply means the underlying main blockchain network. Kava 7. Shardeum 6. They are third-party integrations that enhance efficiency (system throughput) or scalability on top of L1 chains. Their primary purpose is to enhance the capacity of blockchain transactions while keeping the distributed protocol's decentralized benefits. The layer 2 protocols can also be referred to as 'side chain network' or an 'off-chain layer'. The scalability problems that we have today is on the layer-1 network. The payment protocol Lightning Network, for example, is the layer 2 protocol the Bitcoin network is making use of to benefit from quicker transfers and lower fees. There are a number of basic options for technological solutions used in Layer 2, including: Payment channels This is the topmost layer. A state channel is sealed off by the smart contract mechanism instead of validation by nodes of the Layer-1 network. Some examples of Layer-2 solutions are: 1. Layer 2 refers to various protocols that are built on top of layer 1 to improve the original blockchain's functionality. A few more popular layer 2 blockchains are Polygon, Arbitrum, Immutable-X, X-Dai, and Optimism. The blockchain is the fundamental building component of a decentralized ecosystem. The purpose of the main chain is to assign tasks and take control of all the parameters. It has solved the scalability problem of Bitcoin by speeding it up. Layer-2 sits on top of Layer-1 in the blockchain ecosystem and constantly exchanges information with it. Examples of layer 2 projects include "rollups" on Ethereum and the Lightning Network on top of Bitcoin. Layer 1: The base blockchain network. It does so, usually in one of four ways: 1. They can be sidechains, plasma chains, state channels, or rollups. For example, Bitcoin's Lightning Network or Ethereum's Plasma, Polygon, and so on. On the other hand, Starknet and zkSync are among the Ethereum layer-2s that leverage ZK Rollups. They are designed to increase transaction speed, decrease transaction costs (i.e. . Examples of Layer 2 Scaling Solutions Polygon (MATIC) By far, Polygon is the most widely adopted layer 2 solution for Ethereum. Oracles - these are third-party providers of external data for smart contracts. . Layer-2 blockchains are third-party protocols operating on layer-1 blockchains to help solve any of the blockchain trilemma- decentralisation, security, and scalability. Lightning Network The Lightning Network is a primary Layer 2 protocols blockchain designed to enhance the transaction process of Bitcoin. Layer 2 platforms greatly increase blockchain scalability. Layer 2 blockchain solutions are functional components of the blockchain that can be stacked on top of the foundation that Layer 1 provides. The ZKSwap is a Layer 2 scaling solution, specifically an automated market maker (AMM) type decentralized exchange (DEX) powered by zkRollup technology. Algorand Conclusion Popular Searches What is Layer 1 in Blockchain? Layer 1 is responsible for protocols, consensus . The best examples of layer 0 projects include Cardano, Cosmos, and Polkadot. Layer 1 is usually a simple, broad, and general purpose. Popular examples of Ethereum layer 2 solutions include Immutable X, Polygon, and Polkadot. Layer 2 is what gets built on top of the base chain in order to improve scalability. Many Layer 2 blockchain scaling solutions have their own native crypto assets, a number of which are available to trade on OKX. StarkEx By facilitating transfers of value that are fast and efficient, layer 2 solutions open up broader possibilities for blockchain application. Layer 2 is a secondary protocol built on top of the existing blockchain network. For example, the Lightning Network and Raiden Network. For example, while Ethereum handles less than 20 transactions per second, some layer 2 networks supercharge this to over 2,000 tps. We often refer to Layer 2 solutions as "off-chain" blockchain technology. Layer-1 can exist on its own without needing layer-2, but layer-2 need layer-1 to work properly. I'll go over the various layer 2 blockchain solutions that are now in use in the following paragraphs: Blockchains that are nested Layer 2 Blockchain Examples As the problem with Layer 1 blockchains becomes more apparent, more and more people are racing to create Layer 2 blockchains. While Layer 2 blockchains still use Layer 1 features, including smart contracts and security protocols, they are not burdened by the same . They validate and finalize transactions but have issues with scaling (e.g. Meanwhile, minting and transfers on the Polygon Layer 2 blockchain are around $0.05, a factor of 2,000 times cheaper than their Layer 1 equivalents. Subsequently, fees for using the base layer drop, extending the network's utility to more users. Popular examples of Ethereum layer 2 . Celo 4. For example, the Ethereum mainchain is currently capable of processing 15 transactions per second (TPS). gas fees), and help the layer 1 ecosystem scale. For example, Bitcoin and Ethereum. Instead of adding every single daily transaction of every Bitcoin user to the blockchain, the Lightning Network allows users to effectively open tabs with each other and make endless . The blockchain layer two is a solution for scalability issues. State Channels. Typically, layer 2 protocols are optimized for reducing network congestion, lightening the load and increasing throughput of the mainnet. IoTeX 8. For instance, consider the Lightning Network as an example of a layer 2 blockchain deployed on the Bitcoin blockchain. The layer 2 scaling solutions don't require changes in the layer 1.. A. In the example of the city economy, where Layer 1 is the businesses and . Like Bitcoin, Ethereum can be thought of as a Layer 1 protocol. One of the solutions to these problems is the creation of Layer 2 systems, most of which are aimed at solving the scalability problem, which rests primarily on the throughput of blockchain networks (quantity and speed of transactions). Unlike Ethereum, which is limited to 13-17 transactions per second (TPS), Polygon can execute up to 7,000 TPS, making it comparable to Visa. A layer 2 is a separate blockchain that extends Ethereum and inherits the security guarantees of Ethereum. Layer 2 refers to the scaling solutions to reduce congestion through secondary blockchains. Solving the scalability problem will go a long way toward ensuring blockchain's general acceptance. Layer 1 and layer 2 Blockchain Other Blockchain layer 2 examples are Ethereum's Plasma, Polygon, and so on. Each of these cryptocurrencies is trying to solve the problems of Layer 1 blockchains. Examples of layer-2 are Polygon, Cartesi and Celer. Making improvements to the scalability of layer-1 networks is difficult, as we've seen with Bitcoin. Harmony 3. ZKS price chart - coinmarketcap. Layer 2 Blockchain Examples Some of the most common Layer 2 blockchain examples are given below which use Layer 2 protocols blockchain. These assets . It transfers all tokens to Layer 2 and guarantees consistency by continuously generating zero . The fees can rise sky-high. Bitcoin Lightning Network). Smart Contract - written codes that automate transactions on the blockchain. Blockchain technology and the scalability . State Channels. These include -inefficiency and very high execution costs which result in bad Ethereum user experience as well as expensive . The purpose is to improve transaction speed and scalability limitations that face major blockchain protocols. By implementing rollups, this number can reach up to 1,000 TPS, as only . . Layer-2 scaling solutions entail decongesting the base Layer-1 blockchain by shifting a part of its transactional volume to an adjacent system. It creates a secondary framework which is used for transactions "off chain" (e.g. Nested blockchains, sidechains, and state channels are all good instances of layer 2 scaling solutions. As such, the main reason for Arbitrum's existence is to tailor to the shortcomings of current smart contracts based on Ethereum. It's the settlement layer for all transactions on the network. With increased processing power, lower transaction fees, and richer user experience, blockchain technology will gain rapid acceptance. All user transaction activity on these layer 2 . Layer-2: A network that sits on top of Layer-1, which facilities network activity. Examples of this type of layer 2 solution can be found in: Rollups:These layer 2 scaling solutions roll up a group of transactions into one single transaction and then feed it back into the main . Bitcoin). In other words, Layer 1 solutions change the rules of the original blockchain directly, while Layer 2 solutions rely on a parallel network to facilitate transactions off the mainchain. The layer 2 scaling solution is a term to describe projects that are built on top of the layer one blockchain. The Layer-1 blockchain are typically used to pay fees and provide broader utility. Despite having their own working mechanisms and particularities, both solutions are striving to provide increased throughput to blockchain systems. A layer-2 blockchain solution is a second layer built on an existing blockchain network. It consists of three layers: Layer 1, Layer 2, and layer 3. Many Layer 2 blockchain technologies are currently being deployed. Second, they lower the cost of transactions. A Layer 2 blockchain operates on or adjacent to an underlying Layer 1 blockchain. Layer 2's (or L2s) increase the speed and reduce the cost of transacting on a blockchain. Layer-1 vs. Layer-2 Blockchains: The Basics. Developed by L2Lab, it has already launched on Ethereum mainnet. Layer 2 Blockchains Layer 1 Blockchain Examples: Elrond THORChain Layer 2 Blockchain Protocols Examples of Layer 2 Blockchain Solutions Nested Blockchains State Channels Sidechains The Blockchain Trilemma What is Blockchain Layer 0? Layer 2 solutions offer a way of increasing transaction speeds and scaling while benefiting from the security of the main chain. They serve as add-ons for the parent blockchain. . Like other layer 2 scaling solutions, it aims to tackle scalability problems by offloading some of the validation and transaction processing processes to another blockchain. Layer 1 is the main blockchain network in charge of on-chain transactions, while Layer 2 is the connected network in charge of off-chain transactions . Sidechains Sidechains are secondary blockchains that run parallel to the layer-1 blockchain. Elrond 2. Bitcoin, Ethereum, Solana, Binance Smart Chain, Litecoin, and Polkadot are just some of the existing examples of Layer 1 solutions. Layer 0 is the network infrastructure that runs underneath the blockchain forming the fundament of the technology. However, layer 0 projects can come to the rescue: unlike layer 2 solutions, they improve the efficiency of cross-chain interaction instead of the speed and the cost of any particular blockchain. A Layer 2 is a scaling solution that sits on top of a layer 1 blockchain like Bitcoin or Ethereum. However, we don't often hear about layer 0, even though it has been around since the dawn of the blockchain technology. The foundational projects of Layer 1, and the benefits they generated, helped make the idea of Layer 2 protocols become a reality. Earn up to 245% APR! The following Layer-1 vs. Layer-2 blockchain guide explores both approaches and how they contrast. Although geared towards speed and scalability, Layer 2's may also have their own unique selling points. In addition, the Lightning Network brings smart contracts to the Level 1 Bitcoin blockchain. As a result, the Lighting Network increases the processing speed on the Bitcoin blockchain. More importantly, layer 2 protocols will accelerate the integration of blockchain into global commerce. Layer 2 consists of any overlaying network built on top of the mainnet, the layer 1 foundation supporting a blockchain. But did you know Bitcoin has an ecosystem from L0 to L3? Immutable-X - Immutable- X is the first Layer 2 scaling solution for NFTs on Ethereum. Each Layer 2 has its micro-ecosystem of dApps (L3s) built on L2. Blockchain layer 2 solutions: Layer 1 vs. Layer 2 Types of Layer 1 Blockchain Solutions Consensus Protocol Sharding Benefits of Layer 1 In Blockchain Solutions Layer 1 Blockchain Examples 1. 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