Layer 2

About Scalability

At the time of writing, the second-biggest blockchain that acts as a dApps platform is Ethereum, which can process around 15 transactions per second (ref:Ethereum Transaction Throughput). VISA or Alipay can process around 1,700 transactions per second (ref:Visa Transaction Throughput) and 256,000 transactions per second respectively (ref:ALIPAY Transaction Throughput). Transaction speed for dApps is slow and prohibitive for bringing new users to this technology. To solve this issue, there have been several blockchain scalability solutions proposed:

Blockchain Scaling Solutions

These are some of the well-known blockchain scalability solutions:
  1. 1.
    SegWit: Fixing transaction malleability by removing the signature information and storing it outside of the base transaction block.
  2. 2.
    State Channel: Combining off-chain transactions among particular users and only the final state is committed to the main blockchain.
  3. 3.
    Sharding: Allowing many more transactions to be processed in parallel at the same time by making shards.
  4. 4.
    Plasma: Storing transactions in separate child chains and only the root hash is stored in the main chain.
  5. 5.
    OVM: The new scalability stack for Ethereum
  6. 6.
    ZKRollups: ZKRollup is an L2 scaling solution in which all funds are held by a smart contract on the main chain.
Scaling solutions can be categorized as layer 1 or layer 2.
Layer 1 solutions exist only on layer 1 of the Ethereum mainnet. Layer 2 solutions may combine layer 1, layer 2, and off-chain solutions for greater performance and scalability.
Transaction processing needs to be done outside of the mainnet layer 1 chain as it is reaching critical performance limits(ref:"The Ethereum-blockchain size has exceeded 1TB, and yes, it’s an issue").
Ultimately, the blockchain model may evolve, where layer 1 is used as the trust layer, and layer 2 is the transaction layer.