When it comes to the core design of a blockchain network, developers may not necessarily apply updates in the form of the genesis network only. One way to increase blockchain functionality is layer-2 solution that you are going to read about in this article.
What is a Layer 2 Blockchain Protocol?
A layer 2 blockchain protocol is a type of additional layer that is built on the top of the genesis blockchain network. This layer can provide scalability, efficiency, and other advantages for the blockchain ecosystem.
It is important to note that Layer 2 solutions are designed to add additional functionality to the core blockchain infrastructure without changing the underlying design. It means that a blockchain can remain immutable but add new features with the help of layer-2 protocol.
Why does Blockchain Need Layer 2 Protocols?
It is important to note that blockchains have ability to fork when new updates are added to the network. Therefore, many would question the need for a layer 2 solution. However, this issue is explained by blockchain trilemma theory.
This theory postulates that developers on a blockchain cannot increment three main features on the network namely security, decentralization, and scalability. When one feature on the blockchain is enhanced the other two are compromised.
Layer 2 solutions can address this issue and allow blockchain developers to solve the trilemma by bringing additional features in the form of layer 2 solution rather than making changes to the core infrastructure of a blockchain network.
Core Functions of Layer 2 Protocols
Here are three main functions of a blockchain layer 2 protocol:
- Data Availability
On account of limited scalability on the core blockchain it can face issues with data storage. Layer 2 solutions enhance storage capacity for nodes and validators in the sizes ranging from Mbs and Gbs etc.
Layer-2 solutions improve the decentralization potency of a blockchain network. They can allow nodes and validators by increasing decentralization and time-to-finality.
Layer 2 increment the number of transactions processed per second on a blockchain. In this manner, blockchain can process more transactions in smaller amount of time and increase its overall throughput.
How does a Layer 2 Solution Work?
Layer 2 solutions depend on alternative channel for processing transactions and smart contracts. The Layer 2 solution in this manner, provide a new channel for verified transactions on the blockchain to complete the cycle faster. In this manner the throughput for a blockchain improves.
At base Layer 2 solutions need to provide encrypted proof for the transactions processed either before or after the completion. Layer 2 solutions can act as on-chain and off-chain payment channels or rollups.
The second part of the Layer 2 protocol can act like an infrastructure layer that hosts smart contracts and perform the following functions:
Reserve and release tokens on the layer 2 solution.
Generate proof of processing for layer 2 operations, validate, resolve conflicts, and finalize the transactions.
Layer 2 solutions are one of the fastest growing protocols in the blockchain sector. Exchanges and other trading platforms are enabling layer 2 solutions to enhance the functionality and features of a blockchain network. In many cases, these layer 2 solutions also issue tokens that investors can add to their portfolios. To stay updated on these and other vital trends in the crypto and blockchain space, Main Crypto News offers comprehensive coverage to keep you ahead of the curve.