Educational Post

What is Layer 2? Layer 2 refers to a secondary framework or #protocol built on top of an existing #blockchain system. The goal is to solve transaction speed and #scaling difficulties faced by #major #cryptocurrency networks. For instance, #Bitcoin and #Ethereum are still not able to process thousands of transactions per second (TPS), which is detrimental to their long-term growth. Higher throughput is needed before these networks can be effectively adopted and used on a wider scale. The term “layer 2” refers to solutions proposed to the #blockchain scalability problem. Two #major examples are the #Bitcoin Lightning #Network and #Ethereum Plasma. Both solutions strive to provide increased throughput, despite having different mechanisms. The Lightning #Network is based on state channels, channels that perform #blockchain operations and report them to the main chain. State channels are mainly used as payment channels. The Plasma framework consists of sidechains, essentially small blockchains arranged in a tree-like structure. Layer 2 protocols create a secondary framework where transactions and processes can take place independently of the layer 1 (main chain). These techniques are also referred to as “off-chain” #scaling solutions. One advantage of off-chain solutions is that the main chain doesn’t need structural changes because the second layer is added as an extra. Layer 2 solutions have the potential to achieve high throughput without sacrificing #network security. #CryptoRecovery
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