What Are Layer-2 Networks and Sidechains? Ethereum Scaling Explained
Blockchain infrastructure includes layer-1 and layer-2 networks, with layer-2 networks built atop layer-1 networks like Ethereum. Layer-1 provides security and transaction validation, while layer-2 addresses scalability issues caused by throughput and transaction costs. Ethereum processes about 14 transactions per second (TPS), compared to Visa's 65,000 TPS. Scalability challenges intensify during high network activity, leading to increased transaction fees and congestion. Solutions include sidechains, which operate independently with their own consensus mechanisms, and rollups, which bundle transactions for faster processing. Types of rollups include optimistic rollups, which assume validity, and zero-knowledge rollups, which use cryptographic proofs. Major layer-2 networks include Base, Arbitrum, Polygon, Optimism, Scroll, and Blast. Ethereum co-founder Vitalik Buterin aims for a rollup-centric roadmap to enhance Ethereum's capacity to over 100,000 TPS. Layer-2 solutions are also emerging on other blockchains like Bitcoin and Solana.
