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Blockchain layer, 1 and layer, 2 extended solutions

Time : 20/12/2021 Author : voydxq Click : + -
        The popularity of cryptocurrency and blockchain is growing exponentially, and the number of users and transactions is also growing rapidly. The groundbreaking nature of blockchain is obvious, and scalability (the ability of the system to grow while meeting growing needs) has always been a challenge. Highly decentralized and secure public blockchain networks are often difficult to achieve high throughput. This is usually described as the three dilemmas of blockchain, that is, a decentralized system can hardly achieve the same high level of decentralization, security and scalability at the same time. In fact, blockchain network has only two of three factors. Fortunately, thousands of enthusiasts and experts are trying to find expansion solutions.
 
        Some of these solutions are aimed at adjusting the architecture of the main blockchain (laver1), while others are aimed at the layer2 protocol running on the underlying network. There are so many blockchains and cryptocurrencies available that you may not know whether you are using laver1 or laver2 chains. Avoiding the complexity of blockchain is beneficial, but it is worth knowing the system you are investing in or using. Through this article, you will understand the differences between layer1 and layer2 blockchains and various scalability solutions. Layer1 refers to the basic layer of blockchain architecture. This is the main structure of blockchain network.
 
        Bitcoin, Ethereum and BNB chains belong to laver1 blockchain. Laver2 refers to a network built on other blockchains. Therefore, if bitcoin belongs to laver1, the lightningnetwork running on bitcoin is an example of layer2. The scalability improvement of blockchain network can be divided into laver1 and laver2 solutions. Laver1 solution will directly change the rules and mechanisms of the original blockchain. Laver2 solution uses an external parallel network to promote transactions outside the main chain. Imagine a new highway between a big city and its fast-growing suburbs.
 
        With the increase of traffic volume through the highway, congestion becomes very common, especially in peak hours, the average time from place a to place B will increase significantly. Considering the limited capacity of road infrastructure, while the demand is growing, this phenomenon is not surprising. Now, what can the relevant authorities do to help more office workers travel faster through this line? One solution is to improve the highway itself and add additional lanes on both sides of the road, but this is not always feasible, because the cost of this solution is not cheap, and it will cause considerable trouble to those who pass the highway. Another option is to be creative and consider various methods unrelated to changing the core infrastructure, such as building additional service roads, or even opening a light rail transit line along the highway.
 
        In the world of blockchain technology, laver1 (primary network) is the main highway, and the additional service road is the layer2 solution (secondary network to improve the overall capacity). Bitcoin, Ethereum and Polkadot are all considered as layer1 blockchain. They are the underlying blockchains that process and record transactions for their respective ecosystems, and have native cryptocurrencies - usually used to pay fees and provide broader utility. Polygon is an example of Ethereum layer2 expansion solution. Polygon network regularly submits checkpoints to Ethereum main network to update its status.
 
        Throughput is an important element of blockchain. It is a measure of speed and efficiency, indicating how many transactions can be processed and recorded within a specific time frame. As the number of users increases and the number of simultaneous transactions increases, using laver1 blockchain may be slow and costly. This is especially true for layer1 blockchain that uses proof of work mechanism instead of proof of interest. Bitcoin and Ethereum are laver1 networks with scalability problems. Both of them ensure the security of the network through the distributed consensus model. This means that all transactions must be verified by multiple nodes before verification.
 
        The so-called mining nodes compete to solve a complex computing problem, and successful miners will be rewarded with the network's native cryptocurrency. In other words, all transactions need independent verification of several nodes before being confirmed. This effective method can record correct and verified data into the blockchain, while reducing the risk of attacks by bad actors. However, once your network is as popular as Ethereum or bitcoin, the throughput demand will become an increasingly serious problem. When the network is congested, users will face slower confirmation time and higher transaction fees. For laver1 blockchain, there are several options to improve throughput and overall network capacity.
 
        If the blockchain uses workload proof, turning to equity proof may be an option, which can increase the transaction volume per second (TPS) and reduce the processing fee. Nevertheless, the crypto community has different views on the benefits and long-term impact of proof of interest. The scalability solution on laver1 network is usually introduced by the development team of the project. Depending on the solution, the community will need to make hard or soft branching of the network. Some small changes are backward compatible, such as the segwit update of bitcoin. Larger changes, such as increasing the block size of bitcoin to 8MB, require hard forking.
 
        This will create two versions of blockchain, one updated and the other not updated. Another option to improve network throughput is fragmentation. It will split the operation of a blockchain into several smaller parts, and can process data at the same time rather than in sequence. Zero knowledge aggregation (the most common one) binds laver2 transactions under the chain and submits them to the main chain as a transaction. These systems use proof of validity to check the integrity of transactions. Assets are saved on the original chain through bridging smart contracts, and the smart contract confirmation and summary function operates as expected. This not only ensures the security of the original network, but also reduces the consumption of summarized resources.
 
        The side chain is an independent blockchain network with its own group of verifiers. This means that the bridging smart contract on the main chain will not verify the effectiveness of the side chain network. Therefore, you need to believe that the operation of the side chain is correct, because it can control the assets on the original chain. The status channel is a two-way communication environment between the trading parties. All parties seal up part of the underlying blockchain and connect it to the off chain trading channel. This is usually done through pre agreed smart contracts or multi signatures. Then, all parties execute a transaction or a batch of transactions off the chain without immediately submitting transaction data to the underlying distributed ledger (i.e. the main chain). Once all transactions in the set are completed, the final "state" of the channel will be broadcast to the blockchain for verification.
 
        This mechanism improves the processing speed of transactions and increases the overall capacity of the network. Solutions such as bitcoin lightning network and Ethereum's Raiden operate based on state channels. This solution relies on a set of secondary chains located above the main "parent" blockchain. Nested blockchains run according to the rules and parameters set by the parent chain. The main chain does not participate in the execution of transactions, and its role is limited to resolving disputes when necessary. The daily work is entrusted to "sub" chains, which complete the processing under the main chain and return the processed transactions to the main chain. The plasma project of omisego is an example of laver2 nested blockchain solution.
 
        Laver1 and layer2 solutions have unique advantages and disadvantages. Laver1 can provide the most effective solution for large-scale protocol improvement. However, this also means that the verifier must be persuaded to accept the change through hard bifurcation. The verifier may not want to do this, such as changing from proof of workload to proof of equity. Switching to more efficient systems will result in miners losing their income, which will deprive them of the incentive to improve scalability. Layer2 provides a faster way to improve scalability. However, according to the method used, the security of the original blockchain is likely to be greatly reduced. Users trust networks such as Ethereum and bitcoin because of their resilience and security record.
 
        If you abandon some aspects of laver1, you often have to rely on the layer2 team and network to improve efficiency and security. A key question is whether we need laver2 solution with the enhanced scalability of layer1. The existing blockchain has been improved, and a new network with good scalability has been created. However, it takes a long time to improve the scalability of the main system, which cannot be guaranteed. The most likely option is to focus laver1 on security and allow the layer2 network to customize services based on specific use cases. In the near future, large chains such as Ethereum are likely to remain dominant because they have a large user and developer community.
 
        However, its large, decentralized group of verifiers and reliable reputation have laid a solid foundation for the goal of layer2 solution. Since the beginning of cryptocurrency trading, the pursuit of improving scalability has led to a two pronged approach, namely laver1 improvement and laver2 solution. If you have a variety of encryption product combinations, you are likely to have access to laver1 and laver2 networks. Now you know the differences between the two and the different extension methods they provide. I'm Guding, focusing on quantitative trading of digital currency. If you are also interested in digital currency, welcome to communicate with me.
 
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