An article to understand how Layer 2 solves the “impossible triangle” problem of the blockchain?

There is an “impossible triangle” problem in the blockchain industry, that is, security, scalability, and decentralization. Only one of them can be sacrificed to realize the other two.

In order to “solve” this impossible triangle problem, many solutions have emerged, one of which is Layer 2 (Layer 2 network). Today, we will briefly introduce Layer 2 (Layer 2 network) .

How does Layer 2 work?

Layer 2 technology is often referred to as an “off-chain” solution, and its main purpose is to expand the performance of the blockchain while retaining the decentralized advantages of distributed protocols.

In order to build a good blockchain ecosystem, we need to do something in the architecture to balance the needs of security, decentralization, and scalability.

The Layer 2 platform and protocol process data in a way that reduces the burden on the base layer (root chain), and enhances the scalability of the entire blockchain network by transferring part of the data processing of the main chain to Layer 2.

Take ETH as an example. The Layer 2 technology system is a system connected to Ethereum , using Ethereum as the basic layer of security and finality. In other words, instead of changing the Ethereum foundation, we are adding smart contracts to the main blockchain protocols, which interact with offline activities.

Layer 2 reduces the data processing on the blockchain on a large scale by running calculations outside the chain. When there is a dispute, the base layer (root chain) is still the ultimate arbiter.

Layer 2 technology of Bitcoin and Ethereum

The ” Lightning Network ” is a “second layer” payment protocol that operates on top of Bitcoin, which enables fast transactions between participating nodes. The idea behind it is this: not every transaction has to be chained.

Therefore, the Lightning Network adds another layer to the Bitcoin blockchain and enables the establishment of payment channels between any two customers on this additional layer. Transactions in these channels are instant, and the fees will be very low.

Similar to the Bitcoin Lightning Network, people have proposed different solutions to solve the scalability problem of Ethereum, including Casper, Plasma, and sharding. Among them, Plasma uses the second layer of smart contracts on the main blockchain, relying on the underlying Ethereum blockchain to achieve its security.

An article to understand how Layer 2 solves the "impossible triangle" problem of the blockchain?

Plasma allows chains in the chain, which allows exponential growth in scalability. It creates “child” blockchains that are attached to the “main” Ethereum blockchain. These child chains can in turn generate their own child chains and can cycle back and forth in turn.

The proof of the validity of the sub-chain is submitted and stored on the main chain. The result is that we can perform many complex operations in the sub-chain level, with a minimum of interaction with the Ethereum main chain (a large number of interactions with the main chain will only occur when a dispute occurs), with thousands of operations The user’s complete application.

What does Layer 2 mean for the development of the blockchain industry?

Blockchain is evolving into a multi-layered system. Layer 2 can help us create “usable” blockchain systems and expand to other industries.

Ethereum founder Vitalik Buterin did a calculation for us. He mentioned in the AMA:

If we get 100 times from sharding and 100 times from Plasma, the two can basically provide 10,000 times of scalability benefits. This means that the blockchain will be powerful enough to handle most of the applications that people are trying to handle.

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