Explain the difference between Ethereum sidechains and L2

Ethereum is now severely limited by the number of transactions due to millions of users joining every day and the constant rollout of new applications. Ethereum’s ability to process transactions, its transaction throughput, is limited to 15 transactions per second, causing it to become increasingly expensive and overcrowded, making it unusable for many.

The Ethereum network is the main chain, and all transactions that take place directly on it are “on-chain”, while any other transactions are considered “off-chain”. Some off-chain solutions like sidechains and L2 can help Ethereum scale, increase transaction speed, and increase the number of transactions the network can process. In this article, we will show what sidechains and L2 solutions are and how they can help with scalability.

Sidechains and L2 Ethereum solutions help solve Ethereum scaling problems. Attempts to improve on-chain performance often result in Ethereum’s decentralization or scalability trade-off — known as the scalability trilemma.

Sidechains and L2 solutions allow for continuous and incremental innovation to improve Ethereum for everyone while maintaining security and decentralization.

The main difference between sidechains and Ethereum L2 solutions is that L2 inherits the security of the Ethereum main network, while sidechains rely on their own security.

Explain the difference between Ethereum sidechains and L2

An Ethereum sidechain is an independent blockchain network that runs in parallel with the Ethereum mainchain. Sidechains are connected to the main chain through a two-way peg system, allowing assets to be exchanged between sidechains.

There are two basic types of sidechains, one that is interdependent and the other that is independent of each other.

When a chain depends on another chain (like Ethereum), it can be considered a child chain of this parent chain. Typically, child chains do not create their own assets, but instead acquire assets from transfers from the parent chain.

Explain the difference between Ethereum sidechains and L2

Sidechains have their own consensus protocols, usually designed for specific types of transactions, in order to make transactions faster and more affordable. However, this also means that they generally do not inherit the security properties of Ethereum, and when using sidechains, we only rely on the security of the sidechain, including nodes participating in its own consensus protocol.

Sidechains reduce congestion on the main chain, lower costs for everyone, and increase the usability and scalability of the Ethereum ecosystem. Developers can also use sidechains to explore and test new features and use cases not available on the main chain.

Popular sidechains include Polygon PoS, Skale, and Rootstock. Ethereum 2.0 has its own variant of sidechains, called Shardchains, linked to the recently launched Beacon Chain, which aims to eventually become a proof-of-stake (PoS)-based Ethereum mainchain.

Sidechains are connected to the mainchain through a two-way peg system or bridges. On the main chain, we can send our Ethereum to an exit address that acts as a lockbox so we can’t use it elsewhere.

Once the transaction is completed, and the “race period” is passed (for added security), a receipt called “Simple Payment Verification” (SPV) is provided. This will trigger the release of the same value from a lockbox on the sidechain via the smart contract. When “transferring” from the sidechain to the main chain, the exact same process happens, just in reverse.

Sidechains are based on the Ethereum Virtual Machine (EVM), which is Ethereum’s computing engine. This compatibility with the Ethereum Virtual Machine means that developers don’t need to make any changes. It’s just a matter of deploying the same code as they all share the same solidity software layer and are accessible through the same Web3 API!

The L2 protocol is a chain that exists within the Ethereum chain, but enables greater scalability through secondary frameworks. Reduce congestion on the main layer by handling a lot of activity at L2. Unlike sidechains, L2 usually inherits the security properties of the mainchain.

Layer 1 is the underlying blockchain. Ethereum is a layer 1 blockchain because it is the underlying foundation upon which various L2 blockchains are built. Simply put, L2 compresses transaction packets and submits them to the Ethereum main network.

L2 scaling solutions include channel, rollup and plasma. Here’s a breakdown of these independent solutions:

Channel

Through channels, users conduct transactions directly off-chain and reduce on-chain transactions to only contain the most important information. Specifically, a part of the blockchain is locked through a smart contract, so before updating it, the participants involved in the transaction must fully agree.

Participants update their own state by creating and signing transactions that can be submitted to the blockchain. Once we want to stop using the channel, we exit and submit the last state update to the main chain, which will unlock the state again.

Explain the difference between Ethereum sidechains and L2

rollup

A rollup executes transactions outside the Ethereum main network blockchain, then batches multiple transactions together before sending them back to the Ethereum main network. Rollups rely on proofs, allowing Ethereum to verify the correctness of a transaction without processing it.

Two types of rollups

Generally speaking, there are two types of rollups: Zero-knowledge (ZK) rollup and Optimistic rollup.

Zero-Knowledge rollup (ZK rollup) uses proof of validity. Each batch of transactions contains a cryptographic proof called a SNARK, which is verified by a contract on the Ethereum main layer.

This off-chain computation saves a lot of processing time, making ZK-rollup faster and more efficient, since only proofs of validity need to be stored on the main chain, without the need to store large amounts of transaction data.

Optimistic rollup uses fraud proofs. As the name suggests, they optimistically assume that all transactions are valid and commit batches without any initial proof. There is a challenge period during which others are able to detect and prove that there is data to be false.

If the batch turns out to be fraudulent, Optimistic rollps performs the fraud proof and runs the correct transaction computation using the data available on the Ethereum main chain. Participants were asked to reward or cut back on their behavior to incentivize good behavior.

Companies like Optimism help Ethereum scale by offering greater throughput, less latency, and lower gas fees. At the time of writing, Optimism’s gas fees are 10x cheaper than Ethereum.

plasma

Plasma can be thought of as Ethereum’s native sidechain, using a combination of smart contracts and Merkle trees to create infinite branches of subchains. These subchains are smaller copies of the Ethereum main chain with their own consensus mechanism.

The bandwidth required to compute and trade data is offloaded from the parent chain, but periodically committed to the root chain. Each subchain relies on a fraud proof system for security, which is similar to a rollup, with a time period where anyone can question its validity.

The key difference from other sidechains is that the “root” of each Plasma chain block is published to Ethereum, which means it inherits the security of the main chain.

Explain the difference between Ethereum sidechains and L2

Companies like Polygon offer developers and end users lower gas fees, enabling faster transactions. These obvious benefits make developing on Plasma very attractive, and it’s easy to see why they’re exploding.

Alchemy currently supports the Ethereum Layer 1 chain and the Arbitrum L2 chain. Arbitrum is an independent chain built on top of Ethereum, as a smart contract, it supports faster transaction speed, higher throughput, lower gas fees and more benefits. Activities and transactions are eventually relayed from Arbitrum to the Layer 1 chain via an Optimistic rollup.

Mass adoption of scalable solutions such as sidechains and L2 (channel, rollup, and plasma) eases pressure on the Ethereum mainnet, helping more users enjoy faster transaction times and lower high transaction fees, while still maintaining the same Security (in L2 solutions) and decentralized applications.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/explain-the-difference-between-ethereum-sidechains-and-l2/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

Like (0)
Donate Buy me a coffee Buy me a coffee
Previous 2022-05-19 10:52
Next 2022-05-19 10:58

Related articles