What Is Layer 2?
Layer 2 is a blockchain protocol fabricated using an existing model to put out solutions for scalability and slow transaction issues. These are vital issues that confront the entire system of cryptocurrency.
These two key issues have prevented the two most dominant digital currencies from processing massive levels of transactions each second. The ability to process a large volume of transactions per second is referred to as TPS (transactions per second). A low TPS would not favor the crypto industry as high-volume transactions would be difficult to handle going forward with a record number of crypto adoptions across the globe.
It is an off-chain-based solution, where the main chain does not have to pass through any structured changes because the additional layer is present to complete the system. With this, the throughput of the layer 2 system is very high, and it does this while still maintaining the security of the system.
The implication of this is that the layer 2 protocol can easily take up and replace a large part of the work handled by the central system, which would, in turn, relieve the system of stress. In this, there is a division of labor, with layer 1 ensuring the security of the system. While layer 2 provides throughput, which will enable fasting processing.
Layer 2 Example
The layer 2 protocol is the flaunted solution to solving the problem of scalability within the blockchain ecosystem. There are 2 outstanding examples of this protocol.
In the Bitcoin Lightning solution system, the whole network is built on state channels that are in turn attached to blockchain operating channels which would, in turn, send info back to the primary system.
The Ethereum plasma is a combination of many-sided chains that are small and attached to form a framework that looks like a tree. The secondary protocol created by later 2 helps ensure that all the transactions and processes on the blockchain ecosystem occur without any interference from layer 1. This type of transaction processing is described as an off-chain solution to scalability« Back to Glossary Index