Layer 2 scaling solutions are designed to address the scalability issues in Layer 1 blockchains like Ethereum. These solutions operate on top of the base chain and aim to resolve scalability concerns without compromising security and decentralization.

The primary objective of Layer 2 is to increase transaction throughput by offloading numerous transactions from the main chain onto a second layer, reducing congestion and increasing the efficiency of blockchain networks.

Two major examples are Plasma and State Channels, we'll look at them in this article.

Plasma

Plasma is a framework for creating scalable, autonomous smart contract-based blockchain "child chains" tethered to the main Ethereum chain. Key points about Plasma:

Uses fraud proofs to enforce the validity of child chains on the main chain
Enables high throughput by processing transactions on child chains
Multiple child chain types like Plasma Cash for simple transfers.

State Channels

State Channels enable off-chain transaction processing between participants, with just the final state committed to the main chain. Highlights:

Unlimited throughput for participants in the channel
Transactions are processed instantly with very low fees
Best for specific use cases like payment channels, not computations.

Advantages of Layer 2 Scaling Solutions

Layer 2 scaling solutions offer several advantages, including:

Increased scalability by offloading transactions from the main chain.
Reduced gas fees.
Enhanced user experience through faster transaction speeds.
Ability to process large numbers of low-value transactions.

Learn more about Layer 2 Solution in this video

Plasma

State Channels

Advantages of Layer 2 Scaling Solutions

Other Types of Layer 2 Scaling Solutions