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What Are Layer-2 Networks and Sidechains? Ethereum Scaling Explained

Author: Content Editor
This article discusses the concept of layer-2 networks in the context of blockchain infrastructure. Layer-2 networks are built on top of layer-1 networks like Ethereum and aim to address the scalability challenges faced by layer-1 blockchains. Layer-1 networks, such as Ethereum, provide the base layer of infrastructure and security for layer-2 networks. Scalability issues arise on layer-1 blockchains due to limitations in throughput and transaction costs. To overcome these challenges, layer-2 networks use various technologies like sidechains and rollups.

Sidechains are independent blockchains that connect to the layer-1 chain through a bridge, allowing for the transfer of assets between the two. Rollups, on the other hand, bundle multiple transactions into a single transaction that can be processed faster on the layer-1 chain. There are two types of rollups: optimistic rollups and zero-knowledge (zk) rollups.

Several layer-2 and sidechain networks are being built on top of Ethereum, including Base, Arbitrum, Polygon, Optimism, Scroll, and Blast. These networks employ different technological solutions to scale the layer-1 Ethereum network. Layer-2 networks play a crucial role in Ethereum's roadmap to increase its transaction capacity to over 100,000 transactions per second.

Layer-2 networks are not limited to Ethereum, as there are efforts to use them in scaling Bitcoin and other blockchains like Solana. Ethereum co-founder Vitalik Buterin plans to converge Ethereum's scaling strategies of sharding and layer-2 protocols to achieve increased scalability while maintaining core principles like trustlessness and openness.

Overall, layer-2 networks are a crucial component of blockchain infrastructure, aiming to address the scalability challenges of layer-1 blockchains and enable faster and more cost-effective transactions.

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