(2021-06-10) Layer1 Vs Layer2 Wheres The Next Block Party At

Layer 1 vs Layer 2: Where’s the Next Block Party At? Several layer 2 solutions have been proposed for Ethereum, each with its own trade-offs. Plasma was an early solution enabling high-throughput payments but doesn’t support the smart contracts so vital to defi, nor do state or payment channel solutions similar to Bitcoin’s Lightning Network.

Rollups have gained in popularity, aggregating transactions off-chain inside an Ethereum smart contract, reducing fees and increasing throughput, though Optimistic Rollups that support both simple payments and complex smart contracts are more immediately suitable for defi applications than ZK-Rollups.

Polygon has been one of the best performing L2s this year in terms of traction. Initially focused on Plasma, Polygon is now building more of a scaling-solution aggregator, incorporating all layer 2 solutions and generating a significant increase in user adoption as a result.

Popular defi and NFT applications including SushiSwap, OpenSea, Curve Finance, and Decentraland have integrated with the layer 2 solution, taking advantage of Polygon’s fast, low-fee infrastructure.

Alternative layer 1 chains like Binance Smart Chain (BSC) and Solana have also grown in popularity, at least partly in response to the scalability issues encountered in the Ethereum ecosystem.

Ethereum-compatible layer 1 chains such as Polkadot, Cosmos, and Avalanche are another option, bringing interoperable bridges and scalability to Ethereum. However, they introduce additional security considerations associated with less established blockchains and can lose the composability of the Ethereum ecosystem upon which many defi applications rely.