Want to improve blockchain infrastructure? Work under layer-two solutions

A lot has been said about blockchain’s potential to unlock endless business opportunities. Although all the hype hasn’t translated into tangible results, the explosion in decentralized finance markets and nonfungible token markets (NFT) has set a benchmark for what can be achieved and how blockchain can impact even conservative industries.

Developers, entrepreneurs, and businesses aren’t just jumping on the bandwagon like they did two or four years ago. Blockchain is not about what it can do. The questions now revolve around how to best use the technology for best results. Blockchain has evolved slowly from being a buzzword into a mainstream technology. This does not necessarily indicate growth and development.

Related: Blockchain technology can transform the world. And not just through crypto

This doesn’t mean it has been easy. Since we started to see blockchain as a viable technology for powering mainstream applications, the throughput performance of blockchains has been under intense scrutiny, especially those that are widely adopted. Scalability is still a key indicator of whether blockchain networks are ready to accept enterprise applications.

As an example, we can see that many Ethereum users have experienced the negatives of a unscalable blockchain infrastructure. High transaction fees due to network congestion can be a deal-breaker for retail investors, according to my experience. The average user cannot justify paying $70 for a transaction that may not be worth $100.

Notably, Ethereum’s inability scale appropriately has to some extent stifled establishment of the DeFi/NFT sectors. Retail investors and traders who are interested in low-value transactions often have to watch from the sidelines. Vitalik Buterin, a prominent Ethereum developer, recently admitted the gravity of the situation and said that the current fee structure is not sustainable if social network projects powered via NFTs are to prosper on the Ethereum network.

So, the question remains: How have developers of blockchain dealt with this recurring problem?

Is layer 1 ever enough?

My ultimate goal is to solve blockchain’s trilemma. This is balancing security, decentralization and scalability. Blockchains often have to compromise one of these three characteristics. Most legacy blockchains, such as Bitcoin and Ethereum, have made sacrifices in their infrastructure design to ensure security and decentralization.

Bitcoin and Ethereum are two of the most widely used blockchains. This is not only because they are the first blockchains, but also because they are arguably the most secure and decentralized blockchain networks. They make up for what they lack in scalability in other core blockchain requirements. This was sufficient in the initial years of their operation. However, the influx blockchain applications has put enormous pressure on Layer 1 chains and made it necessary to develop and integrate scalability-focused infrastructures.

Related: Ethereum or Bitcoin: Which is the future of DeFi? Experts have the answer

It is easier for newer blockchains than older ones to adapt by creating scalable infrastructure from scratch. However, it can be much more difficult for existing infrastructure users to do the same. It may require a complete overhaul, as was the case with Ethereum. There are many risks involved in moving a blockchain economy worth billions to a new infrastructure. There are many things that could go wrong especially as this is the first time it’s been done at such an enormous scale.

DApp developers and users should opt for Layer 1 chains that are scalable-focused. As expected, there are more Layer 1 chains available to meet the growing demand for fast blockchain infrastructures. Notable mentions include Tron, Binance Smart Chain and EOS. We have found that decentralization is not the best option. Given the blockchain trilemma, many of the alternatives to Ethereum or Bitcoin have chosen speed over decentralization. It becomes a matter of preference and how developers will trade-off.

Layer-two solutions might be a third, and perhaps more advantageous option. Developers can now at least verify that they have access to all the necessary information for creating optimal blockchain applications.

Re layer-two solutions the immediate solution to Blockchain’s trilemma

Due to the Ethereum blockchain’s scalability issues, solutions have been found to create networks that are built on top of existing ones. This will take up some transaction and computing load and reduce the congestion on the mainnet. Multi-layered approaches ensure developers can continue to benefit from the Ethereum blockchain’s high liquidity and evade any bottlenecks.

It is intended that all computations and scalable payments are done off-chain, and that the Layer 1 blockchain records the final state of such activities. It doesn’t matter if it’s optimistic rollups or state channels, plasma, or zero-knowledge rollingups (zkrollups), the goal is the same: To overcome the limitations of decentralized Blockchains.

Polygon, previously known as Matic, has already gained a lot of popularity as a second layer solution for Ethereum applications that want to create scalable platforms free from network congestion. According to DappRadar, Polygon’s version of SushiSwap (Sushi), saw a 75% increase of users during the first week in September. Users have begun to see the benefits of layer-two solutions, particularly when it comes to DeFi retail, despite a recent dip in activity on Polygon.

This dynamic shift isn’t just happening in the DeFi sector, however. NFT market also began to migrate to layer 2, with one solution that saved over $400,000 in gas fees within 24 hours of launch. OpenSea, which announced in July that it had integrated with Polygon in order to allow gas-free trades on the NFT marketplace, said so. Polygon isn’t the only layer two solution currently in demand. Celer Network, Arbitrum and other layer-two infrastructures have also made waves.

I believe developers are now choosing multi-layered blockchain infrastructure because it is the best architecture to create a high-quality blockchain experience. Layer 2 applications will be as valuable as Layer 1 applications if this trend continues, as it seems to be. Developers who want to build decentralized apps or improve existing blockchain infrastructures should consider joining Layer 2.

These views, thoughts, and opinions are solely the author’s and do not necessarily reflect the views or opinions of Cointelegraph.
Andrey Sergeenkov, an independent researcher, analyst, and writer in cryptocurrency is a. He is a strong supporter of blockchain technology, and believes the world needs decentralization in government and society. BTC Peers is an independent media outlet founded by him.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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