Advancing Blockchain Scalability: An Introduction to Layer 1 and Layer 2 Solutions

• URL: http://arxiv.org/abs/2406.13855v1
• Date: Wed, 19 Jun 2024 21:30:16 GMT
• Title: Advancing Blockchain Scalability: An Introduction to Layer 1 and Layer 2 Solutions
• Authors: Han Song, Zhongche Qu, Yihao Wei,
• Abstract summary: This paper examines the components of the Layer 1 protocol and the scale-up methods that directly improve the lower level blockchain. Layer 1 solutions encounter inherent limitations although improvements were applied due to layer 1 storage costs and latency are high. Our findings indicate that Layer 2 protocols, with their various implementations such as rollups and channels, significantly outperform Layer 1 solutions in terms of transaction throughput and efficiency.
• Score: 0.24578723416255752
• License: http://arxiv.org/licenses/nonexclusive-distrib/1.0/
• Abstract: Bitcoin rise has put blockchain technology into the mainstream, amplifying its potential and broad utility. While Bitcoin has become incredibly famous, its transaction rate has not match such a corresponding increase. It still takes approximately 10 minutes to mine a block and add it to the chain. This limitation highlights the importance of seeking scale-up solutions that solve the low throughput transaction rates. Blockchain's consensus mechanisms make peer-to-peer transactions becomes feasible and effectively eliminate the need for centralized control. However, the decentralized systems also causes a lower speed and throughput compared to centralized networks as we mentioned Bitcoin's block creation rates. Two mainstreams scale-up solutions, Layer 1 scale-up and Layer 2 scale-up have been implemented to address these issues. Layer 1 level scalability enhancements happen at where traditional blockchain operates. This paper provides a deep examination of the components of the Layer 1 protocol and the scale-up methods that directly improve the lower level blockchain. We also address that Layer 1 solutions encounter inherent limitations although improvements were applied due to layer 1 storage costs and latency are high. In addition, we discuss layer 2 protocols, advanced scalability techniques, that elevate blockchain performance by handling transactions off the mainnet. Our findings indicate that Layer 2 protocols, with their various implementations such as rollups and channels, significantly outperform Layer 1 solutions in terms of transaction throughput and efficiency. This paper discusses these Layer 2 scaling methods in detail, aiming to provide readers with a comprehensive understanding of these protocols and the underlying logic that drives their effectiveness.

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