Overview of Scalability Solutions

The mainstream Layer 2 solutions that have been battle-tested

Early Beginnings

Beginning in 2017 with Plasma, the Ethereum ecosystem started to explore Layer 2 solutions to address scalability for higher transaction throughput and lower gas fees. Layer 2 solutions achieve this by moving some of the transaction processing off the Ethereum mainnet, while still maintaining the security of the Ethereum network.

After early attempts of Plasma and State Channel, rollups have emerged as the leading scalability path for Ethereum over the past years. At the moment, zk-rollup, Optimistic Rollups, and Validium stand out and become the mainstream Layer 2 scaling solutions.

zk-Rollups

zk-rollups were created based on zero-knowledge proofs (ZKPs). Transactions are aggregated and processed off-chain, and the resulting proof is submitted to the Ethereum mainnet for verification. zk-rollups provide privacy, security, and scalability benefits, as well as reduced gas fees. However, it requires a more complex setup than other Layer 2 solutions, and the creation of ZKP circuits can be resource-intensive.

Optimistic Rollups

Optimistic rollups, such as those implemented by Optimism and Arbitrum, allow for transactions to be processed off-chain and validated by a smart contract in a "challenge period." During this period, users can dispute invalid transactions, and if a dispute is successful, the transaction is reversed. Optimistic rollups provide also fast confirmation times and reduced gas fees, and is relatively easy to set up. However, it can be vulnerable to potential attacks during the challenge period, and disputes can slow down transaction processing.

Validium

Validium uses a sidechain to process transactions off-chain. Although it has most of the advantages in Layer 2 scaling solutions, Validium does not provide the same level of security as others. Validium is best suited for non-critical applications that do not require a high level of security or immutability.