Layer 2 Ethereum: understanding the subject

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What is Layer 2 Ethereum? 

In order to ease the operation of the blockchain, a new technology has been implemented and is called Layer 2. This second layer has several uses that have allowed a blockchain dating back several years to be modernized. The operation is then improved. So what exactly is the Ethereum Layer 2? What does it consist of? What is its use?

Understanding the concept of Layer 2

With the popularity of the existing blockchain, but also with the various technological advances since its creation, it was necessary to bring an update. This is exactly what Layer 2 is, an additional layer that is applied to the existing blockchain. 

Layer 2 acts as an overlay to address the issues faced by the blockchain. The first layers were applied to the Bitcoin blockchain and then Ethereum benefited from them.

How effective is Ethereum?

Layer 2 is therefore a new layer applied to the base blockchain to update it. It has been particularly useful for Ethereum. Ethereum is a decentralised exchange protocol based on a highly secure computer protocol. It is most often compared to Bitcoin. Its problem at one point was that it took too long to complete a transaction, and at the same time required too many resources. Layer 2 therefore aimed to correct this problem.

The Ethereum Layer 2 Plasma

Among the most significant Layer 2s in the history of the blockchain, Ethereum Plasma is regularly cited. Plasma is made up of secondary blockchains attached to the first one, Ethereum (including OMG Network and Polygon). This project has enabled Ethereum to become the most diversified blockchain. In particular, it has served to unblock traffic, create new processes, diversify the Ethereum ecosystem and secure its blockchain.

However, there are several other solutions that have been put in place to evolve Ethereum and these are new changes that can be considered in the future to further evolve the blockchain.

What are the consequences for users?

The consequence of a Layer 2 for a user is quickly noticeable. In the case of Ethereum, the transfer from one wallet to another often cost tens, sometimes hundreds to thousands of euros. This is because the system is governed by the law of supply and demand and Ethereum is not able to support many transactions simultaneously.

This is far too expensive for users and has led to several fiascos. Using a Layer 2 solution allows funds to be sent much faster and therefore much cheaper.

Ethereum has changed its system to Proof of Stake, which should reduce congestion concerns. So for the time being, we have to deal with Layer 2, which does however allow for more affordable fees for users.