Who is Layer 2
Speaking specifically in regards to Ethereum, (proper) Layer 2 solutions are the solution to Ethereum’s high gas fees and “slow” transaction speeds.
What is Layer 2
There are a multitude of Layer 2 solutions, some like to call themselves Layer 2 solutions but others are true Layer 2 solutions.
True Layer 2 Solutions: Loopring, ImmutableX
False Layer 2 Solutions: Polygon
Easy way to tell them apart? True solutions will let you “move” assets from Ethereum (Layer 1) to their L2 solution. False solutions require a bridge, which essentially uses a bridge and gives you their wrapped version of the ERC-20 token. In the case of Polygon that is $WETH.
When is Layer 2
Layer 2 is already upon us! Check out IMX or Loopring for additional information on ZKRollup. Binance tweeted a simple graph showing other solutions as well, Loopring and IMX are what I’m most familiar with.
Where is Layer 2
If you want to take a look at the etherscan equivalent of the respective chain check out these links:
Loopring: https://explorer.loopring.io
ImmutableX: https://immutascan.io
Why is Layer 2
Layer 2s are going to be the solution to Ethereum Scalability, while ETH has it’s own plans to scale itself these Layer 2 solutions will benefit exponentially from any upgrades to L1.
How is Layer 2
It’s MATH! It’s a wonderful thing that I barely understand but let me try to create a metaphor…
Ethereum (Layer 1):
You can clean 2 pieces of laundry in a washer at a time and it costs 20 cents, meaning you paid 10 cents for each piece of clothing.
Zero-Knowledge Rollup (ZKRollup) Proof Solution:
The Layer 2 solution is running a laundry machines that can fit in (rollup) 100 pieces of clothing in the same space that Layer 1 takes but at the same cost as a single L1 transaction. Meaning that laundry cycle was about to clean 100 pieces of clothing for 20 cents, meaning each piece of clothing washed cost .02 cents each.
You could go on and on about how it works but I am not the best person for in-depth review into it, DYOR.