The highly anticipated “crypto spring” may finally be upon us as cryptocurrency markets, led by Bitcoin (BTC), are showing signs of a full-on bull market.
The recent crypto winter saw many different projects grow, gain users, and build new networks. One of these projects, known as Polygon, is a layer-2 (L2) solution designed to help scale the primary protocol, Ethereum. However, with the rise of L2 solutions, questions arise about the implications of L2s, whether they are a better protocol to build on or invest in, and if other layer 1s (L1s) are doing anything to stay competitive.
The Cointelegraph Research Terminal has released a report that dives deep into these questions and more. It looks at up-and-coming projects in the crypto space and provides case studies for L1s like Avalanche and Hedera, comparing them to the new emerging technologies.
The report, titled “L1 vs. L2: The Blockchain Scalability Showdown,” offers an in-depth analysis of why scaling solutions are necessary for the shortcomings of L1s. It delves into explanations of the current state of scalability solutions, as well as bridges and projects focused on interoperability. The report highlights the importance of layer-1 blockchains, such as Bitcoin and Ethereum, and their potential in conjunction with layer-2 protocols.
Layer-1 blockchains are base protocols that can be used in collaboration with third-party layer-2 protocols and are also known as mainnets or primary chains. Additionally, a layer-0 (L0) protocol allows developers to combine elements from different L1 and L2 protocols while retaining their own ecosystem to enhance interoperability.
L2 protocols enable thousands of low-value transactions to be processed after validation on parallel blockchains, with records then being transferred to the main blockchain or mainnet to ensure their immutable recording.
The report aims to provide readers with a comprehensive understanding of the current state of scalability solutions in the blockchain space, equipping them with the knowledge and insights to make better-informed decisions.
One of the key issues plaguing the blockchain space is Ethereum gas fees, which have been a significant hurdle, often costing users more in gas fees than the value of the underlying asset. This has led to the development of solutions focused on combating the issue, as well as increased scalability, including transactions per second (TPS), interoperability, and improved user experiences.
The report also delves into protocol comparison, highlighting that TPS is a crucial factor that separates newer protocols from older generations like Bitcoin and Ethereum. It emphasizes that newer layer-0 protocols are serving as a base layer for different protocols to work interoperably, while layer-2 protocols are built on top of L1s to overcome existing gaps in scalability.
The report provides insights into emerging trends and narratives, such as asset tokenization and account abstraction, which are seen as crucial developments in next-generation protocols.
The migration of assets to these protocols and the increased adoption rates will lead to higher transaction congestion, necessitating easier custody for average users. This is where account abstraction comes into play, aiming to simplify user experiences and spur the next leg of mass adoption.
Cointelegraph Research’s latest report is designed to help analyze these newer protocols and includes insider insights from industry professionals at the forefront of technology developments in the decentralized ledger space.
The Cointelegraph Research team is comprised of subject matter experts from the fields of finance, economics, and technology, providing a premier source for industry reports and insightful analysis. Their combined talents and years of experience make them well-equipped to deliver accurate, insightful content on the latest developments in the blockchain space.
In conclusion, the “L1 vs. L2: The Blockchain Scalability Showdown” report offers a comprehensive look at the current state of blockchain scalability solutions, emerging trends, and more, providing readers with the necessary knowledge and insights to navigate the evolving crypto landscape.