Blockchain technology has come a long way since it was first conceptualized in 2008 with the creation of the first cryptocurrency, Bitcoin. While the underlying technology has been revolutionary, there has always been a challenge for developers to scale the blockchain beyond its current limits. Transaction speed and scalability are two problems that have been consistent with the blockchain technology. However, layer 2 solutions are starting to change the game.

A layer 2 solution is essentially a second layer built on top of the main blockchain network. In this network, transactions can be processed faster and at a lower cost than on the main chain. This is possible because the layer 2 network handles the smaller transactions, leaving the main chain to process the larger, more important transactions. By doing so, layer 2 solutions help to reduce congestion on the main chain, thus increasing transaction speeds and lowering fees.

There are several different types of layer 2 solutions that have been developed, each with their unique benefits. The most popular layer 2 solutions include State Channels, Plasma, and Sidechains.

State Channels

State channels are a layer 2 solution that allows for two parties to transact with one another without broadcasting their transaction on the main chain. This means that transactions can be processed more quickly and at a lower cost. Once the transaction has been completed, the state channel is closed, and the final balance is broadcasted to the main chain.


Plasma is a more complex layer 2 solution that uses a hierarchical structure to process transactions. This means that each Plasma chain can handle its transactions while being connected to the main chain. Plasma can also interact with other Plasma chains, allowing for more complex interactions between different sidechains. A Plasma sidechain can handle a large number of transactions while relying on the main chain for security.


Sidechains are another type of layer 2 solution that allows developers to create a parallel network that is connected to the main chain. This means that transactions can be processed on the sidechain without congesting the main chain. When a transaction is completed on the sidechain, it is broadcasted to the main chain, which helps to ensure that the transaction is secure.

The adoption of layer 2 solutions has been growing rapidly in recent years, and they are becoming an increasingly important part of the blockchain ecosystem. Companies like Ethereum, who have been dealing with scalability issues, are starting to see the benefits of layer 2 solutions. They have recently rolled out its first layer 2 solution called Optimism, which processes transactions more quickly and at a lower cost.

Overall, layer 2 solutions are revolutionizing the blockchain ecosystem. They are enabling the development of new use cases and applications that were not possible before. As more developers start to adopt layer 2 solutions, we can expect to see even more significant improvements in transaction speeds and scalability. This could pave the way for the widespread adoption of blockchain technology, making it more accessible to the general public.