L2 & rollups: how they work, why we need them & what’s next

Author: Roman Aliev (Strategy Marketing Director)

L2 is a collective name for solutions that solve the problems of scalability and speed on blockchain, primarily in the Ethereum network. We’ll tell you about the most popular L2 protocols, their advantages and drawbacks, and what will happen to them now that Ethereum has switched to Proof-of-Stake.

L2 and Vitalik Buterin’s trilemma

Back in 2016, Ethereum creator Vitalik Buterin first described the so-called blockchain trilemma. It boils down to the idea that an ideal blockchain should have three qualities: decentralization, scalability, and security. However, it’s very difficult to achieve all three at the same time, for several reasons.

Decentralization: the more nodes in a network, the harder it is for a malicious actor to take it over. But as you increase the number of nodes, you need more and more resources for them reach consensus, and that slows the network down.

Security: once again, when there are a lot of nodes, the network will continue to run even if some of them break down or get attacked. But scalability suffers: see the point on decentralization.

Scalability: you can create a very fast network if you delegate all transaction…