Ethereum is undergoing a seismic shift. The smart contracts blockchain is upgrading its blockchain for scaling and efficiency reasons. Accordingly, developers and startups are in the race to becoming the top Ethereum Layer 2 scaling solution.
Crypto gambling will benefit immensely from this upgrade. Many of the best crypto games rely on smart contracts. These games will have more efficient payment processing capabilities with Eth 2. Such efficiency is a plus for the industry as a whole.
Online gambling casinos are also gaining popularity by the day. Classic games like Bitcoin crash have online versions that are catching on. This trend is the embodiment of digitization. It is only a matter of time before top online casinos dominate the gambling industry.
Bitcoin gambling games caught some tailwinds from Bitcoin’s rally. It will be fascinating to see whether Ethereum rising can have the same effect. The Ethereum Layer 2 rollout is vital if that effect is to come true.
Defining Ethereum Layer 2
Layer-2 is a term that collectively refers to solutions that aim to scale the Ethereum blockchain. These solutions take transactions off the main Ethereum chain (Layer-1).
They offer scalability because the main chain can handle fewer transactions. Transaction congestion makes speed lower and fees higher. This effect dampens user experience in dApps.
Crypto gambling applications fit into this category. High gas prices are a problem for regular users. Layer-2 solutions aim to take off this burden.
Blockchain games will make more sense with quicker transaction times. Additionally, lowering transaction fees ensures that micro-transactions are viable.
Independent entities can run a scaling solution. Alternatively, a large group of people can control these solutions. This model would be similar to how the main chain functions.
They differ in technology but offer from 50x to over 1000x more throughput than L1. This improvement is vast and represents relief from the main Ethereum chain.
The Layer 2 solutions fall into the following categories:
- Rollups–including ZK rollups and Optimistic rollups.
- State channels.
- Hybrid solutions
Issues to Consider
Ethereum Layer 2 scaling solutions need nuance. Many startups will claim to be trustless, secure, economical, and easy to use. Achieving this balance calls for due diligence. Accordingly, there have been promising solutions that fail to live up to the billing.
Builders need to evaluate different scaling solutions before settling on the most suitable. Aspects like security, performance/ economic, and usability need consideration. This exercise is vital for Ethereum’s long-term success. Accordingly, the solution providers need nuance when talking up their solutions.
Many teams are actively researching and building solutions. Some of these solutions compete directly, while others are complimentary. This dynamism is all in the spirit of innovation. The solutions present unique strengths, weaknesses, and tradeoffs.
Ethereum only recently implemented its migration to Proof of Stake mining. The solutions offer shorter block times and faster finality within the sidechain.
These solutions are already showing results. Having faster and cheaper transactions without compromising on security would be huge.
Ethereum Layer 2 Scaling Solution Trials Already Underway
In January, Ethereum transaction costs went past $15. This figure is absurd for the network if it hopes to become a true applications hub.
Fortunately, many Layer 2 solutions are ready to go. Optimism announced that their Layer-2 scaling solution was going live. This firm ran the trial in liaison with decentralized exchange protocol, Synthetix, which has activated Layer-2 staking.
Optimism has the Optimism Virtual Machine. If the name rings a bell, the firm intends it to work similarly to the Ethereum Virtual Machine (EVM). This solution is still in testing. The deployment of the OVM main net should be in a few months. Before then, trials can show problems that remain hidden.
Optimism is just one of the leading Layer 2 solutions. These solutions provide valuable off-chain throughput and permissionless blockchain security.
The following are select Layer 2 scaling solutions:
Lightning network, which aims to provide rapid transactions to the Bitcoin blockchain and other major coins. It provides a layer 2 payment protocol on top of the existing blockchain. Accordingly, platforms can use it to enable fast transactions among participating nodes. It is gaining consensus as a Bitcoin scalability solution.
The OMG network previously went by the name OmiseGo. It is a trustless off-chain scaling solution for the Ethereum network. It makes the base layer enterprise-ready by using Plasma side chains to scale up Ethereum transactions. The fact that it focuses on businesses elevates this protocol above most other solutions.
The Matic Network is another famous Layer-2 solution. This project has a scope beyond Ethereum and aims to be blockchain agnostic in the future. It utilizes side chains for off-chain computation while ensuring asset security using the Plasma framework. This solution deploys a decentralized network of Proof-of-Stake (PoS) validators.
These projects are at different stages of implementation.
The bottom line is that they are all vying for a piece of the pie. Other major blockchains can also benefit from these solutions. Bitcoin community members look at the Lightning Network favourably. Already, BC Game, for fast and cheap deposit and withdrawals of BTC, runs a Lightning Network node.
Ethereum Needs Successful Layer 2 Solutions
Ethereum intends to be the backbone of the decentralized applications world. This position can gain a vital foothold with Layer-2 solutions. Ethereum needs to have faster, cheaper transactions if it is to retain this position.
Accordingly, Ethereum will be better at fitting scaling solutions. These implementations could be a watershed moment for a platform at the heart of a new decentralized economy.
Scalability problems have cast a cloud on DeFi growth. Thousands of traders and developers remain on the sidelines because of ridiculous gas fees. With these solutions, they can truly find a hub in the Ethereum network.