Ethereum has been a front-runner in the cryptocurrency market since its inception in 2015. Ethereum spawned an extensive ecosystem of developers, entrepreneurs, investors, and consumers, all of whom built on the Ethereum blockchain. The Ethereum Foundation is also working on new developer tools, and there are numerous other projects in the works.
According to CoinMarketCap, Ether is the second-largest cryptocurrency, with a market worth of $519 billion. Ethereum is without a doubt one of the most popular blockchains in the world today, with over 3000 decentralized apps as of 2020.
However, due to its expanding popularity and demand, Ethereum is experiencing a slew of concerns, not the least of which are scalability and congestion issues. Gas costs have increased by over 54% in the last year, transactions are taking longer, and the whole network is becoming overloaded.
Ethereum’s native cryptocurrency, Ethereum (ETH), hit an all-time high of $4867 in November before plummeting by more than 20% a month later. As Ethereum attempts to shift from Proof of Work (PoW) validators to Proof of Stake validators (PoS) validators in order to make network transactions faster and cheaper, Ether’s long-term profitability remains solid.
To put things in context, Ethereum presently processes three times as many transactions per day as Bitcoin, implying that Ethereum could handle hundreds of thousands of daily transactions.
However, in order for Ethereum to rise to the next level, its scalability difficulties must be addressed. Layer-2 was created by innovative platforms to address these limits. So, what precisely are Layer-2 solutions, and is there an Ethereum Layer-2 solution that has the potential to overcome present limitations?
Layer-2 Ethereum Solutions
Layer-2 Networks, as the name suggests, run on top of the existing Ethereum network to enable extra features like payment scalability and off-chain processing. Layer-2 solutions, such as smart contracts, help to relieve network congestion, making transactions faster and gas prices lower.
Transaction fees escalate and become more expensive as more users complete transactions due to the network’s limited capacity. Solving Ethereum’s scalability difficulties using Layer-2 solutions makes cryptocurrency adoption easier and Ethereum more accessible to the general public. As an example…
Polygon is a layer-2 solution for creating and connecting Ethereum-based blockchain networks. It has rapidly grown in popularity due to its functional architecture, which allows for faster processing times.
Polygon has become a viable choice for many users, because to an influx of DeFi and NFT projects on its chain and funding from notable financiers such as billionaire Mark Cuban. The Augur forecast market and the popular OpenSea NFT marketplace are both hosted on the Polygon system. Every month, they oversee billions of dollars in transactions.
When compared to Ethereum’s 30 transactions per second (TPS), the Polygon chain can reach speeds of around 10,000 transactions per second (TPS).
The Ethereum blockchain’s versatility and security are aided by the Polygon multichain network. By exploiting Polygon’s token Matic, the ecosystem has constructed much more than a way to make Ethereum scalable, but also a network that might serve as a glue for the blockchains that revolve around Ethereum.
Metis is a decentralized, open-source network with the ability to scale to thousands of nodes. While anyone can contribute, the project’s team includes people who have previously worked on Bitcoin Core and Zcash.
The average transaction time in the early days of Bitcoin was ten minutes. Because of the large number of people involved in the ecosystem, average transaction times have fallen to roughly two seconds. The average transaction time should be less than one second with Metis, making it a desirable alternative for both corporations and individuals.
Increased adoption and new business models based on smart contracts will result from the increase in transaction volumes. Tokens are already being used by companies like Dharma, Airswap, and Augur to compensate validators who are responsible for ensuring the network’s integrity.
Metis is developing a new layer-2 protocol that will allow millions of smart contracts to execute on the same blockchain at the same time. Their goal is to make it simple to install smart contracts on the Ethereum blockchain, which is a highly secure and scalable network that will allow any user to create a decentralized application (dApp) or smart contract.
You can also use Metis to run your own private chain or sidechain and benefit from immediate liquidity, no transaction fees, and quick settlement times. Individual investors, organizations, and enterprises have complete control over sidechains, which are not restricted by the quantity of tokens on the network. They can have their own token, allowing them to be totally self-contained while being connected to the parent chain.
Metis has no constraints on the number of transactions per second that may be processed on its network, and it does not require mining or node consensus. Instead, they build a one-of-a-kind token economy to compensate both full nodes and validators for keeping the system up and operating.
One of the most appealing features of Metis is its accessibility and ease of use, which appeals to both developers and non-developers. Smart contracts are simple to integrate and utilize, even if you don’t know how to program or code. It handles everything; instead of creating code, smart contracts are used. Metis is free, whereas competing platforms charge thousands of dollars for each smart contract you want to create.
The Cryptocurrency’s Next Big Thing
The advent of Ethereum layer-2 networks and solutions indicates that Ethereum is not going away, and that it will continue to scale and provide more functionality to its users.
While ETH2.0 is still in the works, Layer-2 solutions have paved the path for Ethereum’s scalability. Layer-2 solutions that address scalability challenges will undoubtedly help the Ethereum blockchain gain more value. Layer-2 networks’ key goals are to increase transaction speed and throughput, but they must not threaten the Ethereum blockchain’s security.