Ethereum Layer 2 refers to a secondary framework or protocol built on top of the Ethereum blockchain, designed to improve its scalability and transaction throughput. These solutions process transactions off the main Ethereum chain (Layer 1) and then settle them back on it. Common examples include rollups (optimistic and zero-knowledge) and sidechains. Layer 2 networks significantly reduce transaction costs and increase speed, alleviating congestion on the primary network.
Context
Crypto news regularly highlights the progress and competition among various Ethereum Layer 2 solutions as they vie for user and developer adoption. The ongoing discussion centers on the trade-offs between different Layer 2 technologies regarding security, decentralization, and efficiency. A critical future development involves greater interoperability between Layer 2 networks and the seamless migration of assets and applications across them.
KyberSwap's FairFlow, a swap hook on Uniswap v4, reallocates arbitrage value to liquidity providers, enhancing capital efficiency and sustainable yield generation within DeFi.
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