Layer 2 scalability refers to solutions built on top of a base blockchain (Layer 1) to improve transaction speed and reduce costs. These off-chain systems process transactions separately from the main chain, bundling them before final settlement. This architecture allows for significantly higher transaction volumes without compromising the security of the underlying Layer 1 protocol. It is a critical area of development for widespread blockchain adoption.
Context
Discussions surrounding Layer 2 scalability are currently centered on the adoption rates of various scaling solutions and their impact on network congestion. Key debates involve the trade-offs between different Layer 2 designs, such as rollups and state channels, regarding security and user experience. Analysts are evaluating the effectiveness of these solutions in facilitating mass adoption of decentralized applications.
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