The development trend of the blockchain industry and the stumbling block to the advancement of the underlying technology have always been hot topics among insiders. When it comes to the development of underlying performance, we have to mention the public chain. Thanks to the success of Bitcoin, the early blockchain projects were mostly based on PoW, but these public chains have been criticized in many aspects such as scalability, TPS, and security.
That’s why the Ethereum 2.0 upgrade draws so much attention. As we all know, the top public chain was upgraded in response to issues such as poor scalability, high gas fees, and unsatisfactory on-chain performance. After the DeFi boom, in particular, the frequent on-chain interaction threw Ethereum into endless congestion: hundreds of thousands of transactions were left to be verified at one point in black swan events, pushing the gas fee upward to a staggering 1000Gwei. As a result, tech geeks started to focus on the Ethereum scaling, mainly in two ways: scaling the base layer itself (Layer 1) or scaling the network by offloading some of the work to another layer (Layer 2).
The on-chain solutions look to modify or optimize on-chain parameters, block size, and other information. Another major solution considers changing the development path of the chain or even the consensus mechanism at the center of the public chain — that is precisely what Ethereum 2.0 intends. But it’s progressing slowly due to the unprecedented technical difficulties involved.
Some have also proposed to scale the network by offloading some of the work to Layer 2. To better understand the abstraction, let’s look at the example of a central bank and local commercial banks: the main chain is akin to a central bank, which finds it difficult to process massive accounts in a short period of time. So it needs to delegate the processing tasks to local commercial banks and then check the final results at the terminal. In this way, the local commercial banks share the workload of the central bank, while speeding up transactions.
Layer 2 functions as the local commercial banks to offload the main chain. For the time being, promising Layer 2 solutions include Arbitrum, Polygon (Matic), Metis, and Optimism. In reality, various paths have been derived, such as the state channel (a solution proposed by Lightning Network and Raiden we’re familiar with), liquidity (involved in yield farming or DEX), side chain (e.g. Skale), anchored assets (e.g. Bitcoin-anchored WBTC, RBTC, and IMBTC), and Zero-knowledge Proof (ZPK).
Among the many Layer 2 projects listed above, the most eye-catching is Metis, a Layer 2 public chain network based on the Optimism fork. Its core lies in the Optimistic Rollup scaling technology, which aims to solve the problems facing the Ethereum network such as congestion and high gas fees. It is also the scaling solution adopted by Arbitrum, the top Layer 2 public chain network.
Before December 2021, Metis remained undistinguished in the Layer 2 field, but after 2022, especially after this March, its TVL increased exponentially and hit a historical peak of $824 million, making Metis an outstanding star in Layer 2.
If Ethereum were the only one considering Layer 2, this segment would not soar in the short term. However, when many public chains such as Near and Polkadot pay attention to this scaling solution, it has gained the consensus of insiders.
Although Layer 2 applications still need to improve their user experience as they have no reasonable incentives that encourage users to experience and interact, the mounting industry consensus will attract more and more tech geeks to solve the problems. The same is true with blockchain, which has withstood the industry reshuffle as well as the test of time despite the ceaseless criticisms and doubts along the way.
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