Vitalik Buterin explains Layer 2 on the future of Ethereum’s scalability

Ethereum co-founder Vitalik Buterin spoke about Layer 2 scaling solutions at a blockchain conference in China.

Layer 2 (L2) is the future for Ethereum

At Shanghai International Blockchain Week, Buterin said that Layer 2 is the future of network scalability and the only way to keep Ethereum decentralized. He believes it is necessary to seriously expand the network and admits that solutions like sharding may still be a long way off.

Ethereum co-founder Vitalik Buterin

Buterin confirmed that the base layers for the application will not be implemented until the project enters the final phase of the ETH 2.0 upgrade. He suggests that roll-up is an up-to-date solution that works reasonably well and should be adopted. This solution comes in many forms, such as: B. Zero-Knowledge or Optimistic, who are responsible for processing some transaction data outside the main root chain. This translates into much higher throughput and lower fees.

As Buterin noted, the sidechain or shards will only be provided in phase 1 of the upgrade for at least another year.

“Shard chains will be available next year, subject to the progress of work after the merger.”

64 of these will initially be implemented according to the roadmap, giving Ethereum more space to store and access data, but will not be used for code execution. Before deploying, Ethereum must be fully secured using a proof-of-stake algorithm. At this point, Ethereum 1.0 will be merged with Beacon Chain, which is expected to happen in the first or second quarter of 2022.

Until then, layer 2 scaling is the most practical way to use Ethereum without having to spend extra money on expensive gas fees. Layer 2 protocols and aggregators are growing in popularity this year as ETH transaction fees show no signs of decreasing.

Total Value Locked (TVL) on L2 platforms has hit a record $ 4 billion, according to L2beat. Arbitrum is the most popular at $ 2.5 billion, which is 61.5% of the market share. The dYdX L2 exchange, which uses zk rollups, ranks second with a TVL of $ 900 million and a market share of 22%. In third place is the L2 Optimism solution with $ 290 million and a market share of 7%.

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