1. CI Knowledge Base
  2. Get to Know Blockchain

Understanding Ethereum Layer-2 Solutions

Ethereum Layer-2 solutions have gained significant popularity as a means to address the scalability challenges faced by the Ethereum network. These solutions, including optimistic rollups, Zero-Knowledge rollups (ZK rollups), sidechains, plasma chains, and validiums, offer scalability improvements while maintaining security and compatibility with Ethereum’s ecosystem. In this article, we will delve into the world of Ethereum Layer-2 solutions and discuss their benefits.

Understanding Ethereum and Its Scalability Challenges:

Ethereum is an open-source blockchain platform that enables the development and deployment of decentralized applications (dApps) and smart contracts. However, Ethereum has faced scalability issues due to increasing demand and network congestion. Gas prices have risen, and the network’s capacity of over one million transactions per day has been reached. The blockchain trilemma concept suggests that a typical blockchain can focus on security, decentralization, or scalability, but not all three simultaneously. Ethereum has prioritized security and decentralization, resulting in scalability limitations.

Layer-2 Solutions as Scalability Solutions:

Layer-2 solutions offer a way to enhance scalability by offloading some transaction load from Layer-1 blockchains like Ethereum. These solutions combine multiple transactions into a single one, reducing congestion and lowering gas fees. Optimistic rollups and ZK rollups are two popular types of Layer-2 solutions, although other technologies such as sidechains, plasma chains, and validiums also exist. These Layer-2 solutions primarily focus on scaling Ethereum, which has the highest demand for blockspace.

Types of Ethereum Layer-2 Solutions:

1. Optimistic Rollups:

Optimistic rollups move computation and state storage off the Ethereum mainnet, grouping off-chain transactions before submitting them to the mainnet. They assume off-chain transactions are valid by default and use fraud-proving mechanisms to detect incorrect transaction calculations. Optimistic rollups, such as Arbitrum, Optimism, and Boba Network, offer lower transaction fees and scalability improvements while ensuring the security and trustlessness inherited from the Ethereum mainnet.

2. Zero-Knowledge Rollups:

Zero-Knowledge rollups bundle transactions together and execute them off-chain, significantly reducing on-chain data. They provide validity proofs to finalize transactions on Ethereum, resulting in fast transfer times. Two types of validity proofs, ZK-SNARK and ZK-STARK, are used to prove correctness without revealing sensitive information. ZK rollups combine the scalability benefits of zero-knowledge proofs with Ethereum’s security and offer a promising solution for transaction scaling.

Other Layer-2 Solutions:

While rollups are the preferred Layer-2 solutions for Ethereum, other technologies such as plasma chains, validiums, and sidechains have been explored. Plasma chains offload transactions to a secondary chain, periodically reporting back to the Ethereum mainnet for settlement. Validiums focus on maintaining transaction integrity without storing data on the mainnet, resulting in significant scalability improvements. Sidechains, like Polygon and Gnosis, are independent Ethereum-compatible blockchains that process transactions using their own consensus mechanisms.

Benefits of Layer-2 Solutions:

Layer-2 solutions bring several benefits to Ethereum. Lower transaction fees attract more users and make blockchain feasible for dApps with frequent transactions. Optimistic rollups and ZK rollups offer high security as they inherit the Ethereum mainnet’s security features. Optimistic rollups provide EVM compatibility, allowing developers to migrate existing smart contracts from Ethereum. Recent advancements in zero-knowledge technology have made zero-knowledge Ethereum Virtual Machine (zkEVM) implementation possible, enabling execution of complex smart contracts in ZK rollup chains.


Layer-2 solutions are crucial for improving the scalability of Ethereum, especially in the absence of sharding. Optimistic rollups, ZK rollups, and other Layer-2 technologies offer scalability improvements while maintaining security and compatibility with Ethereum’s ecosystem. As Ethereum continues to evolve, Layer-2 solutions will play a significant role in driving the growth and adoption of decentralized applications.

We hope this guide has provided valuable insights into Ethereum Layer solutions and their significance in the cryptocurrency world. Stay connected with Centurion Invest for the latest updates and educational resources as you navigate the dynamic realm of digital assets.


The Centurion Invest Team.


Connect with Us: