The need for Layer 2

Blockchain technology was born in 2008. Since then, thousands of researchers and developers have been working on solving the bottleneck of blockchain scalability to meet the ever-increasing application demands. These bottlenecks lead to high transaction costs and slow execution speeds, and have become a stumbling block to the mainstreaming of blockchain technology.

Vitalik Buterin, the co-founder of Ethereum, first proposed the concept of "Blockchain Impossible Triangle", arguing that blockchain cannot simultaneously take into account the three dimensions of scalability, security and decentralization. Developers have to make a trade-off between the three. Today's blockchain network can only satisfy two of these dimensions at the same time.

Layer 2 is an emerging technology, which claims that the reason why the blockchain has limitations in scalability is because the blockchain needs to complete too many tasks. The current blockchain has three core functions, namely: execution of transactions, data availability, and consensus.

• Execute the transaction - process and complete the transaction. The metric is the number of calculations (which includes the number of transactions) that the blockchain can complete per second.

• Data Availability - Nodes and validators in the network need to store transactions, state, and other data. Metrics are standard storage units such as MB and GB.

• Consensus - Nodes and validators need to reach a consensus on the state of the network and ordering of transactions. The metrics are the level of decentralization and finality velocity, or the time it takes for all nodes to agree on a state change.