Scaling Blockchains: What Are Layer 2 Solutions And Interoperable Chains?

A one-size-fits-all blockchain scalability solution doesn’t exist.Ethereum 2.0 and general purpose rollups have the potential to make DeFi, NFTs, and other Ethereum dapps much more accessible and cost-effective, and even provide an efficient framework for micropayments.Optimistic rollups currently dominate the layer 2 landscape but general purpose ZK-rollups are coming and can become the preferred layer 2 solution as they offer faster finality and may also offer privacy features.Distributed ledger technology has the potential to solve some of the most prominent problems in the global economy, such as providing financial services to the 1.7 billion people that comprise the global unbanked population.1 However, the largest blockchains are not accessible for low-income economies or viable for daily use as they can only process a limited number of transactions per second. This bottleneck entails elevated transaction costs when network activity is high. But creating a highly scalable blockchain with minimal fees without sacrificing decentralization and security is challenging.2To avoid this issue, developers have designed systems like interoperable blockchains and layer 2 solutions. These increase throughput while retaining security and decentralization. Even in their early stages of development and adoption, they are already transforming the crypto landscape significantly. One day, they may become the preferred option for decentra...