Why are there so many Layer 2 blockchain protocols?

Riz Pabani
5 min readJul 20, 2024

As blockchain technology continues to evolve, one of the most pressing challenges facing the industry is scalability. Major networks like Bitcoin and Ethereum have struggled with transaction speeds and high fees during periods of congestion. Enter Layer 2 protocols — a suite of solutions designed to address these scalability issues. But as these technologies develop, a debate has emerged: should some of these innovations be implemented directly on Layer 1? This article explores Layer 2 protocols, their benefits and challenges, and the ongoing discussion about where these scaling solutions belong in the blockchain stack.

Understanding Layer 1 and Layer 2 Protocols: Layer 1 refers to the base blockchain protocol, such as Bitcoin or Ethereum. It’s the foundation that handles consensus, security, and basic transaction processing. Layer 2 refers to a secondary framework or protocol built on top of an existing blockchain system. The main goal of these protocols is to solve the transaction speed and scaling difficulties faced by major cryptocurrency networks. By processing transactions off the main chain, Layer 2 solutions aim to increase the overall transaction throughput of the system while still maintaining the security guarantees of the underlying blockchain.

Types of Layer 2 Solutions:

  1. State Channels: These…

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Riz Pabani
Riz Pabani

Written by Riz Pabani

I write about mentoring, productivity, finance, crypto, gut health, Python and Data Science. Please follow if you like