Crypto is not about gatekeeping so here are the TLDR explanations of each of these subjects.
1. Why do we need an L2?
2. What is Ethereum layer 2 (L2)?
3. What are the types of L2s?
4. Which L2s are doing well?
Why do we need an L2?
Ethereum does only ~15 transactions per second, which is not nearly good enough compared to the thousands of transactions per second by our current payment providers (like Visa). Even while Ethereum is making progress in improving the speed of the L1, the industry is looking for solutions now. This is where Layer 2 solutions come in.
TLDR: Must go faster to be useful
What is Ethereum Layer 2 (L2)?
Ethereum L2 refers to layer 2 solutions that are built on top of the Ethereum blockchain. These solutions are designed to improve the scalability, speed, and cost-efficiency of Ethereum by moving certain types of transactions off of the main Ethereum blockchain and onto a separate layer.
TLDR: A separate layer on top of Ethereum layer 1 where transactions can be done faster and/or cheaper.
What are the types of L2s?
Optimistic Rollup
Optimistic Rollup is a type of Ethereum L2 solution that uses rollups to scale the Ethereum blockchain. Rollups allow multiple transactions to be bundled together and processed as a single transaction, reducing the load on the Ethereum main chain.
TLDR: Innocent till proven guilty
Zero-knowledge Rollup (zkRollup)
zkRollup is another type of Ethereum L2 solution that uses zero-knowledge proofs to scale the Ethereum blockchain. zkRollups allow transactions to be verified off-chain, reducing the load on the Ethereum main chain.
TLDR: Transactions are batched together in a single transaction off-chain and then returned to the main chain.
Plasma
Plasma is a framework for building Ethereum L2 solutions that use smart contracts to allow users to make transactions on a separate layer without the need for on-chain confirmation.
TLDR: Transactions are off-chain, and results are on-chain
Validium
Validium is an Ethereum L2 solution that uses sharding to scale the Ethereum blockchain. Sharding allows the Ethereum network to be divided into smaller pieces, allowing more transactions to be processed simultaneously.
TLDR: Similar to zkRollup, but data is kept off-chain for speed.
If charts are your thing, then here is a great one from Vitalik
Which L2s are doing well?
As of now, the Optimistic Rollup solutions have the most market share out of all the L2s, but zKRollup is gaining traction in some areas.
TLDR: Optimistic Rollups are winning
L2Beat is a great site to track the implementations of different L2s at https://l2beat.com/scaling/tvl/
