A Survey of Layer-Two Blockchain Protocols

Abstract

After the success of the Bitcoin blockchain, came several cryptocurrencies and blockchain solutions in the last decade. Nonetheless, Blockchain-based systems still suffer from low transaction rates and high transaction processing latencies, which hinder blockchains' scalability. An entire class of solutions, called Layer-1 scalability solutions, have attempted to incrementally improve such limitations by adding/modifying fundamental blockchain attributes. Recently, a completely different class of works, called Layer-2 protocols, have emerged to tackle the blockchain scalability issues using unconventional approaches. Layer-2 protocols improve transaction processing rates, periods, and fees by minimizing the use of underlying slow and costly blockchains. In fact, the main chain acts just as an instrument for trust establishment and dispute resolution among Layer-2 participants, where only a few transactions are dispatched to the main chain. Thus, Layer-2 blockchain protocols have the potential to transform the domain. However, rapid and discrete developments have resulted in diverse branches of Layer-2 protocols. In this work, we systematically create a broad taxonomy of such protocols and implementations. We discuss each Layer-2 protocol class in detail and also elucidate their respective approaches, salient features, requirements, etc. Moreover, we outline the issues related to these protocols along with a comparative discussion. Our thorough study will help further systematize the knowledge dispersed in the domain and help the readers to better understand the field of Layer-2 protocols.

Technical Sandbox for a Global Patient co-Owned Cloud (GPOC)

“…27 Diverse ecosystems, like Directed Acyclic Graph (DAG)-based (e.g., Hedera Hashgraph, Holochain) and blockchain-like systems (e.g., Nano, IOTA, Obyte), demonstrate unique designs for e ciency and privacy. 28,29,30,31 Layer 2 protocols (e.g., Cellar, Loom, Ark, Cosmos, Tesseract) facilitate scalability and privacy through state transfer channels. 30 In healthcare, GPOC should support state change propagation and reversibility.…”

“…28,29,30,31 Layer 2 protocols (e.g., Cellar, Loom, Ark, Cosmos, Tesseract) facilitate scalability and privacy through state transfer channels. 30 In healthcare, GPOC should support state change propagation and reversibility. 32,33 Proposals for scalability, like sharding and block-size modi cations, contrast with the limitations of slow and expensive layer 1 networks.…”

Toward Building Smart Contract-Based Higher Education Systems Using Zero-Knowledge Ethereum Virtual Machine

“…The main goal of these solutions is to somehow outsource the processing and executing of transactions outside of the main chain, thereby reducing transaction costs and improving transaction throughput. The later used scaling solution is based on the official documentation of the Ethereum blockchain and the following research papers: [121][122][123].…”

Practical Limitations of Ethereum’s Layer-2

“…While there are previous studies on Ethereum's layer-2 systems [17], [25], [28], they present several limitations. Several previous works study the different algorithms used by layer-2 systems [25], [26], [27] but none address their actual performance in practice.…”

“…While there are previous studies on Ethereum's layer-2 systems [17], [25], [28], they present several limitations. Several previous works study the different algorithms used by layer-2 systems [25], [26], [27] but none address their actual performance in practice. Others [19] compare concrete systems from the Ethereum ecosystem but do not offer an experimental assessment of their behavior.…”