Blockchain scalability remains one of the most critical challenges facing the crypto industry. Layer 1 networks like Ethereum can process only 15-30 transactions per second, far below the demands of global financial infrastructure.
Layer 2 solutions address this limitation by moving computation off the main chain while inheriting its security guarantees. The two primary approaches are optimistic rollups and zero-knowledge rollups, each with distinct tradeoffs.
Optimistic rollups assume transactions are valid by default and only run computation in case of disputes. This approach offers good EVM compatibility but requires a 7-day withdrawal period for fraud proof windows.
Zero-knowledge rollups use cryptographic proofs to verify transaction validity, enabling instant finality and withdrawals. However, they require more complex cryptography and may have limited smart contract support.
State channels and sidechains offer alternative scaling approaches for specific use cases. Payment channels enable instant, low-cost transactions between parties, while sidechains provide independent execution environments with periodic settlement to the main chain.