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What Are the Differences Between Layer 2s


What Are the Differences Between Layer 2s
In the previous article, we told you why you need Layer 2s and what they are. Now let's understand how they work and which ones are the most effective.
OP RollupZK Rollup
Jul, 17, 2023
1 min read
by CryptoRank
What Are the Differences Between Layer 2s

Plasma

Plasma is a solution based on which sidechains work. It uses Merkle trees to create an unlimited number of copies of the core network or sidechains.

Its advantages include speed and low fees. As for Plasma downsides, there are safety concerns due to a separate consensus mechanism.

The most popular Plasma-based sidechain is Polygon.

State Channels

State channels are a way to exchange private transactions outside the blockchain. Participants create a channel by freezing funds in a multi-signature contract. In the channel, they can conduct as many transactions as they like that are not recorded on the blockchain. 

The advantages of state channels include efficiency in saving time and resources as well as confidentiality. However, the possible liquidity crisis is its huge downside.

This solution is used in Lightning Network and Celer Network.

Rollup

Rollup is a solution that aims to speed up and cheapen transactions on the underlying network. They move some of the computations to sidechains and write them to the main blockchain after verification. There are two types of rollups: ZK-roll-ups and Optimistic roll-ups, which differ in the way transactions are verified.

Rollup’s biggest upsides are high speed of about 1000-4000 transactions per second, good security and decentralization, convenience, and ease of use. It is, nevertheless, less liquid than the underlying network, and the fees are higher than in sidechains.

Rollups are booming right now, and here are the reasons why:

  • Convenience and simplicity for users.

  • Best scalability solution for approaching mass adoption.

The best known are Optimistic rollups ArbitrumOptimism, and the upcoming ZK rollups zkSync and Polygon zkEVM.

 

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Disclaimer: This post was independently created by the author(s) for general informational purposes and does not necessarily reflect the views of ChainRank Analytics OÜ. The author(s) may hold cryptocurrencies mentioned in this report. This post is not investment advice. Conduct your own research and consult an independent financial, tax, or legal advisor before making any investment decisions. The information here does not constitute an offer or solicitation to buy or sell any financial instrument or participate in any trading strategy. Past performance is no guarantee of future results. Without the prior written consent of CryptoRank, no part of this report may be copied, photocopied, reproduced or redistributed in any form or by any means.

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