Layer 2 scaling solutions on Cardano.

Foreword

Cardano has officially entered the network expansion phase – the Basho Era. Since the beginning of 2022, many improvements have been made, in several previous articles we showed how Cardano’s network expansion is divided into 2 parts: on-chain and off-chain.

Off-chain scaling solutions are often referred to as Layer 2 scaling solutions. Layer 2 is a common name for all technical solutions that are not directly deployed on the main chain (layer 1).

I. The reason for the birth of Layer 2

Mainchain – Layer 1 (Cardano) is always designed to operate with the original scope of that blockchain, to make it easier to understand we need to return to a fundamental concept which is the blockchain trilemma.

Blockchain trilemma includes 3 factors: Decentralization, Security, and Scalability. To serve the purpose of each stage of development, each blockchain can change its design and operation to match.

However, it is difficult to increase all 3 factors to the same level at the same time or increase 1 factor excessively compared to the other 2 factors because this will break the stable operating structure that blockchain is being achieved.

Therefore, to increase gradually, the solution is to improve in part or locally by moving to layer 2.

II. Scaling solution for the whole platform.

The scalability of a blockchain is evaluated in terms of improving and increasing the throughput of the network to achieve maximum performance based on the system settings at each point in time. Accompanying this is the process of building and upgrading the network at both layer 1 (on-chain) and layer 2 (off-chain).

We can take the following example: If we consider a blockchain as a tree, then:

– Improving and upgrading the network in layer 1 is to make the roots of the tree really good. It helps the entire trunk will be grow firmly. It means growing vertically.

– Improving and upgrading the network in layer 2 is the development of good branches and leaves. it means growing horizontally

Looking at the picture above we can easily distinguish:

– The blue part: These are the improvements that make Cardano’s layer 1 (on-chain) be stronger.

– The red part: These are the technologies and improvements that make Cardano’s layer 2 (off-chain) be more perfect.

During Cardano’s platform upgrade roadmap in 2022, we all know what Cardano has been and is doing. Cardano’s success is the development and upgrading of its platform in both layer 1 and layer 2 in parallel.

This helps Cardano develop a solid platform that is ready to explode for the next stage. However, within the scope of this article, the author only mentions the solution to expand layer 2, so if readers are interested in layer 1, we will discuss it in other articles.

So why do we need separate analysis at layer 2?

III. Layer 2 scaling solutions.

Those who love or closely follow the development of Cardano are all too familiar with technologies or terms such as Hydra, Mithril, Mamba sidechain….But there are quite a few people who do not know the true meaning of that separate solution in the most obvious way.

This will lead to unnecessary misunderstandings about Cardano’s scalability development roadmap.

A. Scalability and Interoperability

If compared with the solution that extends to the entire platform of a blockchain, as above, we have vertical (Layer 1) and horizontal (Layer 2) development.

The scalable in Layer 2 is similar, meaning there is also vertical and horizontal growth. Specifically, it is the development of the following two properties:

• Scalability: is the ability of the network to grow in terms of transaction speed and number of transactions. In other words, this is an internal expansion of a blockchain or vertical development.

• Interoperability: is the ability of the network of a blockchain to interact and communicate with other blockchains or networks. From there, the power of blockchain can be extended outwardly or horizontally development.

These two properties complement each other and have a linear relationship. If the inside is not good, it will limit the development of the outside and vice versa.

To increase interoperability:

Developing technologies or frameworks so that projects can build specialized sidechains that connect to other blockchains (EVM sidechain)

Building cross-chain asset transfer bridges from project teams in the ecosystem (ERC-20 converter of Singularity.Net)

CONCLUSION

So we can get a clear picture of Cardano’s scaling plans. The mission of increasing scalability Cardano has done very well in accordance with the milestones researched and planned from the years 2018, 2019.

The challenge for Cardano right now is to increase interactivity. The main solution for the whole ecosystem at the moment is to build sidechains that are able to connect to other blockchains. Typically, developing EVM sidechain, and in the next article we will learn more about how EVM sidechain has been implemented in the Cardano ecosystem.

For Vietnamese, please our live-stream clip for more details

Source: Cardanolibrary.net - Vcoincheck.io a project sponsored by Project Catalyst.