Layer2
Layer2 is a concept that aims to reduce transaction fees and improve transactions on the Ethereum blockchain. The term "Layer2" refers to the second layer built on top of the Ethereum blockchain, which is considered the first layer. The idea behind Layer2 is that not all processes need to be done on the Ethereum blockchain (on-chain), and some processes can be done off-chain.
There are two main types of Layer2 solutions:
1. zk Rollups: These solutions may not be EVM Compatible, but they are well-known for their scalability. Examples include zkSync and StarkEX. One notable application that utilizes the technology of StarkEX is dYdX, a decentralized exchange (DEX). Layer2 solutions were developed to address the scaling issues of the Ethereum Main Chain. These solutions involve using a separate chain for Layer2, which helps in separating computations and data storage from the Mainnet, thus solving the scaling problem.
In the short term, it is expected that solutions like Optimism and Arbitrum, which adopt Optimistic Rollups, will be widely used. This is because they are developer-friendly and allow the use of Solidity code on the EVM (Ethereum Virtual Machine). However, in the long term, Zk Rollups are expected to dominate. This is because ZK Rollups address the drawback of Optimistic Rollups, which is the inability to make withdrawals for 7 days.