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Unraveling Ethereum: A Comprehensive Guide to L1 and L2 Scaling Solutions

For almost a decade, scaling has been a noticeable issue for all Ethereum users. There have been projects that chose the platform for its name only to fail quickly because of high fees. The fees are going up as fast as ETH itself and at some point it becomes painfully obvious that Ethereum is only convenient for whales with larger funds. Regular users can’t normally afford to pay $200 or more for a transaction. At times, income doesn’t cover the transfer fees and the whole ordeal becomes inexpedient.
Because the scaling issue has been an ongoing one for a long time, at this point we have several different methods of approaching it. In this article, we will explore various types of scaling as well as terminology, and explain why side-chains are not L2 solutions.
L1 Scaling solutions
The first thing we should do is determine the terminology we are going to use. L1 scaling solutions are a method of increasing the network’s throughput by upgrading its protocol.

For a long time, sharding had been the main scaling method for Ethereum. Here’s how it works:
Every node in Ethereum processes all transactions. Sharding means that the blockchain gets split into several parts - shards and transactions within each shard would be processed simultaneously. This increases the network’s throughput. Each shard requires its own set of validators and each node doesn’t have to process all the transactions. As a result, the chain becomes faster, and more transactions can be processed in a specific amount of time.

The technology was initially intended to be deployed on Ethereum prior to the Proof of Stake merge. However, the technology took longer to develop and as a result, the main scaling method at this time is L2 solutions which we will review below.

L2 Scaling solutions
By definition, L2 is a network built upon Ethereum, that relies upon its security. It means that information checks on L2 are performed through L1 - Ethereum.
An L2 network has its own set of validators and it’s even possible for it to use a different consensus mechanism.
  • Rollups
    Rollup is a network that works parallel with Ethereum but records transactions into the main chain. Validity checks for rollup transactions are performed within Ethereum.
    There are two types of rollups, depending on the method of transaction checks: optimistic and zk-rollups.

    Optimistic rollups
    Optimistic rollups form batches from the transactions and then record them into the main network in a compressed way. This allows the recording to have a lower gas fee since the transactions aren’t released directly in the Ethereum network and because of the format of the recordings. So the whole process becomes way more affordable for an average user. Optimistic rollups allow the L2 transaction data recorded into the network to be considered valid by default while leaving some time to dispute said data. There is a risk that if an invalid transaction isn’t disputed, it might be recorded to L1 as a valid one anyway.

    ZK-rollups are also networks that function simultaneously with Ethereum. However, the validation process is different for them. Batches are formed from transactions, but the data that gets recorded to L1 is a summary of these batches as well as cryptographic proof that the transactions are valid. At this time, ZK-rollups are quite possibly the most promising scaling solution for Ethereum. It’s in many ways because, unlike their Optimistic counterparts, they require transaction data to be cryptographically validated. There’s also a smaller waiting period since there is no need to wait for any disputes to show up or expect the transaction to be canceled. At the same time, the mathematical complexity of ZK-proofs places its own restrictions: validation of general-purpose EVM calculations is a complicated task in and of its own. Thankfully, a lot of developers are focusing their work on solving this issue.

  • State channels
    State channel is a technology that allows a group of users to exchange transactions among themselves while recording only two of them – the first and the last one, into the main network.
    Here’s how it works: a multisig smart contract is deployed into Ethereum. This contract checks that the transactions have been signed by all the required participants. Then the members of the state channel deposit their funds into this multisig contract. After that, they perform all the required interactions off-chain and sign the result. As the final step, the smart contract distributes the funds between the participants according to the recorded result.
  • Plasma
    Plasma chains are something of a middle ground between rollups, where a full validation of the submitted transactions is run within the L1, and side chains without such validation. The idea of plasma chains lies in the premise that not all transactions require validation by all nodes on Ethereum.

    Occasionally, a plasma chain records a cryptographic proof of the network condition along with the result of its work. The data itself isn’t recorded and the proof is compact. In other words, the validity of the transactions isn’t checked but if the commitment is already recorded on Ethereum, a plasma chain can’t change the transaction history retroactively.
  • Validiums
    In terms of architecture, Validiums are a lot like ZK-rollups with one important difference: transaction data for validation is stored off-chain. This allows to provide high throughput with lower fees. However, that is achieved at the cost of security. ZK-rollups deliver higher security. Without data stored in the L1, a Validium operator can prevent a user from using their funds.
A sidechain is a separate blockchain that functions independently from Ethereum and is connected to it through a two-way bridge. Unlike rollup solutions, there is no sidechain transaction validation in the L1 network. So the security system fully lies within the sidechain. While that’s certainly a drawback, a sidechain’s independence from Ethereum provides wider possibilities for different architecture solutions.


As we can see, within years developers have come up with many ideas on Ethereum scaling. Some are more convenient and function better, some are not so promising. It’s no secret that the ideal option for users would be to implement scaling within the L1 itself. However, as we have learned, this path is filled with technological obstacles. This is why at this time, Ethereum consciously relies on the L2 scaling option.

The most popular among them are rollups. Considering the latest Ethereum update (DenCun), which considerably lowers the price of data recording for validation in the L1 chain, rollups become way more convenient than Plazma and Validiums: they provide more security along with lower spending on data availability.

Rollup scaling allows an increase in the overall throughput of the chain without the need to compromise when it comes to security. Still, rollups are not without issues. For instance, one of the issues is the spread of liquidity between different networks. Then the bridge interactivity between different rollups is very complicated.

But considering the popularity of Ethereum, In the coming years, we can expect the emergence of developments that would attempt to combine these solutions into one, that’s going to be more manageable and more convenient.