Header logo
  1. Research
  2. Crypto Research
  3. Concepts

Ethereum Layer-2

Aug 22, 2023 • 9 Min Read

Scalability Problem

Transaction fees on Ethereum have jumped to hundreds of dollars during times of high activity, rendering the mainnet unusable for anyone without deep pockets. Ethereum can only process 7-15 transactions per second, while centralized networks like Visa can scale up to over 65k tps. Since network fees function similarly to a road with a fluctuating toll, the more congested and in demand Ethereum’s rails become, the higher the transaction costs.

According to the blockchain scalability trilemma, existing blockchain models can only have two of the following three properties: decentralization, scalability, and security. When a network optimizes for one, it must sacrifice another:

The chart in this report is only accessible to members
Ethereum’s high level of security and decentralization makes its block space the most expensive in crypto. On thousands of computers worldwide, the network runs software connected to the Ethereum network, known as “nodes.” Each node maintains a copy of the blockchain and verifies that it matches all the other network nodes. While this makes Ethereum’s data decentralized and secure, it sacrifices scalability since every node must sync the entire history of Ethereum’s blockchain from its first block to its ...

Unlock this page with a FREE 30-Day Trial!

*Free trial available only on a monthly plan

Already a member?

Reports you may have missed

Airdrops

Airdrops

Concepts
By JB DeGroft • Jul 26, 2023

WHAT ARE AIRDROPS? Crypto Airdrops are a unique growth and distribution mechanism that crypto protocols use to attract users and give them ownership of the protocol through the "airdropping" of tokens. Airdrops involve giving away tokens to selected users to generate interest, raise awareness, and attract potential users to the project. Most airdrops aim to distribute tokens to early users and backers of the project, ideally rewarding these early backers...

APE -1.78% ARKM -2.39% ENS -3.95% OP -1.14%
Appchains

WHAT IS AN APPCHAIN? Appchains, short for application-specific blockchains, are built to run one specific application or use case. They differ from general-purpose L1/L2 infrastructure chains that run many decentralized applications (dApps) concurrently. While both dApps and appchains technically exist on a base layer blockchain, the key difference is that appchains also operate their own sovereign blockchains while dApps do not. In this piece we will cover factors driving the...

ATOM -1.84% AVAX 1.74% DOT 0.03% FTM 1.63% MATIC -1.02% SOL 0.11%
The P&L of a Decentralized Application

INTRODUCTION The top 50 most valuable protocols all have circulating market caps of at least one billion. Why do these tokens, many of which have unproven business models, trade at such high valuations? One of the core assumptions behind these valuations is that the protocol will someday mature to have product-market fit, justifying its current market value. For protocols that operate decentralized applications (dApps), assessing profitability is one of the...

BTC 1.04% ENS -3.95% ETH 0.23% GLP GMX 1.04% MKR -0.62% UNI 0.92%
Zero-Knowledge Technology

WHAT IS ZERO-KNOWLEDGE TECH? Zk (zero-knowledge) technology is one of the most interesting technologies in crypto and can potentially be very useful in situations that require privacy and security. Zk-tech increases privacy by leveraging zero-knowledge proofs to enable one party to prove to another party that something is true without revealing any information beyond the fact that it is true. For example, imagine you have a secret code you don't...

MATIC -1.02%

Get invaluable analysis of the market and stocks. Cancel at any time. Start Free Trial

Articles Read 1/1

🎁 Unlock 1 extra article by joining our Community!

You’ve reached your limit of 1 free monthly articles. Please enter your email to unlock 1 more articles.

Already have an account? Sign In