Ethereum Layer-2

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:

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 most recent.