To further contextualize this article, we recommend that you first see our article on the First Layer of a Blockchain, following the theme of the different layers that make up a Blockchain, this time we will delve into the second level of application in a Blockchain protocol.
And it is that like the first application layer, the second plays an important role within any chain of blocks, remember that if the first layer is fundamentally the Blockchain itself, the second layer would be a complement that helps to improve some characteristics within the Blockchain.
As we already mentioned, this layer is in charge of complementing the base layer. And it is that in a chain of blocks everything does not always happen wonderfully, in some old Blockchains due to the same design there were some characteristics that for technological reasons did not allow the network itself to scale as it was expected to do, such is the case of Bitcoin that after a few years of its launch, it was possible to appreciate the scalability problems that this Cryptocurrency had, and due to this problem, Bitcoin Cash was born.
Layer 2 protocols are also known as solutions to Blockchain problems, because some networks had some characteristic that limited them, either due to protocol design or technological and technical limitations, thanks to these limitations some Blockchains could not natively execute some functions that would improve the network itself.
Going back to the case of Bitcoin, its main problem was its scalability, since it was difficult for this currency to compete with more up-to-date currencies that had already taken this feature into account and improved it; Bitcoin developers to not switch or hard fork the mainnet opted to create a layer 2 solution called “Lighting Network” that was in charge of executing Bitcoin transactions outside the chain of blocks to later be verified when the network was not congested, managing to solve the serious problem that Bitcoin had in its scalability.
Now, the fact that Bitcoin’s problem was scalability does not mean that all layer 2 solutions are oriented to this feature. There are other Blockchain networks that have implemented very creative solutions and that in a certain way help in the management of the same network.
As we mentioned before, layer 2 solutions are there to complement layer 1 in all those functions that cannot be executed in that protocol, or that due to the design it is better to execute in other rooms. Among the solutions most used by the different chains of blocks we find:
They are developments created outside of the Blockchain in order to allow the main network or layer 1 to handle a greater volume of transactions or message executions within the network without congestion or collapse of the system.
The most common case is the layer 2 solution Lightning Network of Bitcoin, which allows Bitcoin users to make transactions at a lower cost and faster than using the main network. Another great example is the one used within Ethereum called Optimism Rellup which is a layer 2 solution implemented to improve the management of Ethereum smart contracts and improve the performance of Dapps that are born in layer 3.
As we know, not all Blockchains are the same, therefore some implement or develop scalability solutions in different ways, which is why it is very common to find a large number of these solutions in different Blockchains or even in the same one.
The solutions in inter-operability within a chain of blocks are usually very varied; These solutions help in the communication or collection of information external to a Blockchain in order for some of its features to be executed correctly. The most used case today is the use of known Oracles, which are a Layer 2 solution built for the collection of specific information; They are used in conjunction with smart contracts as it allows them to validate the conditions programmed within them and execute automatically.
Although the vast majority of Blockchains that have implemented a smart contract creation system make use of oracles, one of the most representative is the project of Chain link that it was created with the intention of being a decentralized oracle that will allow smart contracts to be updated in real time with information from the real world; Another important case is the oracles used by the stable coin DAI to obtain information on the price of the Cryptocurrencies that are in its reserves and thus be able to maintain its stable price.
Yes, many of these help to greatly improve the structure of a chain of blocks, either for its inter-operability or its scalability, these applications with the simple fact of achieving a positive change are very necessary.
Of course, what many do not know is that the wallet system is part of the interoperability processes of a layer 2 protocol, in this way the main network communicates with all the wallets that have the native Cryptocurrency and the transactions.
Layer 2 functions or layer 2 solutions can be identified following the same concept that defines them and that is to help or complement the Blockchain network in its interoperability and scalability characteristics.