Author name: @nobumei (https://twitter.com/nobu_mei)
<aside> 💡 This page describes Layer2 technology, which attempts to solve Ethereum's scalability problem.
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In the previous sections, we have described BaaS and Ethereum, the most powerful protocol at that layer. I explained that while Ethereum continues to be a robust protocol because it does not sacrifice decentralization, it does have scalability challenges.
This section describes the Layer2 technology that enhances Ethereum's processing performance.
To illustrate the need for Layer 2, please first look at the following graph. Here is the fee called Gas (Gas) required to make a transaction on Ethereum. The term is 5 years and the unit is Gwei.
<aside> 💡 Gwei = The smallest unit of ETH. 1 Gwei = 0.000000001 ETH and fees tend to increase as ETH rises
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Since the summer of 2020, the cost of Gas on Ethereum has been getting higher, indicating that higher Gas = more active trading on Ethereum. DeFi in 2020 and NFT in 2021 were the majority on Ethereum, but the expression "Ethereum is clogging up" is used to describe the high number of transactions and the rising Gas costs.
Average Gas Fee for Ethereum（Source）
Let me explain the phenomenon of Ethereum clogging by comparing it to a expressway.
Usually, when a car is driving on a expressway and trying to reach its destination, it must pay at a toll booth in order to use the expressway. And the more cars try to use the expressway, the more the expressway gets "clogged". The same thing happens in Ethereum, where the Ethereum blockchain is the expressway, the money you pay at the toll booth is the Gas, and the cars driving on it are the blocks carrying the transactions on Ethereum.
Comparing Ethereum to a expressway(MyCrypto)
The difference between a expressway and an Ethereum is the "rules of the road".
On expressways, traffic is allowed in order from the first car in line, but in the case of Ethereum, the logic is to let through the cars that have paid the highest toll fee first. For urgent transactions, paying more money will get you through faster, and too low a fee will not get you through forever.
In the previous section, we explained that Ethereum nodes are highly distributed and highly secure. It is natural to try to use dApps on a highly secure blockchain, but Ethereum is a blockchain that only the rich can use because it is designed to have Gas costs that soar as the number of transactions increases.
To give you an idea of how steep the fees are, it costs several hundred dollars just to sell one NFT. A commission of a few hundred dollars is small in percentage terms for a high-value NFT, but if you try to sell NFTs at the tens of dollars level, that alone will put you in the red. Since the world is populated by a majority of ordinary people rather than rich people, this will not spread Web 3.0 forever.
Against this background, it is becoming increasingly important to use Ethereum for high-value NFTs and important transactions with high security, and use blockchain with low Gas cost for other transactions that are performed daily.
When considering the use of blockchains other than Ethereum, Layer 2, sidechains, and other Layer 1 blockchains become an option.
Multi-chain is the norm in this era (CoinGecko)