Understanding Layer 2s


For starters, they are not really considered a Layer 2, they are considered a sidechain as they have their own POS mechanism in place, with their own set of validators.

Optimism vs Arbitrum

Both of them are very similar and leverages on the same optimistic rollups. In short, the technology “roll-up” data and moves it off the main ethereum chain to handle the computations. After that, it pushes a bundle of data which is just the minimum info needed with no proofs back to the main chain AND it does this optimistically hoping that all the data is valid, no guarantees!

Disputing transactions via “Challenge Period”

There needs to be a mechanism in place to ensure transactions are legitimate and not fraudulent. This is where fraud proofs come in. During the challenge period (7 days) if someone notices a fraudulent transaction, they can submit a fraud proof and the transactions will be rolled back; which the rollup will execute and run the transaction’s computation, using the available state data.

The difference between Optimism and Arbitrum

lies in their fraud proofs. Arbitrum’s fraud proofs seek to find the very specific point of disagreement over transaction history whereas Optimism looks at fraud more holistically.

ZK Roll-ups

Knows as Zero-knowledge rollups aka ZK rollups bundle or “roll up” hundreds of transfers off-chain and generates a cryptographic proof, known as a SNARK (succinct non-interactive argument of knowledge). This is known as a validity proof and is posted on layer 1.

Who has the best tech?

I think we need to move away from this “winner takes all” mentality. The market is big enough to accommodate many players; the complexity and plethora of smart contracts would mean certain Layer 2s are simply better suitable for certain protocols. The winner will still be defi!



Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store