Knowledge base: L2, Bridging “Layer 2 Scaling and Bridging”
Multichain Payment Integration
- Ethereum and Solana are some of the most popular blockchains for NFTs, and NFTs can be purchased with cryptocurrencies or fiat.
Data Dump
reason >> scalability, high number of transactions
L1 >> add utility to native blockchain
L2>> third-party protocols that integrate with an underlying L1 to INCREASE TRANSACTIONAL THROUGHPUT
blockchain trilema >> balance btwn:
- decentralization : meaningful distribution of computing power + consensus through the network
- security: blockchain protocol’s defense against malicious actors and network attacks
- scalability: ability to support high transactional throughput and future growth >> to reasonably compete with legacy, centralized platforms with rapid settlement times (BTC >> 4-7 trsxns , Visa >> thousands TPS)
L1 v L2
- Scalability solutions are being built to solve the TPS (transaction capacity, solving the scalability of blockchain. two different solutions :
- L1 scaling solutions:
- L1 network refers to a blockchain while L2 is a 3rd party integration that can be used with L1 blockchain BTC, ETH, LTC L1, L1 scaling solutions augment the base layer of the protocol itself to improve scalability.
- L1 solutions change the rules of the protocol directly to increase trxn capacity and speed, while accommodating more users and more data contained in each block, OR accelerating the rate at which blocks are confirmed so as to increase the overall throughput of the network.
- functional updates to network scaling:
- consensus protocol improvements:
- POW used on BTC >> secure but slow
- POS >> (not miners to solve cyrptographic algorithms , rather pos systems process and validate new blocks of trsxn data based on participant’s collateral in the network. ETH 2.0, expected to dramatically and fundamentally increase capacity of the ETH network while increasing decentralization and preserving network security.
- sharding:
- adapted from distributed dbs, and is the most popular scaling solution, despite its experimental. Sharding is breaking the state of the entire blockchain network into distinct datasets called (shards), a more manageable task than requiring all nodes to maintain the entire network. network shards are simultaneously processed in parallel by the network, allowing for sequential work on numerous trsxns.
- each network node is assigned to a particular shard instead of maintaining a copy of the blockchain in its entirety. indv shard provide proofs to the mainchain and interact with one another to share addresses, balances and general states using cross-shard communication protocols.
- ETH 2.0 is a one high-profile blockchain protocol that is exploring shards, others include:
- Zilliqa
- Tezos
- Qtum
- L2 scaling solutions:
- network or tech that operates on top of an underlying blockchain protocol to improve its scalability and efficiency
- this entails shifting a portion of the protocol’s transactional burden to an adjacent system architecture, which handles the brunt of the network’s processing and only subsequently reports back to the main blockchain to finalize results. by abstracting the majority of the data processing to auxiliary architecture, the base layer blockchain becomes less congested, and ultimately more scalable.
- examples:
- BTC L1 >> Lightning Network L2 >> to improve the trsxn speeds in this fashion on the BTC network
- Nested blockchains a blockchain within or on top another chain. main chain sets parameters for a broader network, while executions are undertaken on an interconnected web of secondary chains. multiple blockchain levels can be built upon a mainchain, with each level using a parent-child connection. the parent chain delegates work to child chains that process and return back to the parent after completion. the underlying base blockchain does not take part in the network functions of secondary chains unless dispute resolution is necessary.
- examples:
- OMG Plasma is L2 nested blockchain infrastructure that utilized atop the L1 Ethereum protocol to facilitate faster and cheaper trnsxns
- State Channels: a state channel facilitates two-way communication btwn a blockchain and off-chain transactional channels and improves overall transaction capacity. a state channel does not require validation of the l1 network. instead it is a network-adjacent resource that is sealed off by using by using multi-signature or smart contract mechanisms. when a transaction or batch of transactions is completed on state channel, the final state of the channel and all its inherent transitions are recorded to the underlying blockchain.
- Sacrifice some degree of decentralization to achieve greater scalability
- examples:
- Liquid network
- raiden
- Sidechains: blockchain-adjacent transactional chain that’s typically used for large batch transactions. sidechains use an independent consensus mechanism, separate from the original chain which can be optimized for speed and scalability. with a sidechain architecture, the primary role of the mechanism is to maintain security, confirm batched transaction records, and resolve disputes. sidechains are differentiated from state chains in a number of integral ways.
- sidechain transactions arent private between participants they are publicly recorded to the ledger
- sidechain security breaches do not impact the mainchain or other sidechains
- establishing a sidechain might require substantial effort, as the infrastructure is usually built from the ground up
- L1 and L2 are not mutually exclusive, blockchains are exploring both
Polygon
A significant difference between layer 2 and sidechain -
- Sidechains have security mechanisms of their own.
- Layer 2 solutions derive their security from their parent blockchain while using their own tools to address the scalability issues of parent blockchains.
Polygon is a Layer-2 scaling sidechain solution because it has an ecosystem of its own (POS Chain, Plasma Chains, ZK-rollups, Optimistic rollups, etc). And while it might be possible to classify these individual solutions in either of the two categories, polygon as a whole cannot of classified in either of them simply because Polygon's scope is much broader. Hence, a lot of times for Polygon the terms L2 and sidechains are used interchangeably.
Sidechains
Solana:
Is Solana a Layer 1 or 2?
Solana is a Layer 1 blockchain designed to facilitate smart contracts and the creation of new decentralized applications (DApps). With its user-friendly interface, slick branding and easy-to-understand messaging, this blockchain shot to fame.
Cardano:
With this visual schematic in mind, Cardano is the layer 1
(the base network), which itself includes three independent layers: Network layer.
Bridging
A blockchain bridge, otherwise known as a cross-chain bridge, connects two blockchains and allows users to send cryptocurrency from one chain to the other. Basically, if you have bitcoin but want to spend it like Ethereum, you can do that through the bridge.
- Basically, if you have bitcoin but want to spend it like Ethereum, you can do that through the bridge.
- One of the biggest problems of blockchain was the inability to work together. While fluid and somewhat efficient as single entities, each blockchain is limited by the walls of its own domain. Most often this can lead to high transaction costs and congestion.
- Blockchain bridges solve this problem by enabling token transfers, smart contracts and data exchange, and other feedback and instructions between two independent platforms.
- These blockchains mint different coins and operate on different sets of rules; the bridge serves as a neutral zone so users can smoothly switch between one and the other. Having access to multiple blockchains through the same network greatly enhances the crypto experience for most of us.
- This concept is a lot similar to Layer 2 solutions even though the two systems have different purposes. Layer 2 is built on top of an existing blockchain so while it does improve speed, the lack of interoperability remains. Cross-chain bridges are also independent entities that don’t belong to any blockchain.
- Blockchain bridges can do a lot of cool stuff like converting smart contracts and sending data, but the most common utility is token transfer. For example, bitcoin and Ethereum are the two largest cryptocurrency networks and have vastly different rules and protocols. Through a blockchain bridge, bitcoin users can transfer their coins to Ethereum and do with them what they otherwise could not on the bitcoin blockchain. That can include purchasing various Ethereum tokens or making low-fee payments.
- When you have bitcoin and want to transfer some of it to Ethereum, the blockchain bridge will hold your coin and create equivalents in ETH for you to use. None of the crypto involved actually moves anywhere. Rather, the amount of BTC you want to transfer gets locked in a smart contract while you gain access to an equal amount of ETH. When you want to convert back to BTC, the ETH you had or whatever’s left of it will get burned and an equal amount of BTC goes back to your wallet.
- If you would do this regularly, you’d have to convert bitcoin to ETH on a trading platform, withdraw it to a wallet then deposit it again to another exchange. By the time it gets there, you’d have incurred more fees than probably what you planned to do in the first place.
- To put this in perspective, think of how you can use your Visa to pay for your MasterCard bills; or how PayPal can pay for all your online purchases no matter where you’re buying from. Different systems with different protocols yet transactions are fast and seamless. That’s because interoperability has always kept the financial system in place long before cryptocurrency was a thing. As blockchain technology becomes more prominent and not just for crypto, solutions like cross-chain bridges are a big step towards normalization.
GraphQL
- function:
- language:
- example
Consensys
suite of products:
- Infura: >> dev infrastructure, APIs
- Infura brings together everything you need to start building on Web3, with infinitely scalable systems and exceptional documentation.
- Infura empowers developers to build Web3 projects with ease, giving you a foundation of tools so you can focus on what's important: creating.
- The Infura APIs are exceptionally intuitive and fast. Comparing these to other platforms is night and day. This makes it so much easier to build your own Web3 experience and be productive.
- Build your first blockchain project
- Take a blockchain development course at the ConsenSys Academy
- Get the infrastructure and tools you need to build bigger
- to deliver the best infrastructure and tools for developers, and to empower them to build amazing decentralized applications through instant, scalable, and reliable API access to the Ethereum and IPFS networks.
- https://blog.infura.io/post/infura-has-officially-been-acquired-by-consensys-e6ac5d27afa
- Across the Ethereum network, there is a need for utilities that lower the barrier of entry and simplify access to Ethereum data.
- infrastructure as a service (I-a-a-S)
- used by metamask
- https://infura.io/dashboard/ethereum/76271dfc255c4861a2937b41949a1789/settings
- Quorum: >> Ledger
- Quorum Blockchain Service (QBS) is a fully managed ledger service that gives enterprises the ability to grow and operate blockchain networks at scale. Accelerate the development of your end-to-end blockchain application without the hassle of managing infrastructure.
- used by Prescryptive
- Prescryptive can place consumers at the center of their healthcare experience by enabling transparency and control of health plan data, prescription drug pricing and affordability options, better interactions with prescribers and pharmacists, and the ability to "own" their electronic prescriptions for the first time. prescyptive.com
- Our work with ConsenSys has set the stage for the next evolution of services and capabilities utilizing Web3 innovations, driving tremendous levels of data transparency and financial savings across the industry.
- covantis
- https://consensys.net/blockchain-use-cases/global-trade-and-commerce/covantis/
- supply chain: initiative was jointly founded by ADM, Bunge, Cargill, COFCO, Louis Dreyfus Company and Viterra. Its platform is focused on digitizing global trade processes to make them more simple, secure, and efficient. Its goal is to minimize operating risks while increasing market efficiency for the agricultural trading and shipping industry, by working towards the following:
- Reducing paper based processes and the amount of email exchanged between multiple parties
- Providing a trusted single source of information to securely share documents and coordinate high seas logistics from port to port
- Giving multiple parties the ability to share real-time transaction data
- Ledger service
- Truffle: >> development env
- A world class development environment, testing framework and asset pipeline for blockchains using the Ethereum Virtual Machine (EVM), aiming to make life as a developer easier.
- ganache, drizzle
- Built-in smart contract compilation, linking, deployment and binary management.
- Advanced debugging with breakpoints, variable analysis, and step functionality.
- Deployments and transactions through MetaMask to protect your mnemonic.
- External script runner that executes scripts within a Truffle environment.
- Interactive console for direct contract communication.
- Automated contract testing for rapid development.
- Scriptable, extensible deployment & migrations framework.
- Network management for deploying to any number of public & private networks.
- Package management with NPM, using the ERC190 standard.
- Configurable build pipeline with support for tight integration.
- bla
- Codefi:
- Codefi blockchain product suite present a solution to the challenges of operating within traditional finance, scaling decentralized networks, and widening access to Web3
- create and manage digital assets
- unlock digital asset liquidity
- financial applications that consensys ships out
- tools to tokenize assets, swap products, access feeds to defi/financial system
- >> now help newly centralized networks get off the ground>>
- storage application for better price discovery
- MetaMask:
- Available as a browser extension and as a mobile app, MetaMask equips you with a key vault, secure login, token wallet, and token exchange—everything you need to manage your digital assets.
- fast connections to the Ethereum blockchain and several test networks via our friends at Infura
- Diligence:
- Security is critical in the blockchain space. Our comprehensive smart contract audit service helps everyone from startups to enterprises launch and maintain their Ethereum blockchain applications.
- EVM:
- What Is an EVM? An Ethereum virtual machine is a software platform, or “virtual computer,” used by developers to create decentralized applications (DApps), as well as to execute and deploy smart contracts on the Ethereum system
- Semi-Fungible Token Creation: Unlike the ERC-721 token standard, which allows only for the creation of NFTs, and the ERC-20 token, which only allows for the creation of fungible tokens, the ERC-1155 standard permits the creation of semi-fungible tokens.
- Product analysts:
- Product analysts support product teams in their product decisions using quantitative data to inform the next steps.
- perform market research and analyze market data, identifying consumer behaviors and trends. They make recommendations and provide launch strategies based on their analyses to increase firm profitability. how:
- is the process of determining the viability of a new service or product through research conducted directly with potential customers.
- I had limited resources:
- BC: Secondary quantitative research concerning crypto payments
- market trends (industry and the size of market
- qualitative data through interviews with potential clients
- qualitative data through interviews with potentials users, including features, pain points and willingness to use the product
- quantitative data: customer feedback surveys
- Exploratory market research through open-ended interviews and surveys
- specific primary research: the business can take a smaller or more precise segment of their audience and ask questions aimed at solving a suspected problem.
- adept using public source data (census, etc), and leveraging publicly available APIs if available. The challenge here was always been the format of the data and the interoperability of the data.
- commercial reports that typically available
- hotjar user behaviour
- competitive analysis, or market scan to understand competitors
- https://blog.hubspot.com/marketing/market-research-buyers-journey-guide
- Product analysts monitor product performance and recommend alterations to meet sales forecasts.
- something
bridges you used
optimism hop protocol
if the product