What are second-tier projects? Is Ethereum 2.0 Beating Layer 2 Projects?

The company promised years ago that it will work to improve the network efficiency of the major alternative currencies in the market, thereby affecting the fees and times of transactions. While Ethereum (ETH) has migrated to a proof-of-stake (PoS) consensus model, its network has yet to show significant improvements in scalability. So, aside from altcoin competitors, layer 2 projects, such as Polygon (MATIC), are still attracting a lot of attention.

What is the second layer?

Layer 2 is a secondary protocol built on top of existing blockchain systems. Its main goal is to solve the problem of transaction speed, and the way the blockchain manages to scale its capacity to perform many transfers simultaneously. By enabling this, Layer 2 is also able to reduce transaction fees.

There are four types of Tier 2:

The first type is best known as the sidechains model, which is known for always managing the same operations regardless of layer 1, which helps provide scalability.
The second type of layer 2 is the plasma chain. This solution has its own consensus algorithm and transaction block generation algorithm.

The third type of layer 2 (rollup) although referencing blocks to layer 1, has a very long validation time for transactions: up to 7 days.

The last type on the second-level list is the state channel. Its operation is more complex than other forms of network sizing. In this case, tokens are deposited on the Ethereum blockchain, and as a result, a channel is opened and the whole operation takes place through a ticket signed at layer 2 and then at layer 1.

Polygon is the main item of the second layer. It promises to execute up to 65,000 transactions per second with extremely low fees. In comparison, the ETH blockchain managed to deliver an average of 15 to 20 transfers during the same period. However, with the further development of Ethereum 2.0, the leading altcoin is expected to perform up to 100,000 transactions per second, according to its co-founder Vitalik Buterin. The rate of these transfers is also expected to decrease.

Are second-tier projects risky?

In fact, the second layer only seeks to bring scalability to the blockchain Ethereum, and as altcoins fully transition to Ethereum 2.0, they may lose market share. After all, what's the point of using a solution when the main network is already sufficient?

In that sense, projects that aren’t thinking about reinventing themselves right now can look forward to reserving a place for them in the crypto graveyard. This shouldn't be the reality of the polygon because it didn't become the second layer by accident. Significant partnerships have been formed with scalability solutions and further developments have been achieved on the MATIC network.

One step that can impact institutional availability at layer 2 is face ID. Targeted primarily at corporations, this feature aims to bring data privacy into credit histories and decentralized organizations through Polygon. Additionally, Polygon has three features in development that suggest it could grow even more regardless of the arrival of Ethereum 2.0.

1. Polygon Avail: A blockchain focused on data scalability and everyday use. It will bring off-chain scaling solutions.
2. Polygon Miden: supports any smart contract.
3. Polygon Zero: In addition to working with Plonky2, it will be one of the fastest scaling solutions in the blockchain market.


Many investors end up choosing not to use ETH's competing networks because they believe they are less secure than the largest smart contract platforms. Investors who have been in the crypto market for a while have noticed this, as a well-known blockchain called Solana, for example, has experienced eight network outages since its launch in 2020. So, to avoid this problem and save money, Tier 2 might be the most suitable option.


Blog Sourcewhatisblockchain.com