Most Layer 2 solutions are still struggling with scalability

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Since pivoting to a Layer 2-centric approach, the Ethereum (ETH) ecosystem has relied heavily on L2 solutions for scaling. However, these solutions are struggling to compete effectively, especially under pressure from alternatives such as Solana (SOL). During the recent meme coin craze, Solana attracted much of the activity due to its benefits such as low fees, high transaction speed, and user-friendliness.

To understand the challenges, it is important to examine why L2 solutions fail to demonstrate the scalability and cost benefits commonly expected.

Why do meme projects choose Solana over Ethereum L2s?

Meme projects have contributed significantly to the recent increase in market activity. These projects choose Solana for several reasons beyond user-friendliness:

Low fees: Solana’s low transaction costs make it ideal for fee-sensitive applications such as memecoins. High speed: Solana’s multi-threaded architecture ensures high throughput, providing seamless user experiences. Better developer experience: Solana’s tools and ecosystem are optimized for ease of use to appeal to developers and projects. Why is scalability important?

Scalability is basically measured by the number of transactions a blockchain can process. A highly scalable blockchain can process more TXs while offering lower fees, making it crucial for widespread adoption and providing a seamless user experience.

This is especially important for grassroots projects like meme coins, many of which are short-lived and highly fee-sensitive. Without scalability, these projects cannot thrive and users will migrate to platforms that offer better efficiency and cost effectiveness.

Why can’t Ethereum L2s rise to the challenge?

Architectural limitations of Ethereum. Ethereum has long faced scalability issues, and L2 aggregations are the primary solution to these problems. L2s operate as independent blockchains that process off-chain transactions while sending transaction results and proofs back to Ethereum’s mainnet. They inherit the security of Ethereum, making them a promising scaling approach.

However, Ethereum’s original design inherently poses challenges. Ethereum founder Vitalik Buterin admitted that “Ethereum was never designed for scalability.” One of the major limitations is the lack of multi-threading in the Ethereum Virtual Machine. The EVM that processes transactions is strictly single-threaded, meaning it can only process one transaction at a time. In contrast, Solana’s multi-threaded architecture allows it to process multiple processes simultaneously, significantly increasing throughput.

L2s inherit Ethereum’s limitations. Almost all L2 solutions inherit Ethereum’s single-threaded EVM design, resulting in low efficiency. For example, Arbitrum: With a target limit of 7 million gas per second and each token transfer costing 21,000 gas, Arbitrum can process approximately 333 simple transactions per second. More complex smart contract calls consume more gas, significantly reducing capacity. Optimism: With a gas limit of 5 million per block and a block time of 2 seconds, Optimism can only handle 119 simple transfers per second. Gas-intensive operations further reduce this capacity.

Unstable fees Another major issue with Ethereum and L2 solutions is unstable fees during periods of high network activity. This is a critical disadvantage for applications that rely on low and stable fees. Projects like meme coins are particularly fee-sensitive, making Ethereum-based L2s less attractive.

Lack of interoperability between L2s. The scalability argument for having multiple L2s is valid only if contracts in different L2s can interact freely. However, aggregates are actually independent blockchains, and accessing data from one aggregate to another is as difficult as cross-chain communication. This lack of interoperability significantly limits the potential of L2 scalability.

What can L2s do for greater scaling?

Add features to improve interoperability. Ethereum L1 needs to do more to support interoperability between L2s. For example, the new ERC-7786: Cross-Chain Messaging Gateway is a step in the right direction. Although it does not fully solve the interoperability problem, it simplifies communication between L2s and the L1, laying the groundwork for further improvements.

Architectural updates: Difference from current L1 design. To compete with multi-threaded blockchains like Solana, L2s need to get rid of Ethereum’s single-threaded EVM design and embrace parallel execution. This may require a complete overhaul of the EVM, but the potential scalability gains make it a worthwhile endeavor.

Future milestones

Ethereum’s L2 solutions face significant challenges in providing the scalability and cost-effectiveness that applications such as meme coins demand. To remain competitive, the ecosystem must address key architectural limitations, improve interoperability, and embrace innovations in blockchain design. Only by doing so can Ethereum L2s achieve the scalability needed to support widespread adoption and fend off competition from emerging blockchains like Solana.

Laurent Zhang

Laurent Zhang is president and founder of Arcology Network, a revolutionary Ethereum layer-2 solution with the first EVM equivalent, multi-threaded aggregation; It offers unparalleled performance and efficiency to developers developing next-generation decentralized applications. With a background in executive leadership and innovation, Laurent holds a degree from Oxford Brookes University. Laurent’s professional journey includes over a decade of experience in science, research, engineering and leadership roles. After graduating in 2005, he joined MKS Instruments as an Algorithm Engineer. He worked as a research engineer at the Alberta Machine Intelligence Institute from 2010 to 2012, then served as a research scientist at Baker Hughes from 2012 to 2014. He then served as vice president of engineering at Quikflo Health from 2016 to 2018. Laurent has been president of Arcology Network since 2017 and is a visionary of a future where blockchain technology reaches its full potential and offers unique solutions. scalability, efficiency and innovation.