Since its invention in 2016, Ethereum has become the most active and busiest blockchain network after years of repaid development. It is the undisputed NO.1 public chain in all perspectives, including richness of ecology applications, on-chain assets scale, token security and other core indicators.
In 2021, with the emerging of digital currency bull market in the past few months, the transaction frequency of digital currencies deployed in the Ethereum network increased massively, resulting in a significant increase in network usage, especially the bursting in DeFi area. This makes a desperate lack of the original throughput.
For a long time, the entire crypto community has been working hard to solve the throughput and high gas fees problem of Ethereum. One of the major solutions is Ethereum 2.0, which will increase TPS greatly. But is it possible to fix this from another perspective? The answer is yes, it is Layer 2.
About Layer 2
As we all know , the biggest weakness of ETH is the performance. ETH uses full nodes ,which led to low speed and congestion during transactions. ETH came up with the solution of sharding to improve its performance, means to divide Ethereum blockchain into several shards, put nodes in different shard to participate in accounting and consensus. After sharding, Ethereum become a number of relatively smaller blockchains, and the amount of nodes on each shard is significantly reduced. Thus improve work efficiency greatly.
However, sharding based on current situation causes great challenges for development and upgrades, as Ethereum is working constantly everyday and already has a lot of nodes and data.
What is Layer 2? Literally , it refers to the second layer of network. The logic is to transfer and process transactions from Ethereum’s main chain Layer 1 (L1) to Layer 2( L2), then send results back to Layer 1 for confirmation. We call this solution Ethereum Layer 2.
Simply put, Layer 2 develops another blockchain outside the Ethereum main chain, transfers transactions on Ethereum to Layer 2 for further processing, and sends results or briefing back to Ethereum blockchain. The theoretical TPS of L2 reaches 2000-4000, which surpasses Visa’s processing capacity-1700 transactions per second. Therefore, many people believe that the L2 solution is the hope for Ethereum to win the future.
At present, Layer 2 ecological construction has been carried out in full force, and design schemes in different types have received support from a certain amount of community users. However, the trilemma (i.e. decentralization, security and scalability, only two options are achievable) remains an unavoidable issue for most schemes. However, Agalta Protocol provides another thinking to solve this for the market.
Agalta is a decentralized cross-chain protocol featured by its high-speed, security, and reliability. It is one of the first expansion protocols that support Ethereum , and can efficiently solve the congestion and high gas fees problems of Ethereum .Through side chain expansion technology, Agalata extends the internet to existing and future blockchain, Agalta helps developers to build Dapp quickly, and carry out large-scale commercial applications.
Agalta Protocol is committed to the construction of the public chain Layer-2 cross-chain DeFi ecosystem, will launch multi-chain cross-chain research and development plan as scheduled, and gradually open Layer-2 high-speed cross-chain network of Binance Smart Chain, Huobi Eco-Chain, Polkadot Main Chain, OKT and other public chains. As well as the enterprise development toolkit. One click fork of Defi projects and products on Ethereum will also be available here. And Agalata will become a cornerstone of the global public chain Defi eco-system.
In today’s market, Layer 2 solutions like Rollup and State Channel are emerging, including some repetitive functions. Many investors tend to be speculators and ignore some common problems of projects. For example, in the economic model of Optimistic Rollup Protocol, each batch sequencer of epoch needs a smart contract called bond administrator to be marked as collateral. To become a collateral sequencer, a fixed amount of ETH has to be added to the contract. This economic model can prevent the sequencer from becoming abnormal, but it does not fix the potential risk that the verifier may try to send a large number of fraud proofs to the blockchain in different batches (Forcing a large amount of L1 calculations ).
Celer, a representative project of the State Channel. Even though the side chain channel in its network can significantly reduce required collateral deposit, it still has to be proportional to channel numbers and replay capacity of a singal channel (such as payment). This requires massive liquidity in Celer network to ensure normal running of State Channel. Besides, usually the State Channel requires users from both sides to be online all the time, otherwise fairness and security cannot be guaranteed. This kind of availability lackness limits State Channel’s application greatly.
Aalta Protocol technical advantages
Agalta Protocol carried out in-depth research and innovation to solve the common problems mentioned above. And proposed a new generation of Layer 2 Agalta solution: namely , a high-performance cross-chain Protocol that supports multi-chain ecology. Specifically, it has the following highlights.
- Decentralized network: An efficient, safe, and credible decentralized side chain network. The first layer-2 expansion protocols that support Ethereum features scalability and robustness.
- Cross-chain anchoring: AGAT provides a two-way anchored Aga-adapter (adapter) for ETH and other ERC-20 tokens to transfer them to the Agalta chain and provide an EVM-compatible execution environment for DeFi applications.
- AMM model: The newly optimized AMM model automatically prices assets by using the pricing algorithm in the smart contract and creates a liquidity pool for each transaction token. The AMM pool provides liquidity for asset transactions in an automated manner.
- Ultra-high TPS: On the high-performance cross-chain network based on the Agalta API framework, the theoretical TPS performance is as high as 140,000+, far exceeding the existing blockchain transaction performance.
- 0 Gas fee: The unique layer-2 architecture avoids network congestion and the high gas fee. The 0 gas fee allows users to trade freely without worrying about high handling fees and network delays
- Real-time transactions: All transactions are migrated to Layer-2. Users can conduct real-time transactions without waiting for the confirmation time of a block.
- Privacy and security: Based on the advantages of blockchain distributed structure, anonymity and non-tamperable data, the data privacy of transaction users is fully protected, which avoids personal data leakage and data loss
Layer 2 solutions comparision
Now let’s compare all the representative projects in the market in a table
|Comparison of Layer-2 Expansion Technology Routes|
|State channel||Plasma||Optimistic Rollups||ZK Rollup||Agalta|
|Typical project||Celer, Pisa||OMG, Matic||OVM, Fuel||zkSync, Loopring||Agalta|
|Concept||The state channel provides direct one-to-one transfer between two addresses. However, a large number of calculations involved in the interaction between users are calculated and communicated in an encrypted and secure way under the chain. The final settlement of the balance takes place in the expansion plan on the Ethereum main network.||Ethereum’s second-tier expansion framework, based on the main chain (chain-in-chain). Anyone can create different Plasma based on the main chain to support different businesses. Plasma cannot guarantee the safety of the sub-chain, but it can guarantee that users can safely retrieve their assets and return to the main chain when a security incident occurs.||Responsible for a lot of computing under the chain, and security on the chain. A two-layer expansion technical route that ensures the correctness of the state update under the chain by using fraud proof technology.||Responsible for a lot of computing under the chain, and security on the chain. A two-layer expansion technical route that ensures the correctness of the state update under the chain by using zero-knowledge proof technology.||The Agalta Protocol cross-chain architecture consists of Aga-adapter, Aga-Hub cross-chain gateway, ACCP cross-chain communication protocol, and Layer-2 Agalta chain relay cross-chain network group. A two-layer expansion technology route that guarantees the security of cross-chain transactions by using technologies such as S-SPV certification. The transaction links are all completed in the blockchain network. Data is secure and transparent.|
|Security||Risk of loss of off-chain data||Risk of rollback||The incentive mechanism of Bosu theory. The risk increases when the funds inside Rollup increase.||Cryptography, arbitrariness and abandonment theory. A third-party credit is required.||Cryptography, permission chain, and transaction links are transparent.|
|Performance compared to ETH||Hundreds of times||Hundreds of times||About 140 times||About 35 times||About 10,000 times|
|Gas fee||0||A small amount||A small amount||A small amount||0|
|On chain transaction cost||Low||Low||Medium||High||Extremely low|
|Effectiveness validation||arbitration mechanism||Challenge afterwards||Fraud proof||Zero-knowledge proof||S-SPV certificate (strict simple payment verification)|
|Withdraw time||One confirmation||1-2 weeks||7 days||7 days||< 1 minute|
|Smart contract compatibility||Restricted||Restricted||Compatible||Restricted||Compatible|
|Advantages and disadvantages||Advantages: suitable for high-frequency transaction. The off-chain high-speed payment channel can reach thousands of transactions per second.
1. Only for specific applications. Participation is not open.
2. The user needs to lock the funds in the multi-sign contract in advance.
3. Extended universal smart contracts are not supported.
|Advantages: You can create multiple plasma sub-chains as required. The transaction speed in the sub-chain is faster, and the handling fee is low.
1. The waiting time for withdrawing funds to layer-1 is too long.
2. The extended general smart contract is not supported.
|Advantages: support the existing general smart contract EVM, strong composability
Disadvantages: long withdrawal cycle, and low capital utilization
|Advantages: The user’s withdrawal is fast.
1. Existing general contracts are not currently supported
2. High technical difficulty
3. Threat of OP Rollup ecology
Advantages: efficient transaction, 0 gas fee, short withdrawal time
Disadvantages: high technical difficulty in cross-chain development
As shown in the table, Agalta Protocol stands out among many projects with excellent overall performance. It is very suitable as the best L2 solution that supports high-performance applications under the main net Ethereum L1.
We have enough reason to believe that the landing of Layer 2 and Ethereum 2.0 will have the chance to become an important fuel for the second expansion of Ethereum market. And this will eventually make Ethereum to a financial giant with over one trillion US dollars. In the future, Agalta Protocol will play a major role in L2 ecosystem construction, and develop to an important infrastructure of the global blockchain, let’s witness the history together.
Martin has been following the crypto space since 2013. He is a passionate advocate for blockchain technology, and believes that it will have a profound impact on how people live their lives. In addition to being an avid blogger, Martin also enjoys writing about developments in the industry as well as providing useful guides to help those who are new to this exciting frontier of finance and technology.