Second Layer Scalability Solutions

Second Layer Scalability Solutions
Diego Masini
Diego Masini
5 min read

Similar to the CAP theorem, where in any distributed system only two-out-of-three of the following properties can be satisfied: Consistency, Availability and Partition tolerance, in a Blockchain system it is only possible to achieve two of the following properties: Security, Scalability and Decentralization.

The question then is how to compete in scalability with centralized systems like the Visa payment processing network without giving up to Security and Decentralization? One logical option to achieve scalability is to allow participants to interact only with the relevant parties for the operations they want to perform, delaying the need to reach global consensus with the entire blockchain network until it is strictly needed.
The interactions between this subset of participants will need a protocol and a set of rules to ensure a safe and secure operation environment to the participants. These rules will have some (reduced) level of interaction with the blockchain network only when blockchain security model and tamper-proof guarantees are needed, reducing the time required for global consensus between network nodes and scaling the number of operations per second that can be performed between participants. This reasoning is what sustains all second layer scalability solutions that were designed in the last years and it can be formalized as:

  • 1) For each operation, reduce the number of participants to the ones that are strictly involved using direct peer to peer communication between them.
  • 2) Provide a protocol to guide and enforce the interactions between the participants involved in an operation.
  • 3) Provide the necessary safeguards (e.g. dispute resolution mechanisms) to ensure that the aforementioned protocol will work properly even when faced with errors or malicious participants.
  • A subset of second layer protocols known as Commit Chains incorporate an additional step:

  • 4) Collect the off-chain activity and periodically publish commitments of such activity on-chain.

The purpose of this work is to analyze existing second layer scalability solutions from this particular subset that are production-ready or close to being production-ready. We will highlight the pros and cons and (when possible) our evaluation criteria will include the following aspects:

  • Transaction Cost.
  • Transactions per second (TPS) achieved.
  • Resource requirements for clients and servers.
  • Security model.
  • License type (open source flavors vs. close source).
  • Programming language used.
  • Privacy provided by the solution, if any.