What is Ethereum Layer?

Ethereum is a decentralized and open-source blockchain network that uses Ether to cover transaction fees. Ethereum was first introduced by Vitalik Buterin in 2013 and was released on July 30, 2015. Ethereum is currently the 2nd largest after Bitcoin, with a current market capitalization of $402,341 billion. It has taken its place in the crypto world as a cryptocurrency. One of the main reasons for Ethereum’s success is the diverse ecosystem of its decentralized finance. 

The Ethereum network has 2 main functions. The first is that it functions as a platform on which to build on top of hundreds of thousands of other cryptocurrencies. The most common type of these is the ERC-20 network, which makes up a large portion of the best cryptos in the world.

 
Ethereum’s second, and probably most important, function is that it can compute code within the network called “smart contracts .” These are self-fulfilling contracts that require only reliance on the rules, not with other parties in the contract. DeFi platforms use smart contracts to provide users with advanced financial tools for lending, borrowing, earning interest, insurance, and much more. 

Smart contracts can be much more complex than simple transfers or transactions, which increase congestion and transaction fees. The Ethereum blockchain works as a distributed computing network executed by miners. Ethereum miners use their time and computing power to process transactions and generate blocks.

While transaction fees were reasonable before, today users complain about the high gas fees of trading. High fees mean that there is high demand for usage, which leads to network congestion and increased prices for certain users. While this is great for the development of the decentralized economy, increased demand, and the use of applications, high gas charges in a congested and slow network are pushing users away. 

So what is planned to be done for the recovery of the Ethereum network and to reduce user complaints? To mitigate these complaints, Ethereum founders plan to implement Layer 1 and Layer 2. 

Layer 1 is the term used for the underlying blockchain architecture, and the changes made to it are called Layer 1 solutions. For example, Ethereum can be easily scaled by increasing the block size and therefore the number of transactions verified per block. However, this will make mining extremely expensive. Centralizing the network only to the richest miners with the best hardware.

Layer 2 solutions are built on top of the network and do not require any changes to Layer 1. Layer 2 solutions continue to benefit from the security of the consensus mechanism of the Layer 1 network, but they can greatly speed up transactions. While Ethereum’s Layer 1 can process about 15 transactions per second, some Layer 2 projects can increase this to as high as 4,000 transactions per second. Layer 1 scalability upgrades to the Ethereum network are planned in the coming years.

Optimism is a nonprofit Public Benefit Corporation working to launch mainstream network optimistic aggregations. It was born out of a non-profit group called Plasma Group, founded by Ethereum creator Vitalik Buterin and the Lightning Network , co-creator of Bitcoin’s Layer 2 solution. Plasma Group switched to Optimism, a non-profit company, in January 2020 and became a leading optimistic gathering project.

An aggregation is a Layer 2 solution in which a large batch of transactions is collected and processed from the main network (Layer 1) and then condensed transaction data is sent to Layer 1. This can significantly increase the throughput of the network, reduce congestion and reduce transaction fees. Layer 2 projects will probably be the most important step as a pause solution for the scalability of Ethereum and other cryptocurrencies connected to Ethereum. 

US Approves Three Major Crypto Regulation Bills - XRP Reaches All-Time High
US Approves Three Major Cryptocurrency Regulation Bills The US House of Representatives voted to approve three major cryptocurrency bills during its July session: the Digital Asset Market Clarity (CLARITY) Act, the National Stablecoin Innovations Identification (GENIUS) Act, and the Anti-CBDC Oversight Act. The CLARITY and GENIUS bills received strong bipartisan support, while the Anti-CBDC bill passed...
What Is DODO Coin?
A Comprehensive Guide to the Decentralized Trading Protocol The decentralized finance (DeFi) landscape continues to evolve rapidly, with innovative protocols emerging to provide more efficient, secure, and user-friendly trading solutions. One such protocol is DODO, a decentralized exchange (DEX) that aims to solve some of the most critical challenges in automated market making and liquidity provision....
US House of Representatives Moves to Final Vote on Major Crypto Bills - US's Largest Banks Prepare to Issue Their Own Stablecoins
US House of Representatives Moves to Final Vote on Major Crypto Bills The US House of Representatives has passed a preliminary procedural vote to advance three major crypto legislation bills—the GENIUS, CLARITY, and Anti-CBDC bills—to a final vote. The move, which passed 217-212 late Wednesday night, revives previously rejected bills. The GENIUS Act aims to create a federal regulatory framework for...
What Is Pump.fun (PUMP) and How Does It Work?
Pump.fun is an emerging decentralized platform designed to simplify and democratize the process of launching and trading meme tokens on the Solana blockchain. It has quickly gained traction among crypto enthusiasts due to its novel approach to token creation, automatic pricing mechanics, and meme-centric culture. Unlike traditional launchpads or token creation tools, Pump.fun enables users to deploy...
What Is Cryptojacking?
As the adoption of cryptocurrencies continues to expand, so do the associated security threats. Among the growing list of cybercrimes, cryptojacking has emerged as a particularly stealthy and damaging tactic. Often unnoticed by victims, cryptojacking allows malicious actors to exploit computing resources for unauthorized cryptocurrency mining. In this article, we’ll examine what cryptojacking is, how...


Create an account

Now create an account where you can use your knowledge.