The Ethereum Layer 2 market is expected to reach a valuation of at least $1 trillion by 2030, according to a report from investment firm VanEck.
Ethereum has faced significant scalability challenges, struggling with high transaction fees and processing times during peak usage. Layer 2 technologies have emerged as a promising solution, enabling higher transaction volumes and cheaper fees by batching transactions off the main blockchain while retaining Ethereum’s security. Ethereum base chain transactions as a share of the ecosystem have fallen dramatically as a result of Layer 2s.
Optimistic rollups trust transactions by default, checking only in the event of disputes, while zero-knowledge rollups verify each transaction's validity with cryptographic proofs. Trust assumptions are another factor, with Layer 2 networks tackling safety and liveness challenges by moving toward decentralized sequencer models to mitigate risks of failure and attacks. A sequencer is a component that orders and batches multiple off-chain transactions before submitting them to the Ethereum blockchain.
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