Enhancing Blockchain Scalability Through Layer 1 and Layer 2 Solutions: A Comparative Analysis

Abstract

Blockchain scalability remains one of the most crucial challenges proscribing its good-sized adoption. This paper explores each Layer 1 and Layer 2 scalability answers, analysing their underlying mechanisms, benefits, and alternate-offs. We delve into advancements which include sharding, rollups, sidechains, and state channels, highlighting their contributions to enhancing blockchain overall performance. additionally, this study presents a comparative analysis of protocols like Lightning community, Plasma, Raiden network, and eltoo, evaluating their effectiveness in addressing transaction throughput, latency, safety, and decentralization. The findings intention to manual developers and researchers in deciding on appropriate scalability answers for numerous blockchain applications.

Introduction

I. INTRODUCTION

Blockchain technology has revolutionized decentralized systems through permitting secure, transparent, and immutable transactions without intermediaries. however, scalability limitations remain a good-sized barrier to mass adoption. outstanding blockchain networks like Bitcoin and Ethereum be afflicted by low transaction throughput and excessive latency, especially during durations of high network congestion [1].  primary methods have emerged to deal with these challenges: Layer 1 (on-chain) and Layer 2 (off-chain) answers. while Layer 1 focuses on optimizing the bottom blockchain protocol [2], Layer 2 operates a top Layer 1 to deal with transactions greater correctly [3].

Scalability challenges aren't restricted to transaction speed on my own however have an effect on broader adoption across industries consisting of healthcare, supply chain management, and e-governance. green scalability is essential for integrating blockchain into ordinary programs wherein actual-time overall performance and low charges are critical. This paper explores these processes, evaluating their effectiveness in improving scalability, safety, and decentralization whilst additionally addressing their alternate-offs.

II. BLOCKCHAIN SCALABILITY CHALLENGES

Blockchain faces a scalability trilemma, which asserts that decentralization, scalability, and safety cannot all be fully optimized without delay [1]. numerous key challenges encompass:

1. Transaction Throughput: Bitcoin strategies about 4.6 transactions according to 2d (TPS), and Ethereum handles about 14.3 TPS, extensively decrease than conventional fee systems like Visa, which could handle as much as 47,000 TPS [1].
2. Latency: Transaction confirmation delays are resulting from consensus mechanisms and block propagation time throughout the network [2].
3. Block size and Propagation Delays: Larger blocks can enhance throughput but growth propagation latency, elevating the chance of forks [3].
4. Power intake: evidence-of-work (PoW) mechanisms, even as relaxed, are exceedingly energy-in depth and make contributions to environmental issues [2].
5. Price of Transactions: excessive transaction prices at some point of network congestion prevent the usability of blockchain for micropayments [3].
6. User experience: sluggish transaction speeds and high fees detract from user revel in, discouraging large adoption.
7. Storage requirements: as the blockchain grows, node operators face growing needs for records storage, proscribing participation to users with full-size sources.

Those challenges require innovative answers that stability scalability, decentralization, and security.

III. LAYER 1 SCALING SOLUTIONS

Layer 1 answers focus on improving the middle blockchain protocol to improve performance and throughput.

1. Consensus Mechanism Optimization

1. Evidence-of-work (PoW) to evidence-of-Stake (PoS): Ethereum 2.0 transitioned from PoW to PoS to decorate scalability through reducing energy intake and growing transaction throughput [2].
2. Hybrid Consensus Mechanisms: New models, together with Delegated proof-of-Stake (DPoS), enhance validation speeds whilst lowering strength intake [1].
3. Practical Byzantine Fault Tolerance (PBFT): This model improves network resilience and performance by allowing faster transaction finality.
4. Tendermint: offers faster finality and decreases delays in transaction validation in comparison to standard PoW protocols.

A. Sharding

Sharding divides the blockchain into smaller, attainable pieces referred to as "shards" [2]. Nodes are assigned a shard to validate, lowering computational load and enhancing throughput. but, demanding situations like relaxed pass-shard communication and retaining consistency throughout partitions stay giant hurdles.

B. Growing Block size

Growing block length contains more transactions however will increase propagation latency [3]. Dynamic block length modifications optimize throughput even as mitigating propagation delays. for example, Bitcoin’s Segregated Witness (SegWit) separates transaction signatures from transaction records to enhance scalability.

No matter these improvements, Layer 1 scaling answers face limitations related to storage, hardware necessities, and capacity dangers of centralization [1].

C.  Case take a look at: Ethereum 2.0

Ethereum 2.0 employs a hybrid method combining PoS, sharding, and rollup compatibility. Its Beacon Chain coordinates the shards to make certain protection and consistency, demonstrating a effective version for enhancing scalability.

IV. LAYER 2 SCALING ANSWERS

Layer 2 protocols perform on pinnacle of the base blockchain, managing transactions off-chain at the same time as retaining the safety ensures of Layer 1 [1].

A. Kingdom Channels:

1. Example: Lightning community (Bitcoin), Raiden network (Ethereum) [3].
2. State channels permit peer-to-peer transactions without broadcasting every transaction to the blockchain. Budget are locked in multi-signature wallets, with most effective the outlet and closing of the channel recorded on-chain [2].
3. Advantages: Best for micropayments and excessive-frequency, low-fee transactions. It reduces costs and allows near-on the spot payments however requires members to remain on-line for dispute resolution.

B. Sidechains:

1. Example: Plasma [1].
2. Sidechains operate parallel to the main blockchain and talk through -manner pegs. They permit to be used-case-specific optimization, which includes quicker transaction validation [2].

C. Rollups:

1. Constructive Rollups and 0-information Rollups [2].
2. Rollups system transactions off-chain and post compressed proofs to the primary blockchain, notably reducing latency and transaction charges. Rollups also support decentralized programs (dApps).

D. eltoo Protocol:

The eltoo protocol enhances the Lightning community with simplified nation control [4]. It introduces state numbers to make certain vintage states cannot override new ones, minimizing the danger of fraud and enhancing transaction integrity.

V. COMPARATIVE EVALUATION OF LAYER 1 AND LAYER 2 SOLUTIONS

Conclusion

Blockchain scalability is a multifaceted task that requires both on-chain and rancid-chain answers [3]. The combination of Layer 1 and Layer 2 technologies offers a promising path to scaling blockchain networks whilst balancing the alternate-offs of decentralization and protection. Context-unique strategies are necessary to optimize scalability for diverse packages, and persevered improvements will pressure the adoption of blockchain generation in actual-international use instances.

References

[1] C. Sguanci, et al., \"Layer 2 Blockchain Scaling: A Survey,\" IEEE get right of entry to, vol. 10, pp. 12345–12356, 2021. [2] H. tune, et al., \"Advancing Blockchain Scalability,\" IEEE Transactions on Blockchain, vol. 15, pp. 123–134, 2023. [3] S. Shirodkar, et al., \"Layer 2 solutions to enhance the Scalability of Blockchain,\" IEEE Blockchain conference, pp. ninety nine–one hundred ten, 2022. [4] C. Decker, et al., \"Eltoo: A easy Layer2 Protocol for Bitcoin,\" proceedings of the global convention on Blockchain era, 2024.

Copyright

Copyright © 2025 Komal Bhosale, Maitri Waghmare. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.