The Limits of Crypto and the Rise of Layer 2s
- Date:August 14, 2023
- Author(s):
- Joel Hugentobler
- James Wester
- Report Details: 13 pages, 3 graphics
- Research Topic(s):
- Digital Assets & Crypto
- PAID CONTENT
Overview
Truly decentralized blockchains attract participation that provides worldwide transparency and reinforces why they were developed in the first place. But blockchain networks also have a problem: As the number of network users increases, so do network congestion and transaction costs. This is where Layer 2 protocols come in.
In their simplest forms, Layer 2s leave transaction execution and activities on the base layer blockchain while handling most other activities off the chain. This, in turn, eases congestion and lowers costs. This Javelin Strategy & Research report delves into Layer 2s, the blockchain issues they can alleviate, and the challenges associated with implementing them.
Key questions discussed in this report:
- What are the challenges facing blockchain networks?
- What are Layer 2s?
- What are the risks associated with Layer 2s when they’re incorporated into traditional business models?
Companies Mentioned:
Bitcoin Visuals, Block, Defillama, FedWire, L2Beat, L2fees, Microstrategy, NCR Corporation, OpenNode, Twitter
Learn More About This Report & Javelin
Related content
Understanding Crypto Custodians: Proliferation Continues
As cryptocurrencies and other digital assets move increasingly into the mainstream of finance, custodians of those assets move to the fore. With digital assets, challenges are ofte...
Reaching Consensus: The Consensus 2024 Conference
At long last, the everyday applications of decentralized finance, long championed but also mostly theoretical, are meeting reality as cryptocurrencies and digital assets come into ...
Tokenization: Digitizing the Real World
Tokenization—the creation of unique digital records of asset ownership—is poised to make a lasting impact on how participants in financial markets operate, affecting financial inst...
Make informed decisions in a digital financial world