4 scaling solutions that will make Ethereum mainstream in 2021

4 scaling solutions that will make Ethereum mainstream in 2021

Ethereum (ETH) can currently only process 15 transactions per second. Although this problem is supposed to be solved by ETH 2.0, experts assume that this is not to be expected until the end of 2022. That is why ETH developers are working on other so-called Layer 2 scaling solutions. Today we take a look at the four most promising approaches.

Ethereum scaling is one of the most discussed topics in crypto space. Since the launch of the Ethereum network, developers have been looking at possible solutions. Every time there are Bitcoin Sunrise periods of heavy network usage, the scaling debate heats up again. One of these was the ICO boom and the emergence of CryptoKitties in 2017, when the hype overloaded the entire ETH network. Transactions were only possible with enormously high fees, similar to the last few days and weeks.

At the moment, the ETH Blockchain is being pushed to its limits, especially by decentralised finance applications (DeFi). But what solutions are there for this problem at all?

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When it comes to scaling blockchain in general, there are basically two options. One is scaling the so-called base layer, i.e. the main chain of a blockchain network, or scaling the network by offloading part of the transactions to a layer 2.

But what exactly is Ethereum Layer 2 scaling solutions all about? What are the different approaches and when can we expect an implementation?

4 Channels: Scaling individual ETH transactions

Channels are one of the first ideas to emerge to scale ETH. They are comparable to the Bitcoin lightning network. Channels allow participants to perform almost any number of transactions off-chain, while they only need to submit the end result to the main chain. This scaling solution can easily execute several thousand transactions per second.

The main project working on this form of Ethereum scaling is Raiden. It is already possible to exchange any ERC-20 token on Raiden’s platform, as long as the respective channels hold enough capital for transactions. At the moment, however, there are only a few channels and the volume of the platform is manageable.

The biggest problem with this scaling solution is therefore that users have to lure their tokens into the channels in order to carry out transactions. This makes it impossible, for example, to scale smart contract applications on Ethereum. Only for exchanges or the direct exchange of Ethereum tokens could this form of scaling prove useful in the future.

Plasma: scaling transactions on copies of the Ethereum mainchain

Plasma is a scaling solution proposed by Vitalik Buterin and Joseph Poon some time ago. It makes it possible to build a framework that allows transactions to be scaled out to copies of the Ethereum mainchain. In addition, applications can also be rebuilt on this framework. These so-called child chains allow low-cost and fast transaction processing. Overall, this could significantly reduce the load on the Ethereum mainchain.

Plasma Scaling ETHSource: Finematics

One major disadvantage, however, is that Plasma users have to wait a very long time if they want to transfer tokens from the child chains back to the ETH mainchain. Therefore, it is also not possible to comprehensively scale smart contract applications, which are frequently used especially in the DeFi sector, with the help of Plasma. The main projects currently involved in the development of Plasma are OMG Network (OMG) and Matic Network (MATIC).