Block Chains
Block chains are simply a distributed ledger. A ledger to be useful by definition must be tamper-proof. Blockchains It is important to note that not all distributed ledgers need to be implemented in block chains. The foundation layer of a block chain is referred to as the Layer 1.
Transactions on Layer 1
Need participation of all network nodes. This causes high latency and low throughput. To tackle these challenges a 2nd layer can be created on the layer 1 as a foundation. Layer 2 is isolated from the L1 thus a few nodes need to be involved thus reducing the latency and boosting the networks throughput.
Ethereum ETH
GAS
EVM
L2 Ethereum Side
Terms
- DeFi : Decentralized Finance
- Layer 2 : A layer created on the foundation network to increase transaction throughput and make the network more scalable. There are different methods of implementing an L2.
- NFT : Non-Fungible Token
- Multi-signature contract :
- Private Block Chains :
- Side Chain :
- Smart Contracts :
- SPV : Simplified Payment Verification, is
- State Channel : An L2 implementation where certain amount of assets are locked in a multi-signature contract. The participants are free to change the state internally. When channel is closed the result is submitted to the L1 for settlement.
- Proof of Stake :
References and Further Reading
- Solidity : https://soliditylang.org/
- State Channels :
- https://connext.network/
- https://www.kchannels.io/
- https://perun.network/
- https://raiden.network/
- https://statechannels.org/