Jeong Soon-hyeong, CEO of Onther, an Ethereum blockchain R&D firm, spoke about layer 2 solutions for scaling and latency problems associated with layer 1 networks during UDC 2021.
UDC is a blockchain conference hosted by Dunamu, the firm that runs the South Korean exchange Upbit. UDC 2021 was held this year from Sept. 1 to 2.
Jeong spoke on the second day.
Onther is the developer of the Tokamak network, a protocol platform for building and connecting layer 2 networks.
Layer 2 blockchains are built on top of a main chain. By taking the processing load off the main chain, they can improve performance and increase transaction capacity.
"Layer 2 solutions confirm transactions off the main chain to make it less congested," Jeong said.
Some layer 2 solutions aim for size, seeking to encompass as much of the main chain as possible.
But Jeong says the aim of Tokamak is to connect various layer-2 networks, each one optimized for a specific purpose.
"Tokamak allows users to interact between various layer 2 solutions that have been trimmed down and optimized for a specific ecosystem, such as DeFi or NFTs," he said.
Optimistic rollup (OR) solutions are examples of layer 2 solutions that are employed by protocols like Uniswap and the DeFi aggregator 1inch.
However, while OR solutions can increase speed and decrease transaction fees, it often takes up to a week for their transactions to be reconfirmed by the main layer 1 chain.
Onther's solution to this lag is oracle mediators.
"Any time assets are moved from layer 2 to layer 1, oracles directly deliver assets as collateral to users during the waiting period, and receive incentives in return."
In traditional finance, bonds equivalent in value to the original asset being held are provided to the customer. Oracles basically perform this role in the blockchain world.
Jeong says layer 2 oracles are applicable to NFTs as well.
"Oracles help deliver assets to users when they need it, whether it's for DeFi or NFTs," he said.
UDC 2021 articles are sponsored by Upbit.
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