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Vitalik Buterin Weighs in on Difference Between Layer 2s and Execution Sharding 

Last Updated May 23, 2024 2:55 PM
Shraddha Sharma
Last Updated May 23, 2024 2:55 PM

Key Takeaways

  • Layer 2 solutions and execution sharding scale Ethereum differently.
  • Security and transaction speed vary between the two methods, with Layer 2s offering cheaper transactions and faster speeds.
  • The TVL of Layer 2 solutions on Ethereum has surpassed $45.5b.

In a recent post , Vitalik Buterin, co-founder of Ethereum, explains the differences between Layer 2 solutions and execution sharding for scaling Ethereum.

While both methods use ZK-SNARKs for transaction verification, there are certain trade-offs while using each of the scaling methods. Buterin’s commentary also comes at a time when the dollars locked in Ethereum L2’s gained 16% in 7 days.

Layer 2 Solutions Vs. Execution Sharding

In simple terms, while Layer 2 solutions and execution sharding both aim to scale Ethereum by processing more transactions, they differ in their approach. Layer 2s add extra layers on top of the blockchain, whereas sharding splits the blockchain itself into smaller, more manageable parts.

Buterin explains that in terms of technology used, both methods utilize ZK-SNARKs for transaction verification and DAS for data checks. However, in Layer 2 solutions, these technologies are implemented as smart contract codes, which are additional programs running on the blockchain. In execution sharding, they are integrated directly into the core of the blockchain protocol.

Therefore, Layer 2 solutions act like additional highways to handle more traffic without congesting the main road, which is the main blockchain. On the other hand, execution sharding divides the Ethereum blockchain into multiple lanes on the same highway, each managing a part of the overall traffic.

Ethereum L2 TVL | Image: L2Beats
Ethereum L2 TVL | Image: L2Beats

As per data by L2BEAT , the total value locked (TVL) in various Layer 2 solutions for Ethereum stands close to $45.5b. Arbitrum One leads the list at $18.88b at press time. Other notable Layer 2s include OP Mainnet at $7.57b and Base at $6.54b. The data reflects the percentage change in TVL over 7 days until May 23, is positive 16%. 

The commentary from Buterin comes at a time when the dollars locked in L2s are near an all-time high.

Ethereum Trade-Off of Security and Speed

Buterin notes one key difference is how the two methods deal with bugs. In Layer 2 systems, bugs might cause users to lose their coins. Contrarily, in sharded systems, bugs could lead to broader issues like consensus failures, where the network can’t agree on the state of the blockchain. However, as technology improves, the impact of bugs is expected to decrease.

Security is another area where the two methods differ. Ethereum Layer 1 offers strong security guarantees but at a higher cost. Layer 2 solutions provide cheaper transactions, which is beneficial for applications that don’t need the same level of security, like social media or gaming. Buterin explains that different types of Layer 2 solutions can offer various levels of data availability and security, allowing for flexibility based on the application’s needs.

Ethereum scaling approaches: Layer 2 rollups and execution sharding
Ethereum scaling approaches: Layer 2 rollups and execution sharding

The Ethereum co-founder writes, ” It’s ok if someone can pay a million dollars to revert a record of them losing a chess game, or make one of your twitter posts look like it was published three days after it actually was. “

Buterin also notes another issue is in transferring assets between Layer 2 solutions. The developer predicts that all rollups might become more efficient and secure in the future, but for now, the mix of different rollup technologies makes asset transfers complex.

According to him, transaction speed is another factor of concern. He explains, “Ethereum has blocks every 12 seconds, and is unwilling to go much faster because that would overly centralize the network. Many L2s, however, are exploring block times of a few hundred milliseconds.”

How are Faster Transactions Possible?

Buterin underlines that Layer 2 solutions exploring faster processing times rely on preconfirmation mechanisms.

Vitalik Buterin explains that while it is possible to implement faster transaction confirmations and varying security levels directly on the main Ethereum blockchain, doing so would make the system overly complex and could overload the network. According to him, the approach also risks centralizing the network and requiring more intensive governance. Therefore, by using Layer 2 solutions, Ethereum can manage these trade-offs.

The co-founder also touches on the organizational and cultural benefits of Layer 2 solutions. By allowing developers to create independent sub-ecosystems with their own rules, Layer 2 fosters innovation and creativity.

However, this independence also brings coordination challenges, according to Buterin. Ensuring that Ethereum maintains a cohesive ecosystem despite its branching into multiple Layer 2 solutions requires better infrastructure and collaboration.

He notes, “The best I can say is that the ecosystem needs to more fully recognize that cross-L2 infrastructure is a type of Ethereum infrastructure, alongside L1 clients, dev tools, and programming languages, and should be valorized and funded as such.”

L2s Remain Necessary for Ethereum

Vitalik Buterin concludes that while both Layer 2 solutions and execution sharding aim to enhance Ethereum’s scalability, they come with different trade-offs.

Layer 2 solutions provide flexibility and foster innovation by allowing developers to create independent sub-ecosystems.

However, they can pose coordination challenges for the Ethereum network. Despite the complexities and potential risks of centralization, using Layer 2 solutions can help manage these trade-offs more effectively than incorporating all enhancements directly into the main blockchain.

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