User activity on Ethereum has seen slow growth due to Ethereum’s high gas fees. Users prefer to use Solana, Avalanche, Fantom as gas fees on all of these chains cost less than a dollar. Ethereum has less throughput also in comparison to other Layer 1 blockchains. On Ethereum, only 10-12 transactions get executed per second, while on other Layer 1 blockchains have the capacity of thousands of transactions per second. High Gas fees and less throughput are the two critical reasons for the slow growth of Ethereum ecosystem usage in 2021, while at the same time Layer 1 blockchains saw a major rise both in terms of users and price. Various scaling solutions can help in boosting the growth of Ethereum’s ecosystem such as State Channels, Plasma, Sidechains, and Rollups. Rollups have shown the most potential as a scaling solution out of all of these. Rollups can solve significant problems for Ethereum users, which is high gas fees and less throughput. Rollups enable transactions at low cost and have a high throughput capacity without compromising the security as settlement of all the transactions executed on rollups happens on Ethereum. Ethereum can act as a settlement layer of the Ethereum ecosystem while rollups are used as an execution layer. What are Rollups? Rollups offload computation (and state storage) from the blockchain while keeping some data for each transaction on the blockchain. They employ various advanced compression te...
