One of the most pressing problems in cryptocurrencies is how they scale. The traditional on-chain design where every node in the network processes and validates every transaction means that transaction rate is fundamentally limited. Layer 2 is the most promising solution to this problem.
In Layer 2 protocolos, like the Lightning Network or Raiden, applications make use of payment channels and state channels to transact off chain while using the blockchain as a trust anchor. Layer 2 protocols not only help tremendously with scalibility, they also help with privacy and interoperability. But how will these Layer 2 networks take shape?
MIT Media Lab & Fidelity Labs presented a two-day event focused on Layer 2 scaling solutions. The first day was devoted to education – attendees gained exposure to different protocols being built to address the scalability issue. The second day was dedicated to development. Developers attended a one-day hackathon to build applications.