With the ever-increasing volume of transactions on the Ethereum blockchain, scalability has become an important factor for many blockchain projects. Layer-2 solutions have become increasingly popular in the Ethereum space as a result because they provide a scaling solution, allowing users to transact faster and with lower fees.
This article will compare the benefits of three of Ethereum’s most popular Layer-2 solutions: Polygon, Arbitrum and Optimism. But, first, let’s take a closer look at the features and advantages of each of these solutions.
Overview of Layer-2 Solutions
Layer-2 solutions, such as Polygon (formerly Matic Network), Arbitrum and Optimism, are designed to allow transactions to be sent off Ethereum’s main chain. These Layer-2 solutions utilise side chains that are connected to the main chain through a process known as “plasma”. This technology allows for faster and more cost-effective transactions than those processed on Ethereum’s main chain.
Polygon is a Layer-2 solution built on Plasma that cheaply provides near instant transactions. It offers many benefits such as speed, scalability, and enterprise ready product solutions for businesses interested in implementing solutions quickly. Aside from scalability, Polygon’s architecture also affords additional security benefits due to its utilisation of staking mechanisms.
Arbitrum is another layer-2 scaling solution helping decentralised applications scale while ensuring funds remain secure using cryptographic proofs. The key features that Arbitrum offers include increased scalability (up to 10,000 tps), affordable transaction costs with high transaction finality guarantees on their own layer 2 network backed by randomly chosen validators across the globe and an open source development community actively contributing towards creating an efficient layer 2 scaling solution using Truebit staking protocol with simplified incentives structures.
Optimism is a layer-2 Ethereum network developed by a well-known team of developers that uses zkSNARK technology combined with plasma networks, thus providing users fast settlement times without compromising on security or privacy concerns. Optimism has many unique features including Optimistic Rollups for handling large numbers of complex smart contracts, web3 support for dapps like Uniswap running on Optimism and gas abstraction allowing users access any dapp running on this tech platform almost free from any expensive gas fees associated with running these smart contracts.
Polygon
Polygon is a network of Ethereum-compatible blockchain networks and tools, which is a Layer-2 solution that is designed to increase the scalability of Ethereum blockchain. Polygon combines several scaling solutions, with a module-based structure that allows developers to choose the appropriate solution for their problems.
This article will compare Polygon with two other Layer-2 solutions: Arbitrum and Optimism.
Overview
Polygon is an interoperable layer 2 protocol that sits atop the Ethereum blockchain and leverages infrastructure such as Plasma and Optimistic Rollup to operate. It enables high-scalability and instant transactions, achieving speeds of up to 65,000 transactions per second. In addition, Polygon keeps data off-chain, in optimised state parts, allowing for more secure, efficient, and even permissionless (L1) access.
As a platform Polygon enables developers to build their own chains from scratch with custom logic that can hook into Ethereum’s singleton layer 1 for final transactions settlement if needed. These Permissioned or Permissionless stand alone chains are connected to Ethereum via bridges enabling simple token transfers between them.
Polygon is compatible with popular existing layer 2 protocols like Arbitrum and Optimism. They have also developed their custom platforms but are somewhat limited in versatility compared to Polygon’s architecture. With embedded native support of Solidity contracts (the main programming language used in the space) on Polygon along with additional services such as tokenized coins and incentives like gas-free transactions, it facilitates effortless cross-chain interactions thus making polygon a better choice for developers looking for ease of use while building applications that interact across multiple blockchains.
Benefits
Polygon, Arbitrum and Optimism allow users to enjoy many benefits when building decentralised applications (dApps) and exchanges. For example, users can access increased scalability, transaction speeds and better security.
Polygon offers developers the ability to quickly build and launch their projects with minimal cost. Polygon is an easy-to-use platform that allows developers to quickly deploy dApps, creating products from scratch without worrying about all the complexities of constructing a blockchain from the ground up. It provides user-friendly tools, payment methods and other features which make it incredibly simple for developers of any experience level, to create dApps with relative ease.
Arbitrum allows developers the ability to deploy highly secure smart contracts, while providing strong transaction finality assurances. In addition, Arbitrum sidesteps some of Ethereum’s blockchain congestion issues by allowing users multiple rollback options if something goes wrong when executing their transactions or programs. This means that users can reverse potentially damaging transactions without waiting for block confirmation time like on Ethereum due to its multi-chain architecture.
Optimism provides users with all the advantages of a proof of stake network, such as near instantaneous transactions times and high throughput capability for a fraction of energy consumption necessary for competing networks like Ethereum (PoW) networks require. This could provide huge economic incentive for the adoption across enterprises due its low cost per transaction making it much more efficient in terms of savings when compared against established protocols like Ethereum’s traditional proof-of-work system which requires large amounts of computing power in order transact securely on its blockchain which ultimately leads higher operational costs associated with spending redundant electricity in order average out potential 51% attacks through miners profit margins by charging increasing fees therefore making Optimism much more attractive alternative choice as opposed traditional PoWs based on consensus systems since POSs don’t require large amounts computational power currently associated PoWs consensus systems since they are built only achieve finality & not written into stone already compute expensive work before submitting within an extent therefore cutting cost per transaction & making overall dApp infrastructure much more usable eliminating redundant costs miners used reap reward less steeped fees preventing networks becoming stagnant over time & helping increase throughput improving overall user experience beyond theoretical limits since shifting away cumbersome PoW system via using POS consensus protocol allows network steadily become exponentially faster cheaper once implemented well utilised.
Drawbacks
When considering the differences between Polygon, Arbitrum and Optimism, it’s important to consider the drawbacks of each technology.
Polygon has a few major drawbacks:
- It can be difficult for developers to understand how the underlying infrastructure works and if they don’t understand this completely, it could lead to issues when developing for Polygon.
- There are security concerns due to its low level nature.
- The code generation process can be difficult because of its low level nature and lack of tooling support.
Arbitrum also has some drawbacks that may discourage development teams from using it. It is particularly expensive to use and requires additional infrastructure setup in order to do so properly. Additionally, developers must write their smart contracts in Solidity, which limits their flexibility compared to other technologies like Optimism and Ethereum 2.0’s Simplicity-based solutions.
Optimism too has drawbacks that developers must consider before deciding which technology to use for development activities. These mainly consist of limited scalability when compared with other solutions such as Ethereum 2.0 or Arbitrum; as well as lacking community wide adoption by major players such as Micropayment networks or exchanges due to its perceived technical complexity in comparison with Ethereum 1.0 or other platforms that have longer histories behind them such as Bitcoin or RippleNet networks.
Arbitrum
Arbitrum is an Ethereum-based Layer-2 scaling solution created to reduce the cost and increase the speed of transactions on the network. It works by creating a “sidechain” that’s run by a combination of Ethereum and Optimism.
In this section, we will compare Arbitrum to Polygon and Optimism to see the best Layer-2 scaling solution.
Overview
Arbitrum is an innovative blockchain-based protocol developed by Optimism that has the potential to revolutionise scalability, security, and privacy on Ethereum. The protocol leverages Polygon’s infrastructure for high throughput and inexpensive transaction costs. This makes Arbitrum particularly attractive for decentralised finance (DeFi) applications and dapps with high throughput requirements.
At the core of Arbitrum’s power lies its innovation in consensus. Instead of relying on a traditional Nakamoto-style proof-of-work (PoW) or a proof-of-stake (PoS) mechanism, Arbitrum uses an optimistic rollup on its chain. This chain orchestration involves transferring transactions off-chain and onto a single shared “rollup chain,” significantly improving scalability and reducing transaction fees. In addition, optimism provides sharding technology, further increasing throughput while preserving security. As a result, all transactions are final and cryptographically secure, making arbitrum an ideal platform for securely conducting financial transactions without compromising privacy or speed.
Arbitrum also ensures users have full control over their data by storing private keys locally rather than on the main Ethereum chain. This allows users to store their funds securely without relying on custodial accounts or trusting their wallets with third parties. Additionally, because it does not require intensive computing resources, such as those necessitated by PoW networks, users can participate more freely regardless of their hardware configuration or geographic location.
Benefits
Arbitrum is a flexible second-layer Ethereum scaling solution designed to achieve transaction finality in a fraction of the time required for a base layer Ethereum transaction. It has been built with scale, security, usability and compliance in mind. Here are some of its key benefits:
-Improved Performance: Through its unique approach to Layer 2 scaling, Arbitrum’s latency is significantly lower than previous Layer 2 solutions, allowing for transactions to be processed more quickly and securely.
-Cost Efficiency: Arbitrum’s efficient gas usage enables users to pay far less fees for transactions than a base layer Ethereum transaction would cost.
-Versatility & Customization: Arbitrum allows for different subsets of validators that can be willing or unwilling participants to customise the implementation, incentivize based on usage or stake within the network framework.
-Security & Compliance Controls: Its signature verification system has been designed with audits, ongoing support and compliance best practices in mind. It passes common security analyses like static taint analysis inherent to the Dispute Engine implementation meaning it can be successfully integrated into different consortiums and enterprises without sacrificing security measures.
Drawbacks
Arbitrum has several advantages over other blockchain solutions such as Polygon, Optimism and Ethereum, but it also has a few drawbacks that must be considered.
One of the major drawbacks of Arbitrum is its lack of decentralisation. As with all Layer 2 solutions, there is some level of trust in the validity of data stored in the underlying layer 1 blockchain and the validators responsible for running it. This means that if someone could gain control over Arbitrum’s validator set or Layer 1 blockchain they could adversely affect the data stored on or computed by Arbitrum. This could lead to malicious actors attempting to censor certain transactions or alter their results.
In addition, though Arbitrums smart contracts are more secure than their Ethereum counterparts due to advanced formal verification techniques, developers still need to be diligent about coding constraints into their contracts and may face difficulty in debugging them due to the complex programming layers associated with Arbitrums Rollup structure.
Lastly, another potential drawback is that development on any platform that deviates from Ethereum’s standard protocol can be time consuming and require specialised expertise which may not be widely available at this time.
Optimism
As the Ethereum blockchain grows in capabilities, layer-2 solutions are becoming increasingly popular with developers. This is because they offer a way to interact with Ethereum more quickly and efficiently. Three of the most popular layer-2 solutions are Polygon, Arbitrum and Optimism.
This section will focus on Optimism, its features, benefits and drawbacks.
Overview
Polygon, Arbitrum and Optimism are three different Layer 2 scaling solutions for Ethereum, each with distinct features and approaches.
Polygon is a full-stack scaling framework that utilises the Plasma Model and bridges to give developers quick access to Ethereum’s mainnet capabilities. Arbitrum is a Layer 2 scalability solution based on Truebit technology. It allows developers to trustlessly scale their dApps by moving functions off-chain while ensuring data integrity on-chain. Finally, optimism is a rollup solution that focuses on making a cheap, fast, scalable and secure second layer for Ethereum. It is designed specifically to take advantage of optimistic rollup technology to achieve high throughput at low cost.
All three of these technologies are focused on increasing the scalability of the Ethereum network while ensuring security and compliance standards are met.
Benefits
The benefits of using the Polygon, Arbitrum and Optimism platforms are widespread. All three platforms offer several advantages:
1. Cost Savings: These three platforms offer savings in transaction costs compared to traditional Ethereum and other layer two protocols. As an example, Polygon’s Layer 2 Plasma Chain transactions are approximately 100 times cheaper than Ethereum mainnet transactions, whereas Arbitrum and Optimism’s ZK-Rollups can offer even more dramatic cost discounts.
2. Scalability: All the platforms above boast superfast transaction throughput speeds. Whereas the traditional Ethereum network processes at best 15 transactions per second, Polygon’s Matic network is capable of processing upwards of 7,000-10,000 TPS, Arbitrum processes around 1,000 TPS and Optimism can process up to 100 TPS.
3. Enhanced Security: These networks leverage cutting edge security mechanisms such as zk-SNARKs (Zero Knowledge Succinct Non-Interactive Arguments of Knowledge) developed by Secure Multi-Party Computation (MPC) to ensure users’ transaction privacy is maintained while still maintaining certain key security guarantees that ensure their funds will remain safe even if the platform were attacked by malicious actors who may try to exploit any potential bugs in the system’s codebase. Tools like Chainlink’s decentralised oracles also provide security against price manipulators by ensuring reliable pricing feeds for derivatives contracts on the Polygon platform.
4. Modes of Interoperability: The networks support both peg zones and contract bridges which help Link decentralised exchanges (DEXs) interact with multiple chains without losing assets liquidity between chains or ecosystems allowing for increased interoperability and enhanced user experience (UX).
Drawbacks
While Polygon and Arbitrum are great options for developers, they have some drawbacks. Some of the limitations associated with Polygon include a steep learning curve with their Plasm Network, and the fact that decentralisation is limited to their Polygon network. Additionally, Arbitrum has its own set of challenges, including limited scalability and complex development for Ethereum dApps.
Optimism aims to address these limitations and provide a more efficient blockchain infrastructure. In addition, optimism provides a secure, reliable and cost-effective solution – all while working within the bounds of Ethereum’s existing infrastructure. That being said, there are still some drawbacks to using Optimism that users should be aware of.
The biggest drawback to using Optimism is that it requires a user to pay for network fees for transactions on the chain. This can add a layer of cost when developers are trying to get their dApps up and running on the platform. Additionally, due to its nascent architecture there can be slower-than-expected transaction processing times as well as higher gas costs relative to other blockchains such as Ethereum or Cardano. As with any new technology implementation, users should use caution until more research has been done around long-term impact on transaction speeds and costs relative to other blockchains.
Polygon vs Arbitrum vs Optimism – Comparing Ethereum’s Layer-2 Solutions
Evaluating different layer-2 solutions on the Ethereum blockchain is a daunting task as there are numerous competitors competing for dominance. We will focus on three main competitors: Polygon, Arbitrum and Optimism.
Their structures, features and capabilities are different; we will go through each and compare their pros and cons. We will also take a look at the performance of each of the platforms.
Speed
Regarding blockchain technology, speed is a major factor in determining the success of a platform. While blockchains rely on consensus mechanisms to maintain an immutable ledger and agree on the state of data at any given point in time, processing these transactions quickly is paramount to delivering a useful system that users can rely upon.
The three platforms differ significantly when it comes to speed and scalability. Polygon has an infrastructure built on Ethereum that allows for incredibly fast transaction speeds due to its native side chains. Polygon can process up to 65,000 TPS with minimal latency compared to Ethereum’s 12–18 TPS. Meanwhile, Arbitrum has its own consensus mechanism that allows for up to 20,000 TPS and Optimism has also built its own consensus protocol enabling up to 1750 TPS with minimal latency.
While all three platforms have made substantial strides in improving blockchain technology, they all have pros and cons regarding speed and scalability depending on their specific use cases. For example, Optimism may be preferable in low-traffic applications such as DeFi financial contracts due its high throughput within a limited timeframe while Polygon might be better suited for large-scale applications such as games which require much higher throughputs overall during peak times.
Security
The security of a blockchain solution is of utmost importance, especially in financial applications. Polygon, Arbitrum and Optimism stand out for their strong focus on security.
Polygon has been through various security audits from independent firms focused on identifying and mitigating vulnerabilities found in the platform. It also has an active bug bounty program where developers can join to identify and report security flaws, offering rewards from $100 to $15,000 per bug.
Arbitrum is designed as a self-governing ‘Chain’ based on Proof-of-Stake consensus approach for secure transactions. It uses strong cryptography and asymmetric keys to secure authentication and authorization over multiple transactions.
Optimism provides a secure infrastructure to enable scalable built-in DeFi solutions that supports Ethereum and Bitcoin transactions with high fidelity, privacy and trustless execution. In addition, its commitment to compliance standards contributes to its robust safety measures while staying compliant with new regulations such as GDPR or CCPA requirements.
Cost
When comparing the cost among Polygon, Arbitrum and Optimism, both Arbitrum and Optimism have free pricing for developers building applications on the platform. On the other hand, Polygon’s pricing model is divided into two plans: Free and Dynamic. The free plan is limited to 10 transactions per second and 2 million transactions per month.
The dynamic plan is based on usage and could be costly depending on the traffic demands of your application.