How do layer 2 solutions address the issue of high transaction fees in the cryptocurrency market?

1 answers

• Nov 26, 2021 · 3 years ago
  Layer 2 solutions play a crucial role in addressing the issue of high transaction fees in the cryptocurrency market. They provide a way to scale the blockchain and increase transaction throughput without putting additional strain on the main network. One example of a layer 2 solution is the Lightning Network, which allows users to create off-chain payment channels. These channels enable instant and low-cost transactions between participants, without the need for every transaction to be recorded on the main blockchain. Another example is the Raiden Network, which uses state channels to achieve similar results on the Ethereum blockchain. By moving transactions off-chain, layer 2 solutions help to reduce congestion and lower transaction fees, making cryptocurrencies more accessible and practical for everyday use.
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