The blockchain trilemma, a concept proposed by Vitalik Buterin the creator of Ethereum, introduces decentralization, security, and scalability as three pillars of a blockchain in which developers of a blockchain network have to sacrifice one of them to accommodate the other two.

Ethereum, being one of the most decentralized and secure blockchains after Bitcoin, has seen a massive surge in its applications and user adoption which increased the cost of using the network. This in turn has created the need for scaling solutions. The main goal of scalability is to increase transaction speed with faster finality and transaction throughput without sacrificing decentralization or security. Theoretically, there are approaches to address scalability: on-chain scaling or off-chain scaling.

On-Chain Scaling

On-chain scaling addresses the matter by deploying changes directly to the Ethereum mainnet protocol, also known as Layer1. Sharding, as the main focus of this method, is the process of splitting a database horizontally to spread the load. The Ethereum network will reduce network congestion and consequently increase the transactions per second by creating new chains, known as shards.

Off-Chain Scaling

Off-chain solutions, also known as Layer2 scaling solutions, are implemented separately from layer1 mainnet and require no changes to the existing Ethereum protocol. Some solutions derive their security directly from layer 1 Ethereum consensus, such as optimistic rollups, zero-knowledge rollups, or state channels. Other solutions involve the creation of new chains in various forms that derive their security separately from Mainnet, such as sidechains or plasma chains. These solutions communicate with the mainnet but derive their security differently to obtain a variety of goals.

Sidechains

A sidechain is an independent Ethereum Virtual Machine (EVM) compatible blockchain that runs in parallel to Mainnet. It is compatible with Ethereum via two-way bridges and runs under its consensus mechanism. Polygon is an example of a sidechain scaling solution. It is an interoperable layer2 network that uses a proof of stake (PoS) consensus mechanism. Because Polygon, and other sidechain-based solutions, rely on their consensus mechanism, many argue that they are not as secure as the Ethereum network.

Rollups

Rollups are currently the preferred layer2 scaling solution for Ethereum. They execute hundreds of transactions outside of layer2 and post the final data to layer1 where the consensus is reached. This allows rollups to inherit the security of the native Ethereum blockchain and greatly reduce the transaction fees for each user.

Optimistic and zero-knowledge are the two types of rollups. Optimistic rollups are optimistic in the sense that transactions are assumed to be valid. However, if an invalid transaction is suspected, a fraud-proof is run to see if this has taken place. Zero-knowledge rollups use validity proofs where transactions are computed off-chain, and then compressed data is supplied to Ethereum Mainnet as proof of their validity. Arbitrum and Optimism are two examples of optimistic rollups.

Data

The required data for all networks were collected from the fact_blocks and fact_transactions tables of core schema of new optimism, arbitrum, polygon, and ethereum databases. Since the previous data have not been available through these databases, only the data for the last 7 days were selected to measure the quantitative indices. Also, the data were averaged on various timescales to eliminate the effects of time and equalize the parameters.

Transactions

The average number of transactions registered on the block and the number of transactions per second has been shown in the following charts. Consistent with the block size of each blockchain, Ethereum and Polygon can put the data of more transactions into each block. For Arbitrum the number is slightly above one transaction and for Optimism, it is exactly set to 1 transaction per block. Interestingly, the number of transactions per second for each of the blockchains has demonstrated that although Optimism and Arbitrum have higher transaction throughput and in theory, can handle 2k-4k transactions per second compared to Ethereum, they are far from it at the moment. Polygon also registered transactions per second almost 2 times higher than Ethereum while it is capable of handling around 65k transactions per second in theory. Overall, this data shows the dominance of Ethereum in terms of user engagement and the slow pace of layer2 solutions in increasing their adoption rate.

Blocks

The number of blocks mined or minted per minute has been plotted in the next chart. As it can be seen, Arbitrum and Optimism create much more blocks compared to Polygon and Ethereum. To further analyze this difference, the block size of each network has been determined. As it has been demonstrated in the second chart, the block size of Ethereum and Polygon is much larger compared to the rollups. This indicates that Arbitrum and Optimism were designed in a way to store fewer data in each block and send them to the Ethereum mainnet to handle the storage.

Gas Fees

The average usages of gas per block has been higher for Ethereum and Polygon as expected since they have larger blocks with greater number of transactions per each.

The average transaction fees of Ethereum are much higher compared to the other three, as expected. On average, a transaction costs around $4 on Ethereum while it's less than a dollar on others. Arbitrum has had the highest among layer2 blockchains with around 43 cents per transaction. While Polygon has had an average fee of around 2 cents, Optimism has only charged its users less than 1 cent.

User Adoption

The analysis of the daily number of unique wallet addresses that used each blockchain in the measured period has demonstrated that Ethereum has by far had the highest number of users compared to its layer2 networks. More than 200k addresses interact daily with Ethereum while Polygon has registered less than 100k addresses as the second-highest network. The adoption rate for Arbitrum and Optimism is still low for the two rollups even after 1 year since their launch.

Interestingly, each user paid around $440 for transactions on average on the Ethereum network which is an insane amount. This high value encompasses complex operations such as DeFi smart contracts or NFT sales with prices of multiple thousands of dollars. Polygon has had a $10 average per user while Optimism has accounted for an average of less than a dollar, making it a great substitute for Ethereum users.

In conclusion, the comparison of fundamental aspects of layer2 scaling solutions for the Ethereum network with the network's mainnet has demonstrated that while these solutions are much cheaper compared to Ethereum, they lack user adoption and applicability in different sectors of the crypto industry. The data has also shown that while all of the layer2 solutions aim to solve the scalability challenge of Ethereum, their approach and results are different from the others. Among all, Optimism offers the cheapest solution to Ethereum.

Objectives

In this analysis, the current state of Polygon, Arbitrum, and Optimism as different layer2 scaling solutions has been evaluated and compared with the Ethereum mainnet. The main focus had been on the fundamental aspects of these networks in terms of their capacity, transactions throughput, gas fees, and user adoption.