← Learn

03 — Crypto & Web3 · Advanced

Scaling: L1s, Rollups & L2s

CTRT Learn · Advanced · 13 min read

Early blockchains hit a wall: as they got popular, they got slow and expensive. A single Ethereum transaction could cost tens of dollars at peak. Solving this — letting blockchains serve millions of users without sacrificing what makes them special — is one of the central engineering challenges of the field. This advanced lesson explains the problem and the architectures racing to solve it.

The scalability trilemma

At the heart of blockchain design is a hard trade-off, often called the scalability trilemma: it's extremely difficult to maximise all three of decentralization, security, and scalability at once. Push for high speed and low cost (scalability), and you often sacrifice decentralization (fewer, more powerful computers can keep up) or security. The reason blockchains don't just "go faster" is that their slowness is the price of having thousands of independent computers all verify everything — which is precisely what makes them trustworthy and decentralized. Scaling is the art of getting more throughput without giving that up.

Layer 1: the base layer

A Layer 1 (L1) is a foundational blockchain that settles its own transactions and provides its own security — Bitcoin, Ethereum, Solana, and others. L1s can try to scale directly by changing their own design: bigger blocks, faster block times, or different consensus mechanisms. Some newer L1s prioritise raw speed and low cost from the start. The trade-off is usually somewhere on the trilemma — often accepting more centralization (more demanding hardware, fewer validators) in exchange for higher throughput. Comparing L1s means asking which corner of the trilemma each one chose to compromise.

Layer 2: building on top

Rather than change the secure but slow base layer, the dominant approach — especially for Ethereum — is to build a Layer 2 (L2) on top of it. An L2 handles transactions separately, off the main chain, then relies on the L1 underneath for ultimate security and settlement. The idea is elegant: do the heavy lifting fast and cheap on Layer 2, but anchor the final truth to the battle-tested Layer 1. Users get low fees and speed; the security still derives from Ethereum. This "modular" vision — a secure base layer plus many fast layers above it — is now the leading roadmap for scaling.

Rollups: the leading design

The most important L2 technology is the rollup. A rollup executes many transactions off-chain, bundles ("rolls up") hundreds of them together, and posts a single compressed summary back to the L1 — along with a guarantee that the batch is valid. Because the L1 only has to record the compressed summary rather than every individual transaction, costs drop dramatically while security is inherited from the base chain. There are two main flavours:

• Optimistic rollups — assume transactions are valid by default and allow a window to challenge fraud. Simple and widely used.
• Zero-knowledge (ZK) rollups — use the cryptographic proofs from the Privacy course to mathematically prove every batch is valid. More advanced, with faster finality and strong guarantees.

ZK rollups, in particular, connect scaling to the same zero-knowledge breakthroughs driving privacy — one reason CTRT watches the technology closely (Starknet among the networks it follows).

Other approaches

Rollups dominate, but the field is broad. Sidechains are separate blockchains connected to a main chain, with their own security. App-specific chains and "appchains" give a single application its own dedicated blockchain. Sharding splits a blockchain into parallel pieces to process transactions simultaneously. Different networks — NEAR, Sui, and others CTRT researches — make different architectural bets, and which approach wins for which use case is still being decided in real time.

Why it matters for investors

Scaling isn't just engineering trivia — it directly drives a network's usability, cost, and capacity for adoption, and therefore its potential value. A chain that's too expensive can't serve ordinary users; one that sacrifices too much decentralization undermines the whole point. When evaluating any crypto project, the scaling questions are central: How does it handle growth? What did it trade away on the trilemma? Does its architecture fit what it's trying to be? The answers separate networks built to last from those that break under their own success.

Key terms

• Scalability trilemma — the tension between decentralization, security, and scalability.
• Layer 1 (L1) — a base blockchain providing its own security.
• Layer 2 (L2) — a network built atop an L1 for speed and low cost.
• Rollup — an L2 that batches transactions and posts proofs to the L1.
• ZK rollup — a rollup using zero-knowledge proofs to verify batches.

Next course — Narratives & Valuing a Token →

CTRT Learn is general education, not financial, legal, or tax advice. Nothing here is a recommendation to buy or sell any asset. Digital assets are volatile and may result in total loss of capital. CTRT is operated by Centrente, part of the Trancent world.