Off-chain solutions

Layer 2 solutions are built on top of the main blockchain infrastructure. They do not require changes to the base level protocol; rather, they exist simply as smart contracts that interact with off-chain software. We will learn about some of these solutions in the following sections.

Payment or state channels

Payment or state channels are one of the more established blockchain scalability solutions. The idea is to use side channels or chains for processing transactions off the main chain. Once transactions on the side chain are processed and the state of the channel is finalized, it is written back on the main blockchain, as shown in the following diagram:

In this way, a lot of the transaction processing...