implement  some  DApps-like  functionality  on 
Bitcoin, often by building a second layer of protocols 
on top of Bitcoin. For example, by using the Bitcoin 
Lightning Network, it is possible to implement faster, 
lower-cost payment channels that are not  DApps  in 
the  traditional sense.  The  Lightning  Network is the 
earliest and most viable Layer 2 in the crypto world. 
BTC's Lightning Network does not go onto the main 
network for day-to-day transactions, thus saving on 
costly  Gas,  and  if  both  parties  believe  they  will no 
longer be able to transact, they can send a message to 
the main network to make the transaction. When they 
believe they will no longer trade, they can initiate a 
withdrawal command to the mainnet, the signature of 
which proves to the BTC mainnet the authenticity of 
a series of transactions between the two parties off the 
mainnet. 
Lightning Network (LN) is a layer-2 protocol that 
enables fast Bitcoin transaction processing. However, 
it only works well for peer-to-peer micro-payments, 
namely, small-amount payments between individual 
parties.  Wang  et  al.  (2023)  propose  an  LN-based 
framework  for  both  peer-to-peer  and  customer-to-
business  payments,  the  Business-oriented  Layer-2 
Network  (BLN).  With  BLN,  Bitcoin  transaction 
processing  scales  much  better.  Their  experimental 
results indicate that BLN outperforms LN in terms of 
transaction  failure  rate,  transaction  fee,  and 
processing time. 
The  2021  Bitcoin  Taproot  upgrade  introduced 
Schnorr  signatures  (Schnorr  1991,  Maxwell  2019, 
Cragg et al. 2015)  and MAST contracts (Kim et al. 
2018),  enhancing  Bitcoin's  cross-chain 
decentralization.  Schnorr  signatures,  more  efficient 
than elliptic curve signatures, enable clustering of up 
to  1,000  addresses  to  manage  the  same  asset, 
improving  privacy  and  reducing  data  load.  This 
breakthrough surpasses Bitcoin's previous 15 re-multi 
signature  limit,  allowing  for  fully  decentralized 
signature  management.  MAST  contracts,  using 
Merkle  trees,  encrypt  complex  scripts  whose 
components don't overlap. These contracts, similar to 
smart  contracts,  require  only  relevant  script 
disclosure for transactions, simplifying and securing 
operations. 
2.3  ETH Layer 2 Solutions  
Unlike Bitcoin, which focuses on its role as a digital 
gold  and  store  of  value  and  adopts  a  more 
conservative upgrade strategy to ensure the stability 
and security of the network,  Ethereum has an active 
community  of  developers,  with  several  developers 
who  can  build  a  variety  of  complex  decentralized 
applications on it and experiment with and research 
Layer  2  solutions,  scaling  technologies.  Ethernet 
adopts a flexible scaling mechanism, which provides 
more  opportunities  for  Ethernet  to  realize  Layer  2, 
thus  realizing  the  vision  of  higher  throughput  and 
lower  transaction  costs.  Ethernet's  Layer  2  solution 
utilizes  a  variety  of  technologies,  some  of  the 
common  ones  include  Optimistic  Rollup,  zk-rollup, 
Plasma, State Channels, Sidechains and others. 
Optimistic  Rollup  and  ZK-Rollup  are  two 
blockchain  scaling  technologies  that  both  aim  to 
improve  the  throughput  and  scalability  of  the 
blockchain,  but  differ  in  their  implementation 
methods  and  characteristics.  Optimistic  Rollup 
implements a sidechain on the Ethereum blockchain 
that assumes all transactions are valid unless proven 
wrong.  This  hypothetical  verification  approach 
reduces  the  need  for  immediate  computation  and 
allows  for  higher  throughput.  The  advantages  are 
higher  throughput  and  good  compatibility  with 
Ethereum.  Because  of  the  optimistic  assumption,  it 
can process more transactions. Easy integration with 
the existing Ethereum ecosystem and smart contracts. 
Depends on the security of the Ethereum main chain. 
The downside is that if fraud occurs, it takes a while 
to submit and confirm proof of fraud, which can lead 
to delays and additional transaction costs. And need 
to rely on the main chain to ensure the availability of 
data. 
ZK-Rollup uses Zero-Knowledge Proofs to prove 
the validity of all sidechain transactions, rather than 
assuming they are valid, as Optimistic  Rollup does. 
This means that every transaction needs to be verified 
in  real-time.  It  offers  instant  transaction  final 
certainty,  higher  security,  and  data  availability. 
Thanks  to  the  use  of  zero-knowledge  proof, 
transactions can be determined quickly without a long 
window  of  challenge.  Zero-knowledge  proofs 
provide  strong  security.  Since  every  transaction  is 
verified,  data  availability  is  guaranteed.  The 
disadvantage is that the calculation needs are high and 
there  are  compatibility  problems.  Generating  zero-
knowledge  proofs  requires  a  lot  of  computing 
resources.  Integration  with  existing  smart  contracts 
and the Ethereum ecosystem is more  complex. The 
cost  of  developing  and  deploying  ZK-Rollup 
technology is relatively high. 
Optimism,  Arbitrum,  Scroll,  StarkNet,  Polygon 
zkEVM,  zkSync  Era,  Blast,  Linea,  Manta  Pacific, 
Metis, zkFair, Ola, and Lumoz (formerly opside) are 
all  Layer  2  extension  solutions.  This  is  mainly 
achieved by using Optimistic Rollups or ZK-Rollups 
technology.