Avalanche L1s vs Layer 2

Layer 2 blockchain solutions, such as rollups, are another innovation in the blockchain landscape. Layer 2s aim to enhance the scalability and performance of the Ethereum network. Rollups essentially perform computations off-chain and submit the resultant state changes to the base layer, thereby reducing the computational load on the main Ethereum chain.

While both Avalanche Custom Blockchains and Layer 2 rollups strive to improve blockchain scalability and performance, they use different methods and each have their unique advantages and trade-offs.

Decentralization and Security

Avalanche Custom Blockchains are part of the base layer itself. Each blockchain in Avalanche maintains its security, hence a compromise in one blockchain doesn't necessarily impact the others. On the other hand, rollups delegate security to the Ethereum mainnet. As long as the mainnet remains secure, so does the Layer 2 solution, given the rollup performs properly. However, a security breach on the mainnet can potentially affect all Layer 2 solutions.

Interoperability and Flexibility

Avalanche's multi-chain structure offers great interoperability and flexibility, as each custom blockchain network can define its own rules and validate multiple blockchains of different virtual machines. This means Avalanche can cater to a vast array of use cases. Conversely, Layer 2 solutions are primarily designed to augment the Ethereum mainnet and might not offer the same flexibility.

Performance and Cost

Both approaches aim to offer higher transaction throughput and lower fees compared to traditional single-chain systems. Avalanche achieves this through parallel processing across its Avalanche L1s, while rollups offload computation off-chain. However, users of Layer 2 solutions might experience delays when transferring assets back to Layer 1. Furthermore, since Layer 2 systems need to checkpoint their activity to the L1, which effectively sets a price floor and couples the prices of the L1 gas token to the L2 gas token. In Avalanche, the gas tokens of an Avalanche L1 are completely independent from AVAX.