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1. Transaction Throughput Transaction throughput is a key metric of scalability, often measured in
   transactions per second (TPS). Traditional Layer 1 blockchains like Bitcoin and Ethereum face low TPS
   during periods of high demand, leading to transaction delays and high fees. This drives the need for
   higher throughput and faster transaction processing.
2. Transaction Confirmation Time Transaction confirmation time refers to the time required for a transaction
   to be submitted, verified by the network, and added to the blockchain. On low-scalability networks,
   confirmation times can increase significantly as the number of users and transactions grows, negatively
   affecting the user experience, especially in time-sensitive financial transactions.
3. Decentralization and Security Scalability often conflicts with decentralization and security, forming the
   blockchain trilemma, where it's challenging to achieve scalability without sacrificing either decentralization
   or security. The more decentralized a network, the more nodes need to participate in consensus, which
   can slow down transaction processing. Achieving higher scalability requires blockchain projects to balance these three aspects.
4. Fee Management As transaction volumes increase on blockchain networks, transaction fees (also known
   as gas fees) tend to rise, particularly during periods of network congestion. High fees can negatively affect
   the user experience, especially in DeFi applications. By improving scalability, blockchain networks can reduce
   congestion and lower user transaction costs.

1. On-chain Scaling Solutions On-chain scaling, also known as Layer 1 scaling, focuses on optimizing
   the blockchain protocol itself to improve scalability. Common on-chain solutions include:
   1. Consensus Mechanism Optimization: Introducing more efficient consensus algorithms, such as transitioning
      from Proof of Work (PoW) to Proof of Stake (PoS), reduces the network's computational load and energy
      consumption while speeding up transaction validation. For example, Ethereum is transitioning to PoS
      to improve its transaction processing capacity and energy efficiency.
   2. Sharding: Sharding divides the blockchain network into smaller units (called "shards") that process transactions
      in parallel. This significantly increases the network’s capacity for processing multiple transactions simultaneously, i
      mproving throughput. Sharding is a key solution in Ethereum 2.0 to enhance its scalability.
2. Off-chain Scaling Solutions Off-chain scaling, also known as Layer 2 scaling, reduces the load on the main blockchain
   by processing transactions off-chain, thus improving scalability. Common off-chain solutions include:
   1. State Channels: State channels allow users to conduct multiple transactions off-chain, with only the final result submitted
      to the blockchain. Bitcoin’s Lightning Network and Ethereum’s Raiden Network are examples of state channel solutions.
   2. Rollups: Rollups bundle multiple off-chain transactions and submit them to the Layer 1 blockchain, reducing the number
      of on-chain transactions. They come in two main forms: Optimistic Rollups and ZK Rollups, which are critical solutions
      in the Ethereum ecosystem for enhancing scalability.
   3. Sidechains: Sidechains are independent blockchains that process transactions off the main chain while allowing assets
      to be transferred between the two. Polygon and xDai are well-known sidechain solutions that help alleviate congestion
      on Ethereum and improve transaction speed and scalability.

1. Enabling Large-scale Applications A blockchain's scalability determines its ability to support large-scale applications.
   As DeFi, NFTs, and dApps become more widespread, networks face increasing demands for high transaction throughput
   and low latency. Improving scalability enables blockchain platforms to handle these high-traffic applications and support
   millions of simultaneous users.
2. Improving User Experience By improving network scalability, users can enjoy faster transaction speeds, lower fees, and
   a smoother experience. This is especially important for high-frequency applications like DeFi. Without adequate scalability,
   users may face delays, congestion, and high fees, limiting blockchain adoption.
3. Reducing Network Costs By introducing more efficient scaling solutions, blockchain networks can lower overall costs,
   particularly transaction fees. This is crucial for growing use cases such as DeFi and NFTs. By reducing the number of on-chain
   transactions, users can experience faster transactions without paying high fees.
4. Enhancing Network Sustainability Improving scalability is also essential for the long-term sustainability of blockchain
   networks. Increasing efficiency, reducing energy consumption, and optimizing resource usage all contribute to building
   a more environmentally friendly blockchain ecosystem. This is particularly relevant for projects like Ethereum, which face
   scrutiny over energy usage.

HashKey Global Team

1. Consensus Mechanism Layer 1 blockchains use consensus mechanisms to maintain network security
   and decentralization. Common consensus mechanisms include Proof of Work (PoW) and Proof of Stake (PoS),
   which ensure that participants agree on the validity of transactions and data on the blockchain, preventing
   malicious actions or attacks. For example, Bitcoin uses the PoW mechanism, where miners compete to
   solve complex mathematical problems and generate new blocks, while Ethereum is transitioning to a PoS
   mechanism, where participants stake Ether (ETH) to achieve decentralized consensus.
2. Security Layer 1 blockchains provide high levels of security through their consensus mechanisms and
   decentralized architecture. Every node verifies and records transactions, preventing tampering and
   double-spending attacks. This decentralized design ensures that Layer 1 blockchains operate independently
   of centralized control, protecting the network from various threats and attacks.
3. Decentralization At the core of Layer 1 is decentralization, as it relies on no single entity for control.
   With a globally distributed network of nodes, Layer 1 blockchains guarantee transparency and censorship
   resistance for transactions and data. Anyone can participate in the network, laying a strong foundation for
   decentralized finance (DeFi) and decentralized applications (dApps).
4. Scalability Challenges While Layer 1 blockchains offer strong security and decentralization, they often face
   scalability issues when processing a large number of transactions. Bitcoin and Ethereum, for example, have
   relatively slow transaction speeds, limiting their use in high-frequency transaction environments. This challenge
   is driving the development of Layer 2 solutions and blockchain upgrades (such as Ethereum 2.0) aimed at
   improving transaction speed and throughput through techniques like sharding and off-chain solutions.

1. Bitcoin (BTC) Bitcoin is the first and most iconic Layer 1 blockchain. Through its Proof of Work (PoW) mechanism
   and highly decentralized network, Bitcoin ensures the security and transparency of transactions. As a decentralized
   digital currency, Bitcoin offers global value storage and transfer functions, and its network's security and decentralization
   have set a benchmark in the blockchain industry. You can participate in Bitcoin trading on the HashKey Global Bitcoin trading page
   to explore Bitcoin’s role as a Layer 1 blockchain in the global financial system.
2. Ethereum (ETH) Ethereum is another leading Layer 1 blockchain, offering not only digital currency transfers but
   also supporting smart contracts and decentralized applications (dApps) development and operation. Ethereum’s
   network is continuously upgraded (with the transition to Ethereum 2.0) to improve performance, adopting a Proof of Stake (PoS)
   mechanism to enhance scalability and security. You can engage in Ethereum trading on the HashKey Global Ethereum trading page
   to explore how Ethereum as a Layer 1 blockchain drives the development of decentralized finance (DeFi) and decentralized applications.
3. Polkadot (DOT) Polkadot is a Layer 1 blockchain focused on cross-chain interoperability. Through its innovative Relay Chain
   technology, Polkadot connects multiple blockchains and allows them to share data and assets. Polkadot uses a Proof of Stake (PoS)
   consensus mechanism and enhances scalability through parachains, enabling cross-chain communication and collaboration
   between different blockchains. Polkadot’s Layer 1 design not only prioritizes its own security and decentralization but also
   provides strong interoperability for other blockchains.
4. Solana (SOL) Solana is a high-performance Layer 1 blockchain designed to provide low latency and high throughput
   transaction processing. Solana uses a combination of Proof of History (PoH) and Proof of Stake (PoS) consensus mechanisms,
   allowing it to process thousands of transactions per second. It is well-suited for the rapid growth of decentralized finance (DeFi)
   and decentralized applications (dApps). Solana’s design focuses on solving scalability challenges in Layer 1 blockchains, offering
   developers an efficient, low-cost decentralized platform.

1. Foundation of the Blockchain Ecosystem Layer 1 blockchains are the foundation of the entire blockchain ecosystem, providing
   the security and consensus mechanisms for various decentralized applications and Layer 2 solutions. Whether it’s smart contracts,
   dApps, or Layer 2 scalability solutions, Layer 1’s underlying design determines the performance and security of the upper-layer
   functionalities.
2. Balancing Security and Decentralization Layer 1 blockchains ensure data security and censorship resistance through decentralized
   networks. Their decentralized architecture makes it costly to attack Layer 1 networks, allowing them to withstand large-scale attacks
   and malicious activities, ensuring the stability and long-term security of the network.
3. Addressing Scalability Challenges While Layer 1 blockchains excel in security and decentralization, they often have limited transaction
   processing capacity. To address these challenges, the blockchain community is exploring various scaling solutions, including Layer 2,
   off-chain solutions, and sharding technologies, to enhance the performance of Layer 1 and meet global demands.

HashKey Global Team

1. Scalability Enhancement The primary function of Layer 2 solutions is to improve the scalability of blockchain networks.
   By moving a large portion of transaction processing off-chain, Layer 2 significantly reduces the load on Layer 1, thereby i
   ncreasing transaction throughput. Rollups on the Ethereum network are a prime example of a Layer 2 solution, where off-chain
   transactions are bundled and compressed before being submitted to the main chain, reducing fees and increasing efficiency.
2. Reduced Transaction Costs Another key advantage of Layer 2 is the reduction in transaction costs by decreasing the number
   of transactions processed on the main chain. During periods of high transaction volume, transaction fees on Layer 1 can rise significantly,
   affecting user experience. Layer 2 solutions help mitigate this issue, particularly in DeFi applications, where many micro-transactions
   can be handled through Layer 2 at a lower cost.
3. Maintaining Decentralization and Security While Layer 2 processes many transactions off-chain, its security still relies on the
   consensus mechanism and decentralized architecture of Layer 1 blockchains. By interacting with Layer 1 periodically, Layer 2
   ensures the finality and trustworthiness of all transaction data. For example, State Channels allow users to conduct multiple
   transactions off-chain, with only the final state being settled on-chain, improving efficiency while maintaining security.
4. Supporting Smart Contracts and dApps Layer 2 not only improves the transaction performance of the base layer but also
   provides greater scalability for smart contracts and decentralized applications (dApps). With Layer 2, dApp developers can
   deploy complex applications without sacrificing user experience, while still preserving the decentralized nature of the network.

1. State Channels State Channels are a Layer 2 technology that allows two or more participants to conduct multiple transactions off-chain,
   with only the final state being submitted to the main chain. This reduces the number of on-chain transactions, speeding up the process
   and lowering costs. Bitcoin’s Lightning Network and Ethereum’s Raiden Network are both examples of Layer 2 solutions based on State
   Channels. You can participate in Bitcoin trading on the HashKey Global Bitcoin trading page to explore how the Lightning Network helps
   improve Bitcoin’s transaction speed and scalability.
2. Sidechains Sidechains are independent blockchains that operate alongside the main chain and can interact with the Layer 1 main chain,
   allowing users to transfer assets between the two. Sidechains have their own consensus mechanisms and validators, allowing them to process
   transactions independently while typically relying on the main chain for security. xDai and Polygon (formerly Matic) on Ethereum are well-known
   sidechain solutions that help alleviate network congestion. You can engage in Ethereum trading on the HashKey Global Ethereum trading page to
   explore how Polygon uses sidechain technology to enhance Ethereum’s scalability.
3. Rollups Rollups are one of the most widely adopted Layer 2 scalability solutions in the Ethereum community. They bundle off-chain transactions
   and submit them to the Layer 1 blockchain, reducing the number of on-chain transactions. Rollups come in two main forms: Optimistic Rollups
   and ZK Rollups. Optimistic Rollups assume transactions are valid and only verify them if a problem is detected, while ZK Rollups use zero-knowledge
   proofs to ensure transaction validity. Rollups significantly improve transaction processing capacity and efficiency, serving as a key scaling tool for
   the Ethereum 2.0 ecosystem.

1. Improving User Experience Layer 2 solutions dramatically improve the user experience on blockchain networks by increasing transaction
   speeds and lowering fees. Whether for DeFi transactions or dApp usage, users can enjoy a faster and smoother experience without paying
   the high fees associated with Layer 1 transactions.
2. Supporting Large-scale Applications Layer 2’s scalability allows blockchain networks to support larger-scale decentralized applications.
   For example, the large volume of transactions in DeFi and NFT markets can be processed on Layer 2, helping to prevent congestion on Layer 1.
   This scalability is critical to the mainstream adoption of blockchain technology.
3. Reducing Pressure on the Main Chain By offloading a significant number of transactions to Layer 2, congestion on the main chain is alleviated,
   improving the overall performance of Layer 1. For widely used Layer 1 networks like Bitcoin and Ethereum, Layer 2 solutions provide an ideal way
   to address scalability issues while ensuring that they continue to support global decentralized applications and transactions.
4. Enhancing Network Efficiency and Sustainability As Layer 2 technologies evolve, the efficiency of blockchain networks has significantly improved.
   By reducing the computational and storage resources required, Layer 2 not only optimizes transaction speed but also lays the foundation for a more
   environmentally friendly and sustainable blockchain ecosystem.