Unpacking NEAR and Ethereum’s contrasting approaches to blockchain scalability

The landscape of blockchain scalability has evolved significantly in recent years, with Layer-2s (L2s) and sharding emerging as the two dominant approaches.

Ethereum, a key player in the crypto industry, has adopted rollup-centric L2s to scale its network, while NEAR protocol has taken a different path, choosing to scale via sharding. Both strategies offer unique solutions to blockchain scalability, but they also present their distinctive challenges.

Ethereum’s Layer 2s: A Rollup-Centric Approach

NEARWEEK, a NEAR protocol publication, commended Ethereum for garnering considerable attention for its innovative rollup-centric scaling strategy. An L2 protocol is built atop an existing blockchain to enhance scalability, throughput, and privacy. This is achieved by executing state transitions off-chain from the Layer-1 (L1) they’re built upon and committing state roots and transactional data to the underlying L1.

NEAR sees the driving philosophy behind rollups as the belief that a rollup can outperform the underlying L1 in terms of throughput due to decreased consensus overhead. However, in practice, NEAR believes the overall scaling achieved by rollups collectively has been somewhat disappointing, barely surpassing what a single rollup can offer.

However, data from L2 analysis platform L2Beat offers a contrasting view due to increased L2 activity over the past year, as shown in the chart below.

Further, reviewing the top 10 Ethereum L2s shows Arbitrum One and zkSync Era closing in on Ethereum’s monthly transaction count. Additionally, Immutable X and Arbitrum Nova have surpassed Ethereum’s growth in average transactions per second (TPS) over seven days. Notably, Ethereum had a higher active TPS than any L2 scaling solution on the network on July 3.