Scalability has always been a big concern for blockchain protocols. However, a range of powerful solutions have emerged to tackle the scalability issues of blockchain protocols. Layer-2 solutions and Avalanche L1s (Formerly known as Subnets) are the widely popular solutions for improving scalability while offering additional benefits such as a greater degree of security, composability, and interoperability. 

Let’s dive deeper into the Avalanche L1 (Formerly known as Subnets) vs Layer2 solution to understand their viability for web3 projects. 

Understanding Avalanche L1s and Layer-2 solution

Avalanche L1s:

Avalanche L1s (Formerly known as Subnets) is basically an appchain solution for enabling the development of sovereign, dApp-specific blockchain networks that are interconnected, allowing the whole Avalanche ecosystem to scale endlessly while offering inter-L1s (Formerly known as Subnets) Interoperability. L1s (Formerly known as Subnets) allow implementation of custom virtual machine and meanwhile supports all the Ethereum-based smart contracts and its client functionalities. Prominent projects building their Avalanche L1s (Formerly known as Subnets) are DeFi Kingdom, Rymedi, Meld, DOS, Dexalot, Mintara, and more.

Learn more about Avalanche L1s (Formerly known as Subnets) from our detailed blog on this below:

A Beginner’s Guide to Avalanche Subnets

Layer2 solutions:

Layer-2 scaling solutions or L2s refer to the blockchain networks built on the top of Layer-1 blockchains, for example Ethereum. Similar to Avalanche L1s (Formerly known as Subnets), L2 scaling solutions aim to address the scalability issues and thereby improve the efficiency of underlying main blockchains. Layer-2 take the transaction load off from the Layer-1 to process transactions off-chain while still remaining connected to L1 for leveraging security and trustlessness. Polygon zkEVM, Optimism, Arbitrum, Starknet, zkSync Era are some of the popular Ethereum L2s. 

Learn more about Layer-2 solutions and application-specific chains from our detailed guide mentioned below:

Comprehensive Guide on Layer 2, Sidechains and AppChains 

Key factors for choosing between Avalanche L1s vs Layer2 scaling solution

Let’s dive into the analysis of Avalance L1s (Formerly known as Subnets) vs layer-2 solutions on multiple parameters, enabling enterprises and dApp projects to understand its significance:

Degree of Scalability: 

L1s (Formerly known as Subnets) or Layer-2s— the blockchain ecosystem you choose— it must deliver the required throughput of your dApp. Further, the dApp should scale over time with a growing number of daily active users and transactions.

Avalanche L1s (Formerly known as Subnets) offer better scalability than Layer-1, for example the C–chain on Avalanche is designed to offer 4,500 TPS. However, L1s (Formerly known as Subnets) are designed specifically to offer modularity and sovereignty. 

Layer-2 solution, on the other hand, like rollups also offer higher scalability. For example, Polygon zkEVM claims to offer a lower throughput of 2,000 TPS. Also, zkSync offers Ethereum-based ZkRollups that reportedly offer 100,000 TPS. Hence, if your project needs massive scalability, then Layer-2 solutions like Rollups, sidechains, and Plasma chains are the way to go. 

Key factors for adoption:

• What are the TPS requirements of your project?
• What’s the current and future number of DAU– daily active users?
• Does your project need to scale with future demand?

Level of Security 

Having reliable security and full decentralization must be another key considerations for dApps, besides scalability. Speaking about Avalanche L1s (Formerly known as Subnets), they need to choose their own validators and maintain their own security as independent chains, which can be intermediating and vulnerable to attacks. 

Regarding Layer-2 solutions, they are rich in security. L2 solution like rollups can inherits security from the main chain (L1) and therefore, they ensure optimal security without compromising on decentralization. There’s no need for setting up new validators or security or consensus mechanism. Projects needing robust security should choose Layer-2 solution to avoid hassle and security-related issues.

Key considerations for adoption:

• Are you confident about maintaining security on your project? 
• Will you use validators and consensus from mainchain?
• Do you want to adopt a different and unique consensus other than Layer-1?

Customizability

Avalanche L1s (Formerly known as Subnets) are designed with a focus on customization. You can customize tokenomics, gas fees, validator requirements, virtual machine, and logics. 

Whereas, Layer-2 solutions will only allow for customization if you are launching your own L2 chain, for example– Rollups. Deploying your dApp on any public L2 chain will require you to comply with the existing ecosystem parameters. 

Hence, Avalanche L1s (Formerly known as Subnets) is definitely the ideal solution if your project needs customizability instead of using a generic ecosystem.

Key factors for adoption:

• Will your dApp custom tokens, gas fee, on-chain governance, etc?
• Does your dApp has any dependency on Layer-1?
• Customizability or security— which is more important for you? 

Modularity 

L1s (Formerly known as Subnets) are high in modularity as they more flexible than Layer-2s. For example, one can create a L1 (Formerly known as Subnets) to run a decentralized exchange while another L1 (Formerly known as Subnets) can be used for a payment gateway. These two different L1s (Formerly known as Subnets) will run parallel, but they will be interconnected. 

Layer-2 solutions, like rollups also offer modularity as you can create different rollup chains for specific use cases as well as offload some functions like execution, settlement, and consensus to different layers. But, the same level of ease will be difficult to achieve in case of L2s. Hence, L1s (Formerly known as Subnets) is the recommend for this requirement.

Key things to consider:

• Does your business need various use case-specific L2s or L1s (Formerly known as Subnets)?
• Do you want to specialize some of your dApp’s functionalities?
• Will your project needs customizability, along with modularity?

The need for Interoperability 

L1s (Formerly known as Subnets) are powered with ‘Avalanche Warp Messaging’ that enables cross-L1 (Formerly known as Subnets) communication and meanwhile allows projects to implement arbitrary communication protocols between two different L1s (Formerly known as Subnets). 

The same level of interoperability can be hard to achieve in case of layer-2 scaling solutions because they lack cross-layer (L2 to L2) communication. Communicating with Layer-2 requires you to communicate with Layer-1 first, which is practically a time-taking and inefficient interoperability approach. 

Therefore, interoperability-focused dApps should go with Avalanche L1s (Formerly known as Subnets).

Key things to consider for adoption:

• How frequently your dApp needs inter-protocol communication?
• Will your dApp allows users to engage in cross-dApps activities, like trading assets?
• Does your project want to use logics and data from other dApps?

Privacy of on-chain data

Privacy is very important for all kinds of dApps. Avalanche L1s (Formerly known as Subnets) allow projects to keep their data and other information private by creating their own appchains. The data here is only accessible to a set of authorized validators.

Taking about Layer-2 scaling solutions, projects can build their own Rollup chain, for examples, with Polygon CDK. These types of chains offers private appchain environment that maintains data confidentiality and safety. 

As we see, choosing between Polygon supenets vs Layer-2 solutions on ‘Privacy parameter’ seems difficult. But, projects that needs customizabiity and Interoperability aside from privacy, Supernets is for them. If not, then Layer-2 solutions works the best. 

Key considerations for adoption:

• Is your organization strive to keep the data and information private?
• How crucial is the confidentiality of data in your project?
• Private or open— which ecosystem suits your use case?

Dependency on main chain 

Avalanche L1s (Formerly known as Subnets), as we know, are independent blockchains that can specificity their tokenomics, execution logic, maintain state, determine fee regime, etc. They have zero dependency on main chain.

Layer-2 solutions, as the name suggests, they are built on layer-2 and hence depend on main chain for reliable security and authenticity. So, for projects looking for sovereignty and no Layer-1 dependency, Avalanche L1s (Formerly known as Subnets) is a viable choice.

Key things to consider:

• Is your project capable of maintaining robust security on its own?
• Can you see any impact of having dependency on mainchain?
• How important is application-specific customization for your project?

Costs and resources

The threshold of bearing operational cost like computation fee, validators’ incentives, and infrastructure management costs are different for every projects. Likewise, the ability to manage hardware/software requirements differs. 

Avalanche L1s (Formerly known as Subnets) are sovereign blockchain, hence they need to bear cost of validators, computation, and other costs. Plus, their hardware and software requirements for L1s (Formerly known as Subnets) are delicate. 

But, in Layer-2 solutions, you do not need to bootstrap infrastructure or validators because Layer-1 provides all of these. 

Key things to consider:

• Will your users pay for high transaction fees?
• Can you manage validators and their incentives?
• How challenging is to manage hardware and software infrastructure for you?

Here’s a brief comparison: 

Scale your web3 project with Zeeve

Choosing the right blockchain ecosystem is critical for every project. With a core analysis of Avalanche L1s (Formerly known as Subnets) vs Layer-2 solutions, you can make the right decision. However, if you still come across any challenges, Zeeve is happy to help. Zeeve offers all the things needed for seamless launch of L1s (Formerly known as Subnets) and L2s, such as scalable nodes, white-labeled explorers, testnet faucets, data indexers, and plug-n-pay development tools. 

Plus, our services includes security and reliability with ISO 27001 and SOC 2 Type 2 compliance and enterprise-level SLA. For more information on how Zeeve is simplifying the launch of L1s (Formerly known as Subnets), Rollups, appchains, and all the other layer-2 scaling solutions, connect with us. Drop us your queries via email or schedule one-to-one call for detailed discussion.