Layer 2 Scaling Solutions for Blockchains

Many blockchain protocols suffer from scalability issues. One way to improve the scalability of existing solutions is to improve the underlying consensus algorithms. Another way is to carry out off-chain transactions in such a way that the interaction with the underlying blockchain is minimized. This class of solutions is known as layer 2 solutions. We discuss the motivation of layer 2 scaling solutions and various types of layer 2 scaling solutions. We discuss payment channel networks in details.