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On Sep 15, 2022, the Ethereum mainnet completed its transition from the proof of work (PoW) consensus mechanism to proof of stake (PoS). Dubbed "The Merge," the transformation of Ethereum from the PoW to PoS consensus layer was a highly anticipated event. The transformation has positively affected the price of various Ethereum-based Layer 2 projects. The price of Polygon, one of the most popular Ethereum Layer 2 solutions, rose by 36%. Meanwhile, Optimism registered an increase by over 60%. Investors are also awaiting subsequent developments such as the Ethereum Shanghai upgrade, which would likely push the price of Layer 2 projects further.
So, what are some of the top Ethereum Layer 2 solutions you should consider investing in post-merge? Let's find out.
Ethereum Layer 2 protocols are solutions designed to solve the scalability issues related to the main Ethereum base blockchain. Layer 2 is attached to the Ethereum Layer 1 blockchain, which enables it to perform blockchain operations and report them to the main chain.
You can think of these Ethereum Layer 2 solutions as roads leading to the main Ethereum highway. When the Ethereum network gets congested due to high traffic, Layer 2 helps by offloading the traffic to the roads. Ultimately, the congestion is reduced.