Layer 2 Trade-Offs: Evaluating Privacy, Security, and Decentralization in Ethereum Scaling

Abstract

Blockchain technology, particularly Ethereum, has enabled a wide range of decentralized applications but continues to face significant scalability challenges, including high gas fees, limited transaction throughput, and frequent network congestion. This review provides a comprehensive analysis of Ethereum's scalability constraints and critically evaluates current Layer 2 scaling solutions such as Rollups, Plasma, the Lightning Network, and other emerging alternatives. The study conducts a comparative assessment of these mechanisms with respect to decentralization, privacy, and security-core dimensions of the blockchain scalability trilemma. Recent academic contributions, including stochastic models of gas fee behavior and protocolspecific analyses, are examined to provide both theoretical and empirical insights. Emphasis is placed on understanding the architectural advantages of zk-Rollups and their positioning as a leading Layer 2 solution. Quantitative metrics such as transaction throughput benchmarks, privacy, and security capability comparisons are presented to support the evaluation. The findings are intended to inform the design of more scalable, secure, and privacy-preserving Ethereum-compatible architectures.