Improving Scalability in Smart Grid Energy Trading Using Smart Contracts and Layer 2 Blockchain Solutions

Abstract

The integration of blockchain technology into decen-tralized energy trading presents a promising solution to current challenges in energy markets. By leveraging Layer 2 blockchain solutions, such as sidechains and rollups, the scalability, cost-effectiveness and transaction throughput of energy trading plat-forms can be significantly enhanced. This paper focuses on the implementation of smart contracts for energy trading, comparing transaction costs and scalability between Layer 1 and Layer 2 networks. Layer 2 network employs smart contracts to match orders of buyers to that of sellers. The results demonstrate that Layer 2 solutions drastically reduce costs and improve efficiency, making them more feasible for real-world applications. Moreover, this study highlights the potential of using advanced smart contracts and algorithms to further enhance decision-making in energy trades. Future work will focus on optimizing these Layer 2 solutions to handle complex trading scenarios and integrating them into smart grids to create a more sustainable and efficient energy market.