SoK: Layer-Two Blockchain Protocols

Blockchains have the potential to revolutionize markets and services. However, they currently exhibit high latencies and fail to handle transaction loads comparable to those managed by traditional financial systems. Layer-two protocols, built on top of (layer-one) blockchains, avoid disseminating every transaction to the whole network by exchanging authenticated transactions off-chain. Instead, they utilize the expensive and low-rate blockchain only as a recourse for disputes. The promise of layer-two protocols is to complete off-chain transactions in sub-seconds rather than minutes or hours while retaining asset security, reducing fees and allowing blockchains to scale.