A Layer 2 (L2) is a secondary framework or protocol built on top of an existing Layer 1 blockchain. Its primary purpose is to increase transaction throughput and reduce fees while still leveraging the security guarantees of the underlying base chain.
Layer 2 solutions process transactions off the main chain and then post the results back to the Layer 1 for final settlement. This dramatically reduces congestion and costs on the base network.
The most common types of Layer 2 solutions include:
- Optimistic Rollups — bundle transactions off-chain and assume they are valid unless challenged (used by Arbitrum and Optimism)
- ZK-Rollups — use zero-knowledge proofs to verify transaction batches cryptographically (used by zkSync and StarkNet)
- State Channels — allow participants to transact off-chain and settle the final state on-chain (Lightning Network for Bitcoin)
- Sidechains — independent blockchains connected to the main chain via a bridge
Ethereum has embraced a rollup-centric scaling strategy, making Layer 2s essential to its ecosystem. Many popular dApps and DeFi protocols now operate on Layer 2 networks to offer users faster and cheaper transactions.
When using Layer 2 networks, you typically need to bridge your assets from the main chain. Always ensure you are using trusted bridges and understand the withdrawal times, which can vary from minutes to several days depending on the L2 technology used.