Layer 2

A Layer 2 is a network built on top of a base blockchain (the “Layer 1”) to raise transaction throughput and cut fees, while still relying on the base chain for final security.

How it works

Layer 2s move the bulk of transaction processing off the main chain, then post compressed proofs or data back to it. Rollups, the most common approach, batch many transactions together and submit a single summary to Layer 1; “optimistic” rollups assume batches are valid unless challenged, while “zero-knowledge” rollups attach a cryptographic proof of validity. Either way, users get cheaper, faster transactions backed by the base chain.

Why it matters

Scaling is one of crypto’s central challenges: secure, decentralized base chains have limited capacity. Layer 2s let a network serve far more users without sacrificing the underlying security, which is why much of Ethereum’s activity now happens on them.

Example

Rollup networks that settle to Ethereum let users transact for a fraction of mainnet gas fees.