Glossary
Layer 2
A layer 2 is a network built on top of a blockchain (the layer 1) that processes transactions separately and settles them on the main chain, making them faster and cheaper while relying on its security.
Also called L2, Layer two, Scaling solution, Rollup, Second layer
See also
A layer 2 (L2) is a network that runs on top of a main blockchain, called the layer 1, to handle more transactions at lower cost. Users transact on the L2, and the L2 regularly reports its results to the layer 1, which acts as the final judge. The goal is to scale without giving up the security of the base chain.
How a layer 2 works
On Ethereum, most layer 2 networks are rollups. They execute transactions off the main chain, bundle hundreds of them together, and post the compressed data to Ethereum. Two families exist:
- Optimistic rollups, such as Arbitrum, OP Mainnet and Base, assume transactions are valid unless someone proves fraud during a challenge period. Withdrawing directly to Ethereum therefore takes about a week.
- Zero-knowledge (ZK) rollups, such as zkSync and Starknet, attach a cryptographic validity proof to each batch, which Ethereum verifies.
Since the Dencun upgrade of 13 March 2024 (EIP-4844), rollups can post their data in cheaper temporary “blobs”, which lowered layer 2 fees.
Bitcoin has its own approach: the Lightning Network opens payment channels between users, who exchange many off-chain payments and settle only the opening and closing on the Bitcoin blockchain.
A concrete example
Paying the gas fees for a token swap on Ethereum can cost several dollars when the network is busy. Marco bridges $100 of ETH to a layer 2, then makes ten swaps there, each for a few cents and confirmed in seconds. When he wants to return to Ethereum, he uses the official bridge and waits for the withdrawal, or pays a fast bridge to skip the wait.
Why it matters for users
Layer 2 networks make everyday use of crypto affordable: small payments, gaming, DeFi with modest amounts. Most major wallets and exchanges now support deposits and withdrawals directly on popular L2s.
Risks and limits
- Many rollups still rely on a single sequencer and on upgrade keys held by their team, so they are not yet as decentralised as Ethereum. Independent trackers such as L2BEAT rate their maturity.
- Bridges between chains are a frequent target of hacks.
- Liquidity is split across many networks, and sending funds to the wrong network can mean losing them.
- Fees are low but not zero, and can rise during spikes in demand.