Blockchain
Layer 2
A secondary blockchain network built on top of a Layer 1 (like Ethereum) to improve scalability and reduce transaction costs while inheriting the security of the main chain.
Last updated: January 5, 2025
What is Layer 2?
Layer 2 (L2) refers to scaling solutions built on top of existing blockchains (Layer 1) that process transactions off the main chain while still inheriting its security. L2s dramatically reduce fees and increase throughput.
Why Layer 2 Exists
Ethereum’s Limitations
- ~15 transactions per second
- High gas fees during congestion
- Expensive for small transactions
- Limited scalability
L2 Solution
- Process transactions off-chain
- Bundle and submit to L1
- Inherit L1 security
- Much cheaper and faster
Layer 1 vs Layer 2
| Feature | Layer 1 | Layer 2 |
|---|---|---|
| Example | Ethereum | Arbitrum |
| Security | Native | Inherited |
| Fees | $1-50+ | $0.01-0.50 |
| Speed | ~15 TPS | 1000+ TPS |
| Decentralization | Maximum | Varies |
Types of Layer 2
Optimistic Rollups
- Assume transactions are valid
- Fraud proofs if disputed
- 7-day withdrawal period
- Examples: Arbitrum, Optimism
ZK-Rollups
- Zero-knowledge proofs for validity
- Faster withdrawal possible
- More complex technology
- Examples: zkSync, StarkNet, Polygon zkEVM
State Channels
- Direct channels between parties
- Instant, nearly free
- Limited use cases
- Example: Lightning Network (Bitcoin)
Popular Layer 2s
Arbitrum
- Largest Ethereum L2 by TVL
- Optimistic rollup
- Full EVM compatibility
- Rich DeFi ecosystem
Optimism
- Second largest L2
- Optimistic rollup
- OP token for governance
- Superchain vision
Base
- Built by Coinbase
- Optimistic rollup
- Growing rapidly
- No native token
zkSync Era
- ZK-rollup technology
- Native account abstraction
- Growing ecosystem
Polygon zkEVM
- ZK-rollup from Polygon
- EVM equivalent
- Fast finality
Using Layer 2
Getting Started
- Bridge ETH from mainnet to L2
- Add L2 network to wallet
- Use dApps on L2
- Enjoy lower fees
Bridging Assets
Official bridges (slower, cheaper):
Third-party bridges (faster):
- Hop Protocol
- Across Protocol
- Stargate
Costs Comparison
$1,000 swap:
- Ethereum mainnet: $5-50+
- Arbitrum: $0.10-0.50
- Optimism: $0.10-0.50
- zkSync: $0.05-0.30
L2 on Exchanges
Direct L2 Withdrawals
Many exchanges now support direct withdrawal to L2:
Benefits:
- Skip mainnet entirely
- Save bridge fees
- Faster access to L2
L2 Ecosystem
DeFi on L2
- Uniswap (all major L2s)
- Aave (Arbitrum, Optimism)
- GMX (Arbitrum)
- Velodrome (Optimism)
NFTs on L2
- Lower minting costs
- Cheaper trading
- Growing adoption
L2 Risks
Bridge Risk
- Bridges are hack targets
- Use official bridges when possible
- Don’t bridge large amounts at once
Sequencer Risk
- L2s have centralized sequencers
- Can be temporarily down
- Decentralization improving
Smart Contract Risk
- New technology
- Bugs possible
- Audited but not battle-tested like Ethereum
Withdrawal Times
Optimistic Rollups
- 7-day challenge period for fraud proofs
- Third-party bridges offer faster exits
- Trade speed for cost
ZK-Rollups
- Minutes to hours
- Proof generation time
- Generally faster than optimistic
The Future of L2
Trends
- More L2s launching
- Better interoperability
- Lower fees
- Ethereum as settlement layer
Danksharding (EIP-4844)
- “Proto-danksharding” live
- Cheaper L2 data costs
- Further fee reductions
Ready to Start Trading?
Now that you understand layer 2, explore the best exchanges to begin your crypto journey.