Layer 2 (L2)
Blockchains built on top of Ethereum to scale it — faster and cheaper transactions while inheriting Ethereum's security. Examples: Arbitrum, Optimism, Base, zkSync. Rollups batch transactions and post proofs to Ethereum. The scaling solution for Ethereum.
- Ethereum apps needing speed/low cost.
- DeFi, NFTs, payments on Ethereum.
- When you want Ethereum security without L1 costs.
- When you need maximum decentralization (L1).
- When bridging complexity is too risky.
- When the specific L2 is too centralized.
Definition
Layer 2s are protocols that process transactions off Ethereum mainnet and settle on it. Optimistic rollups (Arbitrum, Optimism, Base) assume validity, allow challenges. ZK rollups (zkSync, StarkNet) use validity proofs. They inherit Ethereum's security while being faster and cheaper.
Why it exists
Ethereum L1 is slow (~15-30 TPS) and expensive ($1-50+ per tx). L2s process thousands of TPS at near-zero cost, settling proofs on Ethereum for security — scaling Ethereum without sacrificing security.
How it works
Users transact on the L2 (fast, cheap). The L2 batches transactions and posts a summary/proof to Ethereum L1. Optimistic rollups allow a challenge period; ZK rollups use cryptographic proofs. Withdrawals bridge back to L1.
Scaling limits
Bridge risk (hacks on bridges). Centralization (single sequencer on most L2s). Liquidity fragmentation across L2s. Withdrawal delays (optimistic rollups ~7 days). Complexity.
Cost shape
Much cheaper than L1 (~$0.01-0.10 per tx). Bridge fees for deposits/withdrawals. Running an L2 node is cheaper than L1.
Alternatives
- Ethereum L1 — Most secure, expensive, slow.
- Solana — Fast, cheap, different security model.
- Other L1s (Avalanche, etc.) — Different ecosystems, varying tradeoffs.
Failure modes
- Bridge hacks.
- Sequencer centralization.
- Withdrawal delays.
- Liquidity fragmentation.