Glossary

Layer 2

Plain-language definition Crypto glossary

Key takeaways

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.
Layer 2s move most transaction processing off the main chain, then post compressed proofs or data back to it, with rollups being the most common approach.
Optimistic rollups assume batches are valid unless challenged, while zero-knowledge rollups attach a cryptographic proof of validity, both giving users cheaper, faster transactions backed by the base chain.

Definition

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.

FAQ

Frequently asked questions

Why are Layer 2 networks needed?

Secure, decentralized base chains have limited capacity, which makes scaling one of crypto's central challenges. Layer 2s let a network serve far more users with cheaper, faster transactions without sacrificing the underlying security, which is why much of Ethereum's activity now happens on them.

What is the difference between optimistic and zero-knowledge rollups?

Both batch many transactions together and submit a summary to Layer 1, but they prove validity differently. Optimistic rollups assume batches are valid unless someone challenges them, while zero-knowledge rollups attach a cryptographic proof that the batch is valid.

Do Layer 2s have the same security as Layer 1?

Layer 2s rely on the base chain for final security by posting compressed proofs or data back to it. They inherit much of the Layer 1's security guarantees, though the exact strength depends on the rollup design and how it settles to the base chain.