What are Ethereum Layer-2 (L2) Solutions? (2024)

FAQs

What are Ethereum Layer-2 (L2) Solutions? ›

Layer-2 solutions are considered a component in the future scalability of Ethereum. By providing a faster, less costly route for executing Ethereum transactions, they are designed to address the current issues of high transaction fees and network congestion.

Layer 2 (L2) scaling solutions are technologies designed to improve blockchain efficiency and performance without compromising security or decentralization. They work by offloading a significant portion of computational work from the main blockchain (Layer 1) to secondary networks.

Layer 2 is an umbrella term to describe solutions that build on top of Ethereum mainnet (layer 1) to improve the scalability of the Ethereum network. There are a number of layer 2 solutions on Ethereum.

Examples of L1 chains include Bitcoin, Ethereum, and BNB Smart Chain. On the other hand, L2 are chains built on top of other networks. For example, Polygon (MATIC) is an L2 protocol built on the Ethereum blockchain, as seen in the diagram below.

Layer-2 or second-layer solutions increase the throughput and transactions per second of a blockchain by creating additional blockspace or recording transactions in a more efficient manner. Examples include Plasma, TrueBit, Lightning Network and more.

In summary, Layer 2 scaling solutions offer compelling benefits in terms of scalability, cost-efficiency, transaction speed, privacy, security, and compatibility. These benefits empower blockchain networks to support a wider range of applications and use cases, driving innovation and adoption across industries.

Accelerating Bitcoin Layer 2 Adoption

The Chainlink platform has underpinned the DeFi ecosystem since its inception, fulfilling the need for high-quality data, compute, and interoperability services that help developers create fully-fledged decentralized applications.

Solana is a Layer 1 blockchain and component of the Smart Contract Platforms Crypto Sector (Exhibit 1). Compared to Ethereum—the largest smart contract platform by market capitalization—Solana provides faster and cheaper transactions on a single-layer network, without relying on additional scaling layers.

Arbitrum is a layer 2 scaling solution that reduces congestion and high transaction fees on the Ethereum network by moving computation and data storage off-chain. Utilizing optimistic rollups, Arbitrum executes transactions off-chain and then posts the results onto the Ethereum mainnet.

Is polygon an ETH L2? ›

What is Polygon (MATIC)? Polygon is a “layer two” or “sidechain” scaling solution that runs alongside the Ethereum blockchain — allowing for speedy transactions and low fees.

List of Layer 2 Blockchains. Discover 16 Layer 2 Blockchains across the most popular web3 ecosystems with Alchemy's Dapp Store. Also explore related collections including Layer 1 Blockchains (L1s), Sidechains, Testnets.

Whether you want to play Web3 games, exchange tokens, mint NFTs, or trade ETH, L2s help you do it faster and cheaper. If you're ready to dive deeper into Ethereum Layer 2 networks it doesn't need to be difficult. Through the Ledger ecosystem, you can access Polygon, Arbitrum, Base, and many other L2s.

Layer 2 solutions, often referred to simply as "Layer 2", are a set of secondary protocols built on top of an existing blockchain (the primary being Layer 1). The primary goal of these solutions is to increase transaction throughput and efficiency, thereby addressing scalability issues that many blockchains face.

TCP, paired with IP, is by far the most popular protocol at the transport level. If the IPX protocol is used at the network layer (on networks such as Novell or Microsoft), then it is paired with SPX at the transport layer.

Layer 2, also known as the Data Link Layer, is the second level in the seven-layer OSI reference model for network protocol design. Layer 2 is equivalent to the link layer (the lowest layer) in the TCP/IP network model.

A second language (L2) is a language spoken in addition to one's first language (L1). A second language may be a neighbouring language, another language of the speaker's home country, or a foreign language.

L2 is a subscription-based business intelligence service that benchmarks the digital competence of brands. L2 Digital IQ Index® is the global benchmark for digital performance of consumer brands.

Layer 2 technology is part of what is called the OSI (Open Systems Interconnection) model. It is the layer at which data moves from the physical layer into the cybersphere. It is the launching pad for data. Before defining the specifications of Layer 2 tech, it's important first to understand what the OSI model is.