Crypto glossary
Layer 2 (L2)
A layer 2 is a network built on top of a blockchain that handles transactions off the main chain to make them cheaper and faster.
Layer 2 networks execute transactions separately and periodically post compressed data or proofs back to the layer 1, which acts as the settlement and security layer. Users move funds in through a bridge contract and can withdraw back to the main chain.
On Ethereum, the dominant layer 2 design is the rollup, used by Arbitrum, Optimism, Base, zkSync, Starknet and Linea. The Dencun upgrade of March 2024 introduced blobs (EIP-4844), a cheaper data space for rollups that cut layer 2 fees sharply. On Bitcoin, the Lightning Network is the best-known layer 2.
Layer 2s carry their own risks. Many still rely on a single sequencer that orders transactions, some keep upgrade keys controlled by small multisigs, and bridges between networks have been frequent hacking targets. Liquidity is also fragmented across many separate L2s.
Example
A swap that costs several dollars in fees on Ethereum mainnet during busy periods can cost a few cents on Base or Arbitrum, with the result later settled on Ethereum.
Related terms
Latest articles on Layer 2
- Enso Deploys Orchestration Infrastructure for Kinetiq’s Elysium Layer 2
- The 2026 Layer 2 Shutdowns Confirm Rollup Expansion Exceeded Real Demand
- Based Rollups: Delegated Sequencing as a Structural Correction for Layer 2s
- The 95% Ethereum Layer 2 Fee Drop Changed Everything — But Can It Last?
- Botanix Labs Shuts Down Its Bitcoin Layer 2 After Four Years, Citing Weak DeFi Demand
